High-stakes standoff

To casino-owning American Indians like the Sacramento Valley’s Maidu, the new effort to force them to pay taxes is just another blow in a long history of abuse.

At night, the bright lights of Feather Falls Casino beckon folks for miles around with the promise of entertainment and, possibly, enrichment.

At night, the bright lights of Feather Falls Casino beckon folks for miles around with the promise of entertainment and, possibly, enrichment.

Photo By Eric Johnson

When Alan Archuleta was 10 years old in 1973, he got a check in the mail from the U.S. government. It was for $600, and it was payment for the fact that 12 years earlier, the government had summarily disbanded his tribe, a small group of mountain Maidu who historically had lived in the Feather Falls area east of Oroville. Archuleta is now a round, genial, 40-year-old man with an open, youthful face and jet-black hair. Today, 30 years later, he’s sitting in his office at the sprawling brown-shingled headquarters of that same tribe, now known collectively as the Concow-Maidu of Mooretown Rancheria. It’s located amid oak-studded hills on the southern outskirts of Oroville.

The spacious building—with its many photographs of American Indian art and of historic American Indian sites and dwellings; its life-sized, carved-wood brown bear near the front door; and its conference room, offices, industrial-sized kitchen, and day-care center—is testimony to just how far the tribe has come in three decades.

Even more so is the glittering, $20 million Feather Falls Casino, which is located up a slight rise about a quarter-mile away, overlooking the rancheria’s 300-acre compound. At night, its neon lights glow like many-colored incandescent jewels under the dark sky.

In the past three decades, the Mooretown Rancheria has reorganized and been re-recognized by the federal government; has signed compacts with the state government, enabling it to build and operate the casino; has greatly improved the lives of its members; and has gained the respect that comes from being one of the largest employers in the Oroville area.

More than 450 people work at Feather Falls Casino. Figures aren’t available for the other casino in Oroville, Gold Country, which is owned by the Tyme Maidu tribe of Berry Creek Rancheria, but the casinos are about the same size, so they probably are comparable. Together, Archuleta has been told, the casinos employ more people than any other industry in the area, with the exception of Oroville Hospital. Yet, less than a decade ago, they didn’t exist, at least technically.

The casinos are part of one of the most extraordinary economic revivals in American history. American Indian gaming has grown exponentially in the past decade, and because that growth has occurred mostly in rural areas, it’s had a tremendous impact on many rural communities.

There are now eight American Indian casinos in the greater Sacramento Valley. Together, they employ thousands of people; do many millions of dollars in business annually; and have become major players not only in their local business communities, but also—as part of the California Nations Indian Gaming Association (CNIGA)—in statewide politics.

For the first time since the coming of the white people, the American Indians of California are in a position of power, and they are not about to give it up.

Archuleta is treasurer of the Mooretown Rancheria’s tribal council, an elected position. A graduate of the University of California, Davis, in religious studies who continues to live in Davis, he commutes to Oroville several days a week. Another Archuleta, a cousin named Gary, is the tribal chairman. He lives on the rancheria’s 300-acre compound.

Perhaps to show just how far the tribe has come, a photo on Alan Archuleta’s office wall, taken in Stockton in October 2002, shows the two men standing at the sides of President George W. Bush.

As if for balance, however, there’s a far different image of Bush elsewhere in the office. On an opposite wall, a large political button is stuck into the surface. It shows a caricature of the president above the words, “I did not have corporate relations with that man!”

Political balance is something California’s casino-owning American Indians have cultivated carefully. Privately, they may be registered Republicans or Democrats, but publicly and collectively, they present themselves as patriotic Americans who try to cultivate good relations with both major political parties even as they seek to be treated as members of sovereign nations.

In just a few years, thanks to their own determination, some favorable court cases and the support of the voters of California, they have been able to negotiate a series of 20-year compacts with the state, setting the conditions for the operation of a total of 54 Nevada-style gaming casinos. The casinos have been hugely successful, exceeding all expectations and generating revenues that have allowed American Indians to go from being among the poorest people in the state to being largely self-sufficient and in a few cases extremely wealthy.

But now the Indians find themselves under fire, and it’s due at least partly to a momentary loss of political balance that led some of them to take sides during a contentious political battle.

