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Overview

Propositions 94–97 are referendums on four recent governor-approved Indian gaming compacts. If the propositions pass, compacts for the Agua Caliente, the Sycuan Band of the Kumeyaay Nation, the Pechanga Band of Luiseno Indians, and the Morongo Band of Mission Indians will go into effect. If rejected, the four tribes will continue to operate their casinos under the existing gaming compacts.

Background

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In 1999 Governor Gray Davis negotiated new tribal-state compacts with nearly 60 tribes, allowing them to expand current gambling operations, allowing Nevada-style gambling in California, legalizing video slot machines, allowing casino employees to unionize and providing up to $1.1 million annually for non-gaming tribes. Indians would also make quarterly payments based on the number of slot machines they owned to reimburse the state for gambling addiction programs and the impact of casinos on local jurisdictions. The compacts were ratified by the passage of Proposition 1A, an initiative constitutional amendment which appeared on the March 7, 2000 ballot. Since the passage of Proposition 1A Indian gaming has generated billions of dollars of revenue, with $7.7 billion made in 2006. California Indians have become the largest contributor to California political campaigns. Gaming has become so lucrative that hundreds of Native Americans are petitioning the Bureau of Indian Affairs for recognition of new California tribes in order to buy land and build casinos.

In 2006, Gov. Schwarzenegger negotiated new compact amendments which would allow four of California's wealthiest tribes to add a total of up to 17,000 new slot machines. The tribes includeAgua Caliente, the Sycuan Band of the Kumeyaay Nation, the Pechanga Band of Luiseno Indians, and the Morongo Band of Mission Indians. In the summer of 2007, the legislature passed four bills which approved the compact amendments and the Governor signed the bills in July 2007. The bills were put on hold, however, with the qualification of four propositions for the Feb. 5, 2008 ballot. The propositions, which qualified in November, 2007, are referendums intended to let the voters decide on the compact approval bills passed in the legislature. If approved, these propositions will allow the compact amendments to go into effect, subject to approval by the U.S. Department of the Interior. If this propositions are rejected, the tribes would have to continue to operate their casinos under the 1999 compacts without the new slot machines.

Any portion of the 1999 compacts that are not altered by the amendments would remain in effect.

Proposals

Propositions 94 - 97 are virtually identical. They allow each tribe to increase the number of slot machines in their casinos by the thousands. Each tribe would be obligated to pay larger amount to the state through two funds. The RSTF fund was designated through the 1999 compacts as a way to pay the state a portion of slot machines revenue and would continue to receive a percentage of slot machine profits under the propositions. Propositions 94-97 would also now require tribal money to paid directly to the general fund for California. The four tribes would pay collectively at least $131 million to the state each year.

Each proposition would require their respective tribes to justify and control environmental impacts of their casinos on nearby communities. Each tribe would create a report on environmental impact which would then be open for public comment. A final report would be published including documented public views. The tribe would have to come to agreements with adjacent cities and the county of residence to provide funds for treatment of social problems created in near-by communities, such as gambling addiction or increased crime. Any failure to reach an agreement would be settled by arbitration. Each tribe would also have to document their intent to avoid or limit casino's impacts on the nearby environment.

A Memorandum of Agreement (MOA) was signed by the Governor and each tribe in the summer of 2007 to take effect at the same time as the amendments. The MOA addresses various casino operational requirements. Each casino would have to abide by certain standards regarding money transactions and patron credit. Guidelines would be drawn up to identify gambling addicts and provide treatment. Each tribe would have to provide a copy of annual internal gambling audits to state regulators.

In addition to these provisions, Prop. 96 (the Sycuan's compact) authorizes a second, off-reservation casino. Federal law usually restricts casinos to Indian lands. However, the law contains several exceptions which allow for casinos to be built on lands which touch the reservation along a boundary. The Sycuan tribe bought 1,600 acres of land between their reservation and the site of a future resort. The land contains 24 separate parcels which, if taken into trust as a single piece of property, can meet the federal exception. The tribe has said they are giving thought to building a second casino on the property but for the time being, the property would be used for recreation and tribal residences.

Secretary of State Debra Bowen announced that Propositions 94-97 had qualified for the ballot on Nov. 19th, 2007. In a surprising move, the federal government approved the compacts in late November 2007, technically allowing the compacts to go into effect well before the February 2008 state election. The compacts were approved automatically as they were received over 45 days previous by the Department of the Interior in Washington. Federal law declares that all compacts must be reviewed within the 45 day period or are otherwise approved. Secretary of State Debra Bowen submitted the compacts to the Interior Dept. on Sept. 5th, 2007, almost two months before the propositions were filed. On Dec. 3, 2007, U.S. Interior Department officials said they will delay finalizing the approvals by not publishing a notice of the approval in the Federal Register. Legal problems could arise with the federal decision if the propositions are rejected on Feb. 5th. 2008. It's unclear how the federal government will handle the compacts if they are not approved by California voters.

