Ignoring The Law To Settle A Fight

2007 – #9 © Copyright 2007, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I Nelson Rose, www.GamblingAndTheLAw.com

A few months ago I wrote a column predicting that the California State Legislature would figure out a way to allow a few tribes to greatly expand the number of slot machines in their casinos, in return for up to 25% of the revenue.

The problem had been the state’s politically powerful unions. Gov. Arnold Schwarzenegger had negotiated proposed compacts that did not allow casino workers to organize through mail-in cards. Workers could still attempt to form a union, but only through an election, which union leaders said the tribes could influence.

Anti-gambling activists complained the compacts did not give the state enough power to regulate. The problem came to light when the U.S. District Court in the District of Columbia ruled that the federal National Indian Gaming Commission could only regulate bingo and poker. The Court struck down the Commission’s national minimum internal control standards for casinos. The “anti’s” argued this left the tribes to basically self-regulate their own casinos.

I wrote: “If the Legislature approves the compact, the state will eventually get more than $500 million a year. Let’s see – unions complaining about how they organize workers and some technicalities about regulation versus half a billion dollars a year… How do you think they will vote?”

The proposed compacts passed the State Senate, but stalled in the Assembly.

Then my prediction came true. Assembly Speaker Fabian Nunez (D.-Los Angeles) worked out a deal with four of the five tribes. The tribes agreed to sign a side agreements, allowing their casinos to be audited by the state. They also promised to cooperate with state garnishment of employees’ wages for back child and spousal support, and to set up safeguards to protect problem gamblers and minors.

Politically, this shows how much power the casino tribes have won in California. Unions have always been the backbone of the Democratic party, and the Democrats are firmly in control of both the Senate and Assembly. Yet, the side agreement did not even give lip service to protecting workers’ rights to organize as they wished.

Legally, the question arises whether these side agreements are enforceable. They are not part of the compacts. Rather, they are government to government memoranda of agreement (MOAs). State legislators votes on them along with the untouched compacts.

Are these MOAs enforceable?

The answer is they can be, if they are done right.

Tribes have sovereign immunity. Normally, they cannot be sued, even if they break a written contract. A state can pass whatever laws it wants. But the chances are very slim that those are enforceable against its tribes.

Congress can take away a tribe’s sovereign immunity, as it did when it enacted the Indian Gaming Regulatory Act. That is why state-tribal compacts are enforceable.

Tribes can also voluntarily waive their sovereign immunity. They sometimes do this with commercial contracts. But if an agreement involves a tribe’s land, the only way to make sure the waiver is enforceable is to have the agreement approved by the federal government.

The compacts themselves have to be approved by the Secretary of Interior. The state and tribew could have asked that the side agreements also be approved. But it does not look like that was done.

Even if the side agreements are not enforceable, it might be no big deal. Tribes have signed memos of understanding with cities and counties, agreeing to help with building roads and maintaining safety standards. The question of whether these agreements are legally enforceable has apparently never come up, because the tribes have lived up to their commitments.

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© Copyright 2007. Professor I Nelson Rose is recognized as one of the world’s leading experts on gambling law. His latest books, Internet Gaming Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com.