- The Washington Times - Saturday, September 25, 2004

In a nation doctrinally committed to equal opportunity, it should not be conceivable for the government to condition access to a multibillion-dollar industry on an individual’s ethnicity.

Yet California has done exactly that in awarding an exclusive monopoly to Indian tribes to engage in casino-type gaming. The U.S. Supreme Court soon will decide whether to review a court ruling upholding the monopoly in a case with potentially sweeping ramifications for freedom of enterprise in 23 states that allow Indian tribes to conduct Las Vegas-style gaming while excluding all others from the opportunity.

The case presents important constitutional and statutory issues. Under the Indian Gaming Regulatory Act, states are authorized to establish tribal-state compacts to allow casino-style gambling activities on Indian reservations where the state “permits such gaming for any purpose by any person, organization, or entity.”

In 2000, Californians enacted Proposition 1A, which allowed the governor to sign such compacts authorizing tribes to sponsor casino gambling. Two successive governors have done so, signing more than five dozen compacts. So far, 53 tribes have opened casinos, operating tens of thousands of slot machines, with a whopping $5 billion to $6 billion in annual revenues.

It’s a lucrative deal, if you can get it. Trouble is, that deal was limited by the initiative to Indian tribes (though shrewd non-Indian investors stand to profit handsomely as well). The compacts expressly intend creation of a “unique opportunity” for tribes to operate casinos “in an economic environment free from competition… on non-Indian lands in California.”

Setting up exclusive gambling enclaves would seem to conflict squarely with the underlying federal requirement that casinos may be allowed on Indian reservations only in states where such “gambling devices are legal.” In California, it is quite the contrary: Anyone operating such devices outside of Indian reservations faces criminal sanctions.

The law was challenged by a group of California card clubs and charities whose non-casino activities suddenly paled in attractiveness once the tribes started offering slot machines. They have no gripe with Indian tribes opening casinos, but believe the state should apply a single set of rules for gambling, not two — a pre-condition of the federal law.

But that’s not how the justifiably infamous U.S. 9th Circuit Court of Appeals saw it. Despite legislative history expressing a desire to maintain “free market competition” between tribes and “other state-licensed gaming enterprises,” the court concluded the statute could be interpreted in a way other than its obvious meaning. Its logic went something like this: To permit casinos on Indian reservations, gambling has to be permitted in the state; but if the state decides to permit gambling on reservations, it becomes a state in which gambling is permitted, thereby fulfilling the condition.

The court indulged such a tortured interpretation by supposedly following the so-called “Indian canon,” by which ambiguous statutes relating to tribes are construed for their benefit, to protect a weak and defenseless people who are wards of the nation. But in this context, tribes are anything but weak and defenseless. Between 1998 and 2001, Indian tribes in California spent $114 million on political campaigns; and in 1998 were by far the largest political contributors in the state.

By construing the federal law to allow an exclusive monopoly, the 9th Circuit created a constitutional problem. Tribal preferences are permissible under the equal protection guarantee only if they are reasonably tied to “Congress’ unique obligation toward the Indians.” It is difficult to fathom how extending the exclusive privilege of conducting gambling operations is tied to that “unique obligation.” If economic opportunity is the goal, Congress and states could by that reasoning confer monopoly economic privileges upon tribes for any purpose — not limited to the reservations.

The growing political muscle of Indians and others who profit from their monopoly privileges makes such a scenario more than plausible. Indeed, in the casino context, tribes already operate 348 casinos with total revenues of more than $16 billion in 30 states, only seven of which allow competition from non-Indians. Fueled by such profits, the power to extend economic hegemony into other areas will be exceeded only by the appetite of cash-hungry politicians.

No fair-minded person begrudges Indian tribes the chance to establish profit-making enterprises or to benefit from tax advantages or other attributes of sovereignty. But a state making an entire industry the exclusive economic domain of Indian tribes, thereby placing it off-limits to other citizens, violates the fundamental principle of equal opportunity enshrined in federal law and the United States Constitution.

The specter of corruption and favoritism already has spread to nearly half the states, and there is every economic and political incentive to spread the scheme even wider. This can be avoided and freedom of enterprise preserved only if the Supreme Court steps in and restores the rule of law.

Clint Bolick is a constitutional litigator who has successfully challenged regulatory barriers to enterprise across the U.S.

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