Legal Challenges

Three legal challenges were mounted in an effort to stop the compacts from going before voters. Agua Caliente's tribal chairman, Richard Milanovich brought forth a suit that argued that the propositions should be banned from the ballot because the qualifying petitions did not include the full text of the compact agreements for signers to read. Milanovich also contended that the California's constitution forbids challenges to state tax collections, making the propositions invalid. Superior Court Judge Lloyd Connelly rejected the lawsuit on Nov. 27th, 2007.

Two similar lawsuits were brought by the Pechanga tribe and the Morongo tribe. Their suits contended that the propositions were not verified within 90 days upon collection of the correct number of signatures. They claimed that state law mandates that signatures gathered to qualify a initiative must be collected and verified within 90 days. Judges Gail Ohanesian and Jack Sapunor ruled against the tribes, concluding that state law permits verification after a 90-day period for signature gathering.

Arguments For and Against

Proponents of Propositions 94-97 believe that passage of the compacts will provide a significant amount of new money to California during a period of economic crisis. They claim that the new agreements provide new environmental standards and additional state oversight of tribal gaming. Supporters also claim that $198 million of the new revenues will go into the RSTF fund which will benefit non-gaming tribes around the state. Several prominent law enforcement and business groups support the proposal.

Critics claim that the compact amendments additional slot machines would give financial advantage to four powerful tribes with smaller gaming tribes unable to compete. They point to the fact that the agreements do not provide for a comment period for community members to voice environmental concerns. They claim casino workers are not given appropriate benefits or protection under the compacts. Opponents also claim that the agreements do not provide the level of revenues promised by backers of the plans. Many different labor groups and education organizations oppose the propositions along with several California tribes.

Official Voter Information

Texts of the Initiatives
Proposition 94
Proposition 95
Proposition 96
Proposition 97

Analysis by the Legislative Analyst's Office
Proposition 94
Proposition 95
Proposition 96
Proposition 97

Individual Campaign Committees. Committees formed to support or oppose the ballot measure.

Key Websites and Links

Division of Gambling Control: This department regulates gambling activities in California through the state Office of the Attorney General.

Pechanga.net. Online collection of Indian gaming news.
[Website archived in Internet Archive]

California Nations Indian Gaming Association
'CNIGA is dedicated to the purpose of protecting the sovereign right of Indian tribes to have gaming on federally-recognized Indian lands.'

Indian Affairs: Laws and Treaties. Online index of treaties compiled and edited by Charles J. Kappler.

Public Opinion

Vote trend running against Prop. 93 (Term Limits) and in favor of Props. 94-97 (Indian Gaming). Field Poll #2265, 2/04/08

Voters closely divided on Prop. 93 (term limits) and Props. 94-97 (Indian gaming). Field Poll #2262, 1/24/08

Low voter awareness of propositions dealing with term limits and Indian gaming. Field Poll # 2256, 12/27/2007

Videos

Yes For California. Youtube video channel

No on 94-97 Youtube video channel

Pro

Con

The Basics

• What is adding VGTs to my establishment going to cost me?

  There is no upfront cost to submitting an application to the IGB. Once you have been approved by the IGB, the yearly cost will be $100 to maintain a valid establishment license. In addition to the IGB fee you may also be required by the city you are located in to pay a yearly “sticker fee” for each VGT. This rate varies by city, please contact IGS for the exact cost for the city you are located in.

• Why should I add video gaming to my establishment?

  The average IGS client will generate $116,235 per year. Adding video gaming can help assist you in meeting your financial goals. This income has allowed many of our clients to make additional investments in their locations, further enhancing their overall establishment.

• How long is the application process? Is there a way to expedite the process?

  On average the process takes three to four months from application submittal to licensure. There is no way to expedite the licensing process, although some terminal operators may claim that they can- this is false.

• How do you assist during the application process?

  IGS has experienced staff that will walk you through the entire application process. We are able to assist in applying for a local or state liquor license, gathering and notarizing the forms needed for the IGB application and submitting the IGB application on your behalf.

• The first step after submitting your application is to get fingerprinted, this includes any owner with 5% or more of ownership, any officers and the video gaming manager. The IGB will then process your application and have a field agent conduct a site visit. IGS personnel will ensure you know who needs to be fingerprinted and the closest location to accomplish this.

• Once my application is submitted to the IGB, how long does it take for machines to be active in my establishment?

  Once an application is submitted the IGB, it may take as little as 30 days to approve your application. Once approved, machines will be moved into the establishment expeditiously, typically within 1-5 days. Once machines are in your establishment, IGS submits documentation to establish an appointment with the IGB to activate machines – this appointment is granted within 14 days of the request. This appointment date is set by regulatory protocol and outside of the terminal operator’s control. On the date of the appointment, your machines will “go live” allowing them to be played.

• You will be required to renew your license annually with the IGB.

• What is the maximum number of machines you are allowed in your establishment?

  Per the IGB, each licensed establishment is allowed to have up to six VGTs.

• What are the requirements to become a licensed establishment?

  You will be required to have a valid local and state liquor license before you are eligible to submit your application to the IGB. If you are applying to become a licensed truck stop establishment there are additional requirements.

• When and how do I get paid from having gaming machines at my establishment?

  IGS will electronically transfer the funds to your bank account weekly.