During the recent gubernatorial recall election, four of the wealthiest Southern California casino-owning tribes decided to put most of their chips on one candidate, Lt. Governor Cruz Bustamante, and donated millions of dollars to his campaign.

Suddenly, the tribes became an issue, one tied directly to the state’s horrific budget crisis. Bustamante’s chief opponent, action-movie star Arnold Schwarzenegger, launched a series of attack ads targeting all of the casino-owning tribes as people who “make billions, yet pay no taxes and virtually nothing to the state. It’s time for them to pay their fair share. Give me your vote, and I guarantee you things will change.”

Mooretown Rancheria member Alan Archuleta sits surrounded by some of the 1,000 slot machines that have contributed to his tribe’s newfound prosperity.

Photo By Tom Angel

Schwarzenegger frequently cited Connecticut—a state whose two huge casinos give 25 percent of their revenue to the state—but conveniently ignored, American Indians charge, that in return, the two tribes enjoy a monopoly on gaming. The Indians also point out that in Nevada, the tax rate on casinos is just 7 percent.

Since winning the governorship, Schwarzenegger has continued to play hardball, though he’s come down from his 25-percent figure somewhat. In his recently delivered budget proposal to the Legislature, he assumes that he will be able to squeeze some $500 million annually in additional taxes from the tribes, or about 10 percent of their revenues. He listed getting the state’s “fair share” of American Indian gambling revenue on his well-publicized 10-point “to do” list. And he’s welcomed an effort to qualify an initiative for the November ballot that would break the Indians’ monopoly on gaming if the tribes didn’t agree to turn over a full 25 percent of their revenue to the state.

To Alan Archuleta and thousands of other California American Indians, these developments are worrisome, and not only because they now threaten the financial health of the casinos and the tribes’ sovereignty. The Indians have long memories. They know what can happen to people like them, people with brown skin, when they become the scapegoat for society’s problems. They wince at now being portrayed as rich and selfish, as people unwilling to do their “fair share.”

Just a few years ago, the tribes were riding high in popularity. Twice, in 1998 and 2000, voters resoundingly supported ballot initiatives that gave them a monopoly on gaming in the state. Most Californians thought this was a good way to enable the Indians to become self-reliant—and perhaps for the rest of society to atone for 150 years of mistreating them.

And the California tribes believed they had secure compacts. After decades of broken treaties and shattered promises, the American Indians thought they finally could trust the government to honor its side of a deal—not only because voters twice had supported them, but also because the tribes themselves had developed the financial clout to be major players in the game of politics.

That trust, fragile as it was, is now gone. As Archuleta puts it sarcastically, the attitude of most of California’s American Indians today is: “Here we go again, the white man breaking a compact with the Indians. Who woulda thought?”

It was the American Indians’ historic misfortune to be spiritually sophisticated but technologically simple hunters and gatherers who lived on land that European Americans, who were hierarchically organized and technologically powerful, wanted for their own. The Indians never had a chance.

For nearly 150 years, they watched as the invaders flooded onto their land. And the Indians were powerless to stop them, no matter how fiercely they fought. Sometimes, the Indians signed agreements giving them rights to certain ancestral territories, but the whites rarely honored them.

In the meantime, American Indians died from genocide and disease. It’s estimated that 700,000 American Indians lived in California in 1800; by 1860, the number had shrunk to 100,000.

It wasn’t until 1909, when then-President Theodore Roosevelt established 113 small reservations in the state, that the Indians finally had any land of their own. As it was, they lived in these small rural enclaves like colonies of Third World people.

Then, in 1961, then-President John F. Kennedy signed the grotesquely named Indian Termination Act, which removed federal recognition from one-fourth of California’s tribes, including the Mooretown Rancheria.

The tribe had been a loose-knit collection of descendants of the last four American Indians alive in the Feather Falls area in the first half of the 20th century: Robert Jackson, Ida Jackson, Fred Taylor and Kate Archuleta, Alan Archuleta’s grandmother. There were dozens of tribal members scattered throughout Northern California, though most lived in the Oroville area. The government didn’t consult any of them before terminating the tribe. More than a decade later, it sent everyone that small check.

