Metropolitan News-Enterprise


Monday, December 30, 2002


Page 1


C.A. Rejects Larry Flynt’s Challenge to Indian Gaming Compacts


By KENNETH OFGANG, Staff Writer/Appellate Courts


The First District Court of Appeal has turned down a constitutional challenge by pornographer/casino operator Larry Flynt to the Indian gaming monopoly granted by Proposition 1A.

Affirming San Francisco Superior Court Judge James McBride’s ruling in favor of the state, the Div. Two panel Thursday held that the federal Equal Protection Clause is not violated by legislation designed “to deal with the special problems of Indians.”

Proposition 1A was adopted by a 2 to 1 margin in March 2000, after Proposition 5—a statutory initiative designed to promote Indian gaming—was declared unconstitutional by the Supreme Court. Proposition 1A amended the California Constitution to allow Nevada-style gambling at slot machines, lottery games, and “banking” games in which the gaming operator competes against the customer.

IGRA Approval

The amendment restricts the operation of such games to casinos on Indian tribal lands. In exchange for the monopoly, tribes must enter into compacts with the state—subject to approval by the governor and Legislature, as well as by federal authorities under the Indian Gaming Regulatory Act—and share the revenues with the state and with non-gaming tribes.

Sixty-two tribes have entered into the compacts, which run through 2020. But Flynt, who owns the Hustler Casino in Gardena, joined the management of the city’s other gaming establishment, the Normandie Casino, in bringing the Superior Court action against the California Gambling Control Commission, which licenses casinos in the state.

Non-Indian casinos like Flynt’s can only offer poker and other “non-banking” games, in which the “house” has no stake in the outcome but charges a per-hand or per-hour fee to each player.

Besides Gardena, there are non-Indian casinos in Commerce, Bell, Bell Gardens, and Hawaiian Gardens, and in many other cities throughout the state. But the inability to offer the high-stakes “banking” games is causing them to lose their wealthier customers, Flynt—who built the Hustler Casino on the site of the El Dorado Club, which he bought out of bankruptcy—has said, even though the nearest Indian casinos are 60 miles from Los Angeles.

In his lawsuit, Flynt argued that Proposition 1A is preempted by IGRA, and that it creates an unconstitutional racial preference in favor of Indians. But similar arguments by Northern California club owners were rejected by U.S. District Judge David Levi of the Eastern District of California last summer, and Justice Ignacio Ruvolo, writing Thursday for the First District panel, said the federal judge’s reasoning was compelling.

While IGRA explicitly authorizes states to prohibit Indian gambling operators from running games that are banned elsewhere in the state, the justice explained, the federal act does not bar states from granting tribes the exclusive right to conduct such games if that is what a state chooses to do.

Thus, while “the wisdom, policy implications, or economics of allowing Nevada-style gaming on Indian land in California” may be open to debate, the legal issues “were largely answered when voters resoundingly approved Proposition 1A,” Ruvolo wrote.

The equal protection argument fails, the justice said, because the U.S. Supreme Court has explicitly held that laws designed to fulfill the government’s “unique obligations” to the Indian tribes are not racial preferences.

Preference Upheld

Ruvolo cited Morton v. Mancari (1974) 417 U.S. 535, in which a unanimous court upheld the Bureau of Indian Affairs’ hiring preference for persons who are at least one-fourth Native American. The late Justice Harry Blackmun said the preference was not “racial” in nature, but was “reasonably designed to further the cause of Indian self-government.”

Indian gaming operations, Ruvolo wrote, similarly serve the needs of the Indian population.

He noted that under IGRA, revenues from Native American gaming can, in general, only be used for tribal government, welfare, or economic development, or for charitable or local government purposes. Similarly, Ruvolo pointed out, the California compacts specify that revenues are to be used “to develop self-sufficiency, promote tribal economic development, and generate jobs and revenues to support the Tribe’s government and governmental services and programs.”

The case is Flynt v. California Gambling Control Commission, 02 S.O.S. 6417.


Copyright 2002, Metropolitan News Company