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Calif. tribe moving forward with urban casino plans
Friday, October 10, 2003

The Bureau of Indian Affairs on Thursday finalized a land acquisition for a landless tribe in California, clearing the way for a full-fledged urban casino in the Bay Area.

Over the objections of Sen. Dianne Feinstein (D-Calif.), who sought a delay in the decision, the BIA took 10 acres into trust for the Lytton Band of Pomo Indians. The acquisition marks the first time the tribe, whose federal status was terminated in 1958, has a land base.

"The tribe is obviously ecstatic to have their land base again and they are looking forward to being able to provide for their tribal members, the vast majority of whom are living without health care, dental care, vision care, adequate housing and hold jobs that can be best classified as working poor," said Doug Elmerts, a spokesperson for the 250-member band.

The land, located in the city of San Pablo, won't be used for housing or other tribal purposes. Instead, the tribe will convert a card club already in operation there into a Class III casino.

To do that, the tribe has to negotiate a compact with the state. Elmerts said the tribe was hopeful that governor-elect Arnold Schwarzenegger (R), who wants gaming tribes to share more revenues with the state, will be fair. The tribe already has an agreement to share revenues with San Pablo.

But in the short run, the Lytton Band will introduce new Class II games at the facility. Multimedia Games Inc. (NASDAQ: MGAM), a casino game manufacturer that specializes in the Class II market, will be supplying the machines, according to a source familiar with the tribe's plans.

MGAM has close ties to tribes in Oklahoma, where Class III gaming is outlawed, but only became involved with the Lytton Band recently. The company, which is based in Texas, disclosed that it has loaned $21 million in order to help the tribe complete the acquisition of the San Pablo site.

Joseph N. Jaffoni, an investor relations professional with Jaffoni & Collins Incorporated, said the money was advanced to the tribe yesterday. The short-term "bridge loan" will enable to the tribe to seek another source of financing, he said. The tribe is expected to repay the loan in two months although the arrangement can be extended to 14 months.

The introduction of MGAM signals the exit of the tribe's old investors. Philadelphia mayoral candidate Sam Katz, a Republican, and a group of 21 partners had spent at least $14 million to get the casino off the ground.

But Katz and the other investors, who were aided in Congress by Sens. Arlen Specter and Rick Santorum, both Republicans, have broken their ties to the Lytton Band, The Philadelphia Daily News reported.

A timeline for the introduction of MGAM machines to the card club was not disclosed yesterday. To avoid violating federal law, the only MGAM product the tribe can offer is Reel Time Bingo 1.2A. The National Indian Gaming Commission (NIGC) late last month classified a modified version of the machine as Class II.

Other versions currently in play at some casinos in Oklahoma are not legal. "NIGC field representatives will continue to monitor the gaming activities tribes offer as Class II play," NIGC chairman Phil Hogen, a Bush appointee, said in an October 5 letter.

Opponents to the casino include other card club operators in the Bay Area. "The Lyttons are not a valid tribe, and it makes a farce out of the law to call Casino San Pablo Indian land," said Alan Titus, a lawyer for a group that sued to prevent the BIA from taking the land into trust.

A federal judge and the 9th Circuit Court of Appeals have refused to block the BIA. In an August 6 decision, U.S. District Judge David F. Levi said the acquisition was mandated by a bill signed into law by former President Bill Clinton in December 2000.

The mandatory acquisition, in the form of a rider inserted in a massive Indian-related bill, drew considerable opposition. It ensured the Lytton Band would not have to go through a lengthy process to obtain the land.

Feinstein asked the Bush administration to hold off on the land and questioned whether the Lyttons "were ever validly recognized as a tribe." She also authored a bill that would make it harder for the BIA to take the land into trust.

The BIA placed the Lytton Band on the list of federally recognized tribes in 1991. The opponents to the casino claim proper procedure was not followed. Levi, in his decision in August, said there wasn't enough information to determine whether the tribe's status was restored properly.

Relevant Documents:
Letter: Phil Hogen on Class II Games (October 5, 2003)

Court Decisions:
Artichoke Joe's v. Norton (August 6, 2002 | Artichoke Joe's v. Norton (July 29, 2002)

Relevant Laws:
The Omnibus Indian Advancement Act of 2000 (H.R.5528)

Relevant Links;
Lytton Band of Pomo Indians - http://www.sonic.net/lytton
Multimedia Games - http://www.multimediagames.com
National Indian Gaming Commission - http://www.nigc.gov