“It was like, ‘OK, you guys are no longer a tribe,’” Alan Archuleta says. “'Here’s your money for everything you no longer have.’”

And, truly, they had nothing, or at least nothing they could regard as heritage or wealth salvaged from the past. And now the government had wiped out their legal existence as a tribe.

Archuleta says people often ask him about his culture: Does he practice sweat-lodge ceremonies? Does he speak the language? Does he know any stories? And his answer, invariably, is no. He grew up in Oroville as “just another American kid,” one whose father happened to be American Indian but who otherwise knew nothing of his heritage. “I was really unaware that I was part of a minority culture that had been wiped out by this point,” he says.

Not everyone in his tribe had forgotten, however. In the mid-1980s, members of the rancheria, along with other disbanded tribes, successfully sued to have their recognition reinstated. The rancheria purchased a small parcel of land south of Oroville that originally had been part of land granted to it in an 1851 treaty that Congress later disavowed.

By the late 1980s, American Indian tribes around the country were beginning to take advantage of their unique legal status, developed through decades of court decisions, as sovereign “domestic dependent nations.” As states began establishing lottery games to raise money for schools and other purposes, these tribes began opening gaming operations of their own, beginning with high-stakes bingo.

When the state of California sued the Cabazon tribe, in Southern California, to prevent it from operating bingo games, the case went all the way to the U.S. Supreme Court. And in 1987, that court held, in effect, that whatever gambling the state allows—a lottery, for example, or bingo parlors—the tribes also can allow.

This photo of President George W. Bush, with Alan Archuleta, on left, and Tribal Chairman Gary Archuleta, suggests how much political clout California’s American Indians have developed in just a few years.

In 1988, recognizing that gaming was becoming increasingly popular on reservations, Congress passed the Indian Gaming Regulatory Act, which did two things. First, it divided gaming into three classes, ranging from traditional American Indian ceremonial gaming (Class I) through bingo-style games (Class II) to all other forms of gaming, including Nevada-style games (Class III). Second, the act left it up to the states to determine which levels of activity to allow and required that any Class III gaming be authorized by a tribal-state compact or agreement.

As tribes in California began to expand their casino operations, they started adding more and more games that possibly belonged in Class III. Compacts became necessary, and in 1998 then-Governor Pete Wilson negotiated the state’s first agreement, with the Pala band of Mission Indians in San Diego County.

It was intended to be a model compact, but the other tribes thought it was far too restrictive in terms of the games it allowed. So, in record time and with record spending, the tribes qualified Proposition 5 for the November 1998 ballot, taking the issue directly to the voters.

This was when the tribes really began flexing their political muscle. Not only did they spend an astonishing $70 million to pass the measure, but they also contributed some $5 million to the campaigns of influential state politicians that year. It was more than enough to counter the multimillion-dollar campaign against the measure, sponsored chiefly by Nevada casinos and California card rooms and racetracks.

The proposition essentially required the state to allow whatever gaming operations the tribes wanted, including Nevada-style gaming, and it passed handily, with 63 percent of voters in favor.

However, on August 24, 1999, the California Supreme Court struck down Proposition 5, saying that it violated the 1984 California State Lottery Act, an initiative constitutional amendment that banned casino-style gaming in the state.

The tribes were back to square one.

However, they had on their side the new governor, Gray Davis, whose campaign they’d generously bankrolled. He proceeded to negotiate a new series of 20-year compacts with the tribes. In return for stricter limitations on the number of machines, increased revenue sharing with non-casino-owning tribes and concessions to organized labor, the tribes would be able to operate slot machines and house-banked card games. They also would be required to make quarterly payments based on the number of slot machines they owned to reimburse the state for gambling-addiction programs and the effects of casinos on local jurisdictions.

The compacts were contingent on passage of an initiative constitutional amendment superseding the California State Lottery Act. That turned out to be Proposition 1A on the March 2000 ballot.

For the second time, Californians went to the polls to vote on American Indian gaming, and again they approved it, this time by a resounding 65 percent. This round, the tribes, facing no opposition from Nevada casinos, spent $30 million to get their measure passed.

Since then, American Indian gaming in California has grown apace. Today, 54 casinos directly employ more than 42,000 people and generate revenues estimated at between $4 billion and $6 billion per year, with more casinos being built all the time.

