The U.S. Supreme Court could decide to rule in a California case that, if upheld by the high court, would limit states in how much they could require from gaming tribes in return for a gaming compact.

The lawsuit was filed by the Rincon Band of Luiseño Indians, a San Diego County gaming tribe that sued then-Governor Arnold Schwarzenegger after compact negotiations collapsed in 2004. The tribe, which owns Harrah’s Rincon Casino, asserts that Schwarzenegger’s attempt to extract money for each additional slot machine the tribe deployed violated federal law that doesn’t allow states to tax Indian tribes. Several other gaming tribes agreed to the additional payments, but Rincon decided to sue.

Last year, the Ninth Circuit Court of Appeals in a split ruling (2-1) sided with the tribe, calling the governor’s demands an illegal tax.

Federal law does not prevent tribes from paying money to reimburse local governments to mitigate the effects of casinos, but generally it requires that they get something in return, experts in tribal gaming law say. Rincon Chairman, Bo Mazzetti says tribes such as his don’t mind so much paying money for their local region, but object to the funds just going into the state’s budget, which is rarely disbursed to local governments.

“Tribal money that goes to the state treasury is not designated for any use and cannot be tracked, so tribal contributions could just as easily be spent on salaries for legislators,” Mazzetti said last month.

Some critics of tribal gaming in California say that tribes are already getting a tremendous amount under their compacts with the state, including the exclusive right to operate casinos.

By GGB Staff

Staff writers for Global Gaming Business magazine. Las Vegas, Nevada.