The Pauma Band of Luiseño Indians is owed $36.2 million by the state of California, according to the 9th Circuit Court of Appeals which ruled on Monday that the state misled the tribe.
In 2004 three major casinos were vying to develop and operate a casino authorized by Pauma’s tribal-state class III gaming compact. In order to compete in the market and obtain the necessary investment dollars needed to develop the type of facility the Pauma desired, it would need to operate 2,000 slot machines, but preferably more. According to the terms of its 1999 Compact, the tribe was limited to operating 2,000 Class III slots at its Casino Pauma, but due to a provision in the compact, the California Gambling Control Division prevented the tribe from reaching that limit. So, rather than challenging the Commission’s interpretation of the provision via litigation it chose to negotiate an amendment of the 1999 compact, and in 2004 a new agreement was reached. That alternative enabled the Pauma to operate unlimited slots and extended the 1999’s compact expiration by 10 years, in exchange for higher payments than the ones required by the 1999 compact.
In 2004 several other tribes began challenging the Commissions interpretation of the License Pool Limitations provision of the compact and it was determined that there were 8050 more licenses than in the Commission’s interpretation, but the tribe was still unable to add more slot machines to its facility. In the 2-1 decision Judge Richard C Tallman wrote, “Pauma continued paying California the exorbitantly expensive 2004 amendment prices for the same machines it acquired under the 1999 compact provisions,” and that “Under the original 1999 compact, Pauma paid $315,000 annually for the 1,050 machines. Under the 2004 amendment, Pauma paid $7.75 million annually,” according to indianz.com.
As a result, Pauma’s 2004 Amendment was rescinded by the judge and its 1999 compact was reinstated. In addition, Judge Tallman ordered the state to refund the $36.2 million it had paid over the five years it operated under the “much more expensive 2004 Amendment.”
Two major points of dissension for Judge John A. Jarvey were the miscalculation by the state regarding the number of machines that were available and the state’s sovereign immunity is not waived by the compact, differing from that of his colleagues.
The differing opinions could lead to California requesting an en banc, or larger, hearing, or a trip to the U.S Supreme Court.