The mid-Sacramento Valley alone has four of them now: one in Colusa; two in Oroville; and the newest one, Rolling Hills, in Corning. And the Mechoopda tribe of Chico hopes to open a small casino (500 slots) by 2005 at a site located midway between Chico and Oroville, near the intersection of Highways 99 and 149.

Whether the customer base can sustain this increasing number of casinos concerns Archuleta and others in his tribe. “When Thunder Valley [a huge new facility near fast-growing Roseville] opened, our monthly revenues went down by a quarter of a million dollars,” he says.

But right now, the tribes are much more concerned about Schwarzenegger’s attempt to squeeze money from them. To them, his support for the proposed ballot initiative, which has the backing of racetrack and card-room interests, is nothing less than “blackmail,” as Archuleta puts it. “It’s a hostage situation,” he says. “They’re holding a gun to our heads.”

On this mid-week morning, Feather Falls Casino is surprisingly busy, with easily a couple hundred people playing the slots. In addition, a tour bus has just dropped off 60 or 70 elderly Southeast Asian people, Hmong or Laotian. They’re bundled up against the winter cold in drab denim coats and knit hats, but their eyes gleam with excitement. Clutching $20 bills in their hands, they line up at the casino’s entrance to get change.

Despite the early hour, cocktail waitresses in skimpy blue outfits bustle among the lit-up slot machines and colorful neon decorations carrying drink trays. Except for the American Indian themes—the rooms have such names as “Bow and Arrow Lounge” and “Silver Moccasin Ballroom”—this could be Reno or Las Vegas. There’s another similarity: The air here smells faintly of tobacco, as it does in Nevada casinos. Because of tribal sovereignty, the California law against smoking in public places does not apply here.

Feather Falls Casino started small, in three trailers and with just 98 slot machines, in 1996 but grew quickly. Capitalization originally came from Malaysian sources, Archuleta explains, but now the casino regularly gets offers from major American lenders. It recently completed a large addition to its original casino, adding a whole new wing. It now has 1,000 slots and nine gaming tables; a large bar area; a separate, nonsmoking restaurant; and an 800-seat entertainment arena.

We pass a poster of country star Tanya Tucker, who’s scheduled for a March 19 show. “I had a crush on her when I was a kid,” Archuleta says, seeming slightly amazed that his tribe’s casino should now be hosting her performance.

An on-site facility offers subsidized child care to members of the Mooretown Rancheria.

Photo By Tom Angel

Heretofore, such talent would have bypassed Oroville entirely. Recent shows at Feather Falls and Gold Country have included Willie Nelson, the Robert Cray Band, the Isley Brothers, Pam Tillis and George Jones.

For some of these artists, the proliferation of casinos nationwide has given their careers new life that they might not have enjoyed otherwise. And it’s given folks in rural areas the chance to see live performers they might otherwise have known only from records or television.

As Indian casinos go, Feather Falls is relatively small. Archuleta points out that the new Thunder Valley Casino, which, by all accounts, is one of the largest gaming facilities in the world, cost 10 times as much to build, $200 million, as his casino did. It also has the legal maximum of 2,000 slot machines, the most lucrative sources of gaming revenue.

Some of the casinos are making some Indians—those in tribes of, say, 20 members—very wealthy, but Feather Falls is not among them. There are 180 lineal descendants of the original four tribal ancestors, and they share in the monthly per-capita disbursement from the casino’s revenues. Asked how much that is, Archuleta demurs, saying only, “It basically makes my mortgage payment.”

It’s important to realize, he explains, that excess revenues from the casino are treated as government funds, not as conventional profits. A good deal of money goes to support the tribe as a group, including some 720 additional “adopted” members. These are local American Indians without a direct genetic link to the four ancestors but who nevertheless have been given special tribal status.

Adopted members do not receive monthly per-capita revenues, but they are eligible for the tribe’s other services, including subsidized day care, free health-care services at the tribe’s Oroville clinic, education assistance with books and tuition, and low rents if they live in one of the 50 homes on the rancheria. They also will be eligible to use the big gymnasium now under construction next to the tribal offices.