• Depending on the available space of the establishments and the number of machines, the overall gaming area that recommended is 140 square footage. The gaming area will include the VGTs, chairs and tables and the payout device. IGS suggests the machines to be properly spaced for comfort and privacy and will develop a custom layout for your establishment.

• IGS takes great pride in properly integrating video gaming to fit into your establishment. By creating a private gaming area, not only are you providing privacy to your gaming patrons, but also providing a barrier from your establishment to separate the gaming from your existing customers.

• That is entirely up to you. Many of our clients choose not to add additional staff. Others, in effort to focus on exceptional customer service, have added additional staff. Employees responsible for serving or overseeing the gaming area must be over the age of 21.

• What are the most important attributes for a successful establishment?

  Although there are a number of attributes to a successful gaming establishment, the most important are cleanliness, customer service, layout, design, hours of operation and machine mix.

• You are required to have an on-premise liquor license, which allows you to pour beer, wine or liquor to be served at the establishment.

• The majority of counties and municipalities in the state of Illinois do allow video gaming. To see if your municipality allows video gaming, please call IGS at 312.544.9856.

• Will my employees have to redeem winning tickets for cash?

  No, your employees will not need to redeem any tickets or handle any cash. IGS utilizes a kiosk payout device which is accessible by each video gaming patron.

• Can one terminal operator offer me more than others financially?

  No. The IGB has a very clear and defined no inducement policy. The revenue split is written in Illinois law and mandates 28% to the state, 5% to the municipality, 33.5% to the establishment and 33.5% to the terminal operator. Furthermore, it is a direct violation of the inducement policy to accept anything of value in exchange for signing with a terminal operator.

• Are there requirements to become a licensed truck stop establishment?

• Are there limits on the hours of operation of VGTs?

  Hours of operation of VGTs must coincide with the legal hours of operation for the consumption of alcoholic beverages on the premises. However, a licensed truck stop establishment that does not hold a liquor license may operate VGTs on a continuous basis.

Service & Support

• Yes, IGS service reaches throughout the entire state of Illinois.

• What happens if one of my machines is down or is broken? What is the response time?

  Even with proper maintenance, a machine in your facility will occasionally need repair. In these cases, you are asked to contact IGS through our technical support line. Our dispatcher will contact you, assess the problem, and offer technical assistance. In most cases, the repair and/or question can be handled remotely – the Dispatcher can access your machines remotely and restore the machine into operation. Other times, a technician will be sent to your establishment and the repair will take place.

• Do you provide marketing and advertising support?

  Yes, we work with you to develop strategic marketing plans. In accordance with IGB regulation, we can participate in financial co-op programs. IGS offers graphic design assistance on all marketing items, ensuring brand consistency. Think of us as your one stop ad agency!

• Will I have a point of contact if I ever needed non-technical support?

  Yes, you will have a dedicated Account Manager who will work closely with you.

• Do you provide staff training once machines are installed and active?

  Once machines are active, your IGS Account Manager will conduct on-site training with you and your employees. This training will cover the most commonly encountered questions from players and extensive training on how to serve gaming customers. IGS has developed key tactics in customer service to foster loyalty and repeat business and has developed a comprehensive training manual for our clients to refer back to. As staff changes we will retrain as necessary.

• How is the cash in the VGTs and payout device managed and handled?

  IGS is partnered with Thillens who provides an armored car and secure cashing carrying services.

• What is the process for installing and activating machines?

Performance & Profit

• IGS provides a client portal for in-depth reports and analyses.

• IGS establishments earn an average of $116,235 per year, which is two times the sate average!

• What makes IGS different from other terminal operators?

  With more than 25 years of experience running high performing gaming establishments much like your own, we know the needs of the establishment and the gaming guest better than anyone. We translate this knowledge into action plans for our clients helping them outperform in their respective markets. IGS clients earn nearly two times more than clients of other terminal operators.

Glossary Terms

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• Gaming machines similar to slot machines. Each VGT offers different games depending on manufacturer and type including video poker and line games.

• NTI is defined as the difference between cash wagered on each machine less the cash won on each machine. This amount is then split in accordance with the Video Gaming Act between the state, city/county, Establishment and Terminal Operator.

• Money that is placed into each VGT by players.

• The Illinois Gaming Board is responsible for regulating the gaming industry in Illinois.

• M3t is the manufacturer of the payout device used by IGS as well as the back-end data analytics system. The M3t kiosk serves as an ATM, bill breaker, VGT ticket redemption machine and will serve as the Player Rewards portal in the future.

• A game manufacturer used by IGS offering slot titles such as Blazing 7’s Hot Shot, Mega Spins, Hot Rocks, and American Original.

• A game manufacturer used by IGS offering slot titles such as Big City 5’s, Smash the Pig, The Big Easy, and The Wildlife.

• A game manufacturer used by IGS offering slot titles such as Diamond’s O’Dublin, Invaders from the Planet Moolah, and Count Money.

• A game manufacturer used by IGS offering slot titles such as Kitty Glitter, Golden Goddess, Black Widow, and Stinkin’ Rich.