Capitol Alert

A Schwarzenegger-era casino deal will cost state $36.3 million

California will pay $36.3 million after losing a years-long legal fight with a Southern California tribe over a casino deal negotiated by Gov. Arnold Schwarzenegger that traded permission to add slot machines in return for millions of dollars in payments to the General Fund .

Legislation to appropriate the money emerged earlier this month, and lawmakers are expected to act on Senate Bill 1187 before the Aug. 31 deadline to pass bills. The claim is the costliest for the state since at least 2010, surpassing the $24.1 million the state paid last year after a lawsuit stemming from the state’s aborted sale of state office buildings.

The payment follows a 9th U.S. Circuit Court of Appeals ruling in the case between the state and the Pauma Band of Luiseño Indians, which operates a casino southeast of Temecula in northern San Diego County. The state in June lost its attempt to appeal the case to the U.S. Supreme Court.

The Pauma band was among more than 60 California tribes that signed tribal casino compacts in 1999 that for the first time brought Vegas-style gambling to tribal land.

The tribe tried to add machines a few years later but the Schwarzenegger administration said there were no more slot licenses available under the 1999 deal. The tribe made a new deal in 2004 that raised its annual payment to the state from about $315,000 to $7.75 million in exchange for hundreds more slots.

In fact, additional 1999 slot licenses were available. The Pauma band’s lawsuit charged that state officials intentionally misled the tribe to pressure it to agree to pay more.

“Since this misrepresentation induced Pauma to enter into the much more expensive 2004 amendment, the tribe is entitled to rescission of the amendment and restitution for the $36.2 million in overpayments made to the state,” federal appeals court Judge Richard C. Tallman wrote in an October 2015 decision.

Because of another court decision, Gov. Jerry Brown’s casino deals have generally brought less cash to the state than those in the Schwarzenegger era.

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