On the way back to the offices from the casino, we drive through the rancheria’s small subdivision. The houses are clustered together, a series of small, neat bungalows along winding, suburban-style streets. They were built with federal funding before the casino began generating money, so they’re modest in size, but what’s noticeable are the small signs of prosperity: newer cars in the driveways and a few boats here and there.

In addition to serving as the tribal-council treasurer, Archuleta serves as a commissioner for the Ukiah-based Northern Circle Indian Housing Authority, which is operated by 10 Northern California tribes. It pools resources—grant development, construction design, etc.—to build housing for member tribes. Mooretown Rancheria now plans to build another 50 houses within the next three to five years. Tribal members, both lineal and adopted, will be able to buy these homes “at just fantastic loan rates,” as little as 1.5 percent to 2 percent, Archuleta says.

Many members work at the casino, in the tribal offices or at the mini-mart and gas station the tribe operates on rancheria land. American Indians have preference for all entry-level jobs, and they are encouraged to get the training they need for higher positions.

The tribe also helps with college expenses. Archuleta, who’s a single parent, says he wouldn’t have been able to complete his studies at UC Davis without the subsidy he received from the tribe.

“There’s not a single tribal member on welfare,” Archuleta says proudly. “A few years ago, if someone had told me 30 percent of the tribe was on welfare, I would have considered that a conservative figure.”

Before the casino, he says, “our members in general had a high level of unemployment, high incidence of drug and alcohol abuse, higher than normal share of problems with the law. The gaming didn’t drastically change everyone overnight, but many more of our members have a decent place to live, many of them are buying homes, we have all kinds of training and education programs, and we have several adult members who have received and are getting their GED.”

With the relatively large number of people in their tribe, they’re not getting wealthy, he says, but life is much better in many ways.

For one thing, tribal members now get more respect. “Before the gaming came in, you’d call the sheriff, and you’d be lucky if they showed up. Some of my cousins would be walking down the street in Oroville, and cops would pull up and ask where they were going and what they were doing. Things like that,” Archuleta says. That’s less and less often the case since the casino came in.

“Now, I have a 15-year-old daughter who just got a 3.5 in high school, and I’m encouraged by that,” he says.

As one of the few college-educated members of the tribe, Archuleta says, he felt a special responsibility to help it negotiate the inevitable problems that come with managing a multimillion-dollar business. So, he ran for tribal-council treasurer and was elected in 2000.

His skills will be tested in the coming months, as American Indian tribes confront the immense pressure being put on them by a popular new governor and his allies, including the backers of the most hostile of three initiatives now being qualified for the November ballot.

That initiative, sponsored by racetrack and card-room interests, would require the casinos to surrender 25 percent of their revenues, or about $1 billion annually, to the state. If any of them, even one, refused to go along, or the initiative were thwarted in court or in any other way, five racetracks and 11 card rooms would be allowed to have a total of as many as 30,000 slot machines, breaking American Indians’ monopoly on Nevada-style gaming in the state.

According to the terms of its compact with the state, Feather Falls Casino could add 1,000 slots tomorrow if its owners wished. That’s why the owners have no incentive to enter into renegotiations with Governor Arnold Schwarzenegger regarding how much they pay to the state.

Photo By Tom Angel

This is a huge threat to the tribes because a number of them draw a good amount of their customers from urban areas, where most of the racetracks and card rooms are located.

At CNIGA’s annual Western Indian Gaming Conference held in Palm Springs in mid-January, the state’s American Indian casinos began planning their counterattack and filling their financial war chest.

According to published reports, some tribal officials wanted to fight back by sponsoring a counter-initiative that would expand the existing compacts, while others preferred to focus on fighting the racetracks-and-card-rooms initiative, first by challenging it in court and, if that didn’t work, by campaigning against it.

They have plenty of money to do it. By the time of the meeting, half a dozen tribes had already pledged a total of $1.5 million as seed money for a campaign that could cost as much as $100 million. American Indians are veteran political fighters now, and they’re willing to do what it takes to protect their hard-won financial independence.

A few days after the meeting, the Agua Caliente band of Cahuilla Indians, which operates two hugely profitable casinos in the Palm Springs area, announced that it planned to circulate a competing initiative that would remove all limits on the kinds of games (some, such as craps, are currently banned) or amounts of gaming a casino could offer, in return for agreeing to give the state a share of excess revenues equivalent to the current corporate-tax rate, about 9 percent. This would bring in an amount about equal to the current figure Schwarzenegger considers “fair,” $500 million.

Tribe officials said the tribe was prepared to spend $50 million to get the initiative passed.

Finally, a third proposal dealing with American Indian casinos surfaced in late January. Submitted by an anti-gambling group called Stand Up For California, it claims to be a compromise between the other measures, though it says nothing about putting slots in racetracks and card rooms. It would require the tribes to renegotiate their compacts with the state and pay an undefined “fair share” to state and local governments to offset the cost in increased public services. It also would increase the number of permitted slots from 2,000 to 3,000. That proposal’s backers don’t have much money, however, so it remains a long shot.

Meanwhile, several tribes already have entered into negotiations with Daniel Kolkey, the man Schwarzenegger selected to renegotiate the compacts. Kolkey faces a daunting task. Whereas Davis negotiated the original compacts as a group, the tribes that are willing to renegotiate want to do so independently.

That’s because their situations are significantly different. Some of the larger casinos, such as Cache Creek and Thunder Valley, both located near Sacramento, may be willing to give the state a larger share of revenues in return for being allowed to operate more slot machines.

Attorney Howard Dickstein, who represents both Cache Creek and Thunder Valley in their current negotiations with the state, acknowledges the possibility of such an agreement.

“I think the tribes are willing to step up to the plate to work things out in the context of the growth of their business,” says Dickstein. “The tribes that are really the majority, and that are the largest gaming tribes in the state, have the wherewithal to help with the budget deficit and to provide revenue share. These tribes could use more slot machines and could grow their business.”

Dickstein also recognizes the residual bad blood that stained matters between the tribes and the state in the past and that still colors the negotiations of today. “There are generations and generations of hostility, antagonism and distrust, and they’re hard to break down in five or 10 years,” he says.

Nevertheless, Dickstein remains optimistic that the tribes and the state will come to an agreement by late spring. “I think that building trust one step at a time will help,” Dickstein says, “and if we are successful here, it will establish another bridge between Indian tribal governments and the state government. But there will always be bumps in the road.”

Dickstein’s comments reflect a growing understanding between some tribes and the state. They also reflect a growing rift between the state’s large and small gaming tribes, when it comes to political power and financial resources.

Smaller casinos, such as Feather Falls and others with fewer than 2,000 slots, see little to gain in renegotiating. Legally, Feather Falls could add 1,000 slots to its casino tomorrow, if it had the space for them, but it doesn’t want to do so. As far as it’s concerned, it plans to renegotiate its compact in 17 years, when it’s up.

“At this time, our compact and our situation work fine for us,” says Tribal Chairman Gary Archuleta. “We don’t really see any reason to go into negotiations.”

To the tribes, the state of California has no legal right to tax what they see as their governmental revenues, any more than it can tax the revenues of, say, Oregon. As citizens, American Indians pay all the usual taxes—sales tax, personal state and federal income taxes, and even the California Redemption Value on bottles and cans—but as sovereign nations, they don’t pay taxes on casino revenues. They do contribute some $140 million annually to special funds for non-casino-owning tribes and to offset their impacts on public services, as delineated in their compacts.

Feather Falls contributes more than $1 million annually to this fund as well as payroll and other taxes, Alan Archuleta points out.

So, don’t expect the Mooretown Rancheria to begin negotiations with the governor anytime soon. A deal’s a deal, the tribe insists.

Or, hear the words of Ben Clark, a 65-year-old lifelong resident of the area, a man to whom other rancheria members defer as a “tribal elder,” someone whose experience gives him wisdom and insight. He has some straight talk for the governor. This is what he had to say during a recent interview: “I don’t know if Schwarzenegger knows this or not, but in 1850 or thereabouts, they put a bounty on the Indians of Northern California, $5 for scalps and $2 for ears. So, that didn’t leave many Indians left. And the ones that are left, I don’t believe are going to give in to some threat from anybody. That’s what I say.”

Eric Johnson and John McCormack contributed to this article.