| Slot Machine Suppliers Are N.M. Gaming's Big Winners
In an article in the Albuquerque Journal on March 20, 1997 by investigative reporter Thom Cole, we are told of the real beneficiaries of the states illegal Indian casinos. The article states, "Suppliers of slot machines hit the jackpot in selling and leasing devices to illegal Indian casinos in New Mexico.
"Machine suppliers-many of them non-Indian and from out of state-have reaped tens of millions of dollars from the gambling operations."
"And the most recent legal threat to the suppliers-a federal grand jury investigation-has been shut down, possibly forever." It appears that New Mexico qualifies for being a "banana republic." The illegal casinos are allowed to remain open but the grand juries are shut down!
In commenting on the current legal state of the casinos, the article continues, "The 10th U.S. Circuit Court of appeals in January upheld a lower court ruling that the Indian casinos are illegal but allowed the gambling operations to remain open at least until April or May. Kelly said he will re-evaluate his enforcement position 'with respect to the tribes and the vendors' when the stay is lifted.
"The Legislature is considering state-tribal compacts to legalize the casino, and it could act before the stay lifted by the federal courts. p 21, federal law known as the John son act makes it a crime to 'manufacture, recondition, repair, sell, transport, possess or use any gambling device' on Indian land unless used by tribes with state-tribal compacts for casino gambling.
"But some tribes in New Mexico obtained machines long before compacts were signed by Gov. Gary Johnson in February 1995, and those compacts later were declared invalid by both state and federal court the brief period the comp were in place, some of the nation's major slot machine supplier, such as Sodak Gaming and Bally Gaming, provided devices in New Mexico.
"The state Supreme Court in July 199S ruled the compacts were void and four months later found all casino gambling to be illegal in New Mexico.
"Kelly on Dec. 14, 1995, publicly announced the casinos were operating illegally and threatened to force their closure. The major slot machine suppliers withdrew from the state, but some smaller suppliers continued to provide devices to tribes.
Cole categorizes the newer addition to the roster of illegal casinos: "The Jicarilla Apache tribe opened its casino in Dolce in north west New Mexico in May 1996, several months after the Supreme Court rulings and Kelly's announcement that Indian casinos were illegal.
"SSK Enterprises, a Chatsworth, Calif., company, brokered a sale of slot machines to the Jicarilla Apaches in early 1996, according to Steve Lenske, a lawyer for the company.
"SSK Enterprises also has supplied devices to Ibos Pueblo. The company's owner, Ronald C. Clapper, is a principal in a second Chatsworth company called JC Gaming.
"JC Gaming has leased machines to San Felipe Pueblo in exchange for a share of the take. The company also loaned money to the pueblo to help finance the opening of its casino.
"SSK Enterprises and JC Gaming acted in good faith on a belief that tribes could have the devices legally, and they committed no violations 'That was all quite lawful at the time,' he said.
"Lenske said his clients stopped supplying machines in New Mexico after federal district courts ruled in the summer of 1996 that the Indian casinos were illegal.
"Lenske said a federal grand jury in New Mexico last summer subpoenaed records of SSK Enterprises and JC Gaming.
"He said the U.S. Attorney's Office in Albuquerque told him it was trying to determine whether any machine supplier had violated the Johnson Act
"Lenske said he was told in mid-January by the U.S. Attorney's Office that the grand jury investigation was on hold."
"Sarah Barlow, a lawyer for Taos Pueblo, said the pueblo early last summer supplied records to federal investigators who said they were looking at machine suppliers." Cole didn't mention that Barlow also was trying to arrange a loan to the Taos Casino of $100,000, pulling the funds from her own children's trust fund, and charging the tribe 99% per year.
The article mentions some of the antics of Raymond Gallegos, a prominent bar-owner, who is remembered by local police for beating up clients in the parking lots of his bars with pool cues.
"James Toulousse, a lawyer for machine supplier Raymond A. Gallegos, said his client hasn't been asked by federal investigators to produce records. Toulousse has denied any violation of the Johnson Act by his client.
"Gallegos became involved in the supply of machines to Indian tribes at least three years prior to Gov. Johnson signing state-tribal compacts.
"Gallegos' companies have provided devices to San Juan Pueblo and the Mescalero Apache tribe.
"Gallegos, a close associate of Mescalero Apache President Wendell Chino, is still in the machine business.
"Gallegos and two of his children are registered lobbyists in Santa Fe working with Chino to convince the Legislature to approve new state tribal compacts.
"The Johnson Act has been used by federal law enforcement in other states to attack machine suppliers.
The article continues, "Victor Marshall, a lawyer who has represented gambling opponents in several legal actions, has been critical of the Justice Department for not bringing criminal charges stemming from Indian casinos in New Mexico.
"'I don't know where the blame lies, but it starts at the top' in Washington, Marshall said.
"New Mexico tribes began seeking state-tribal compacts for casino gambling as early as 1989. But they couldn't reach agreement with Gov. Garrey Carruthers, who left office at the end of 1990, or Gov. Bruce King, who served from 1991 through 1994.
"The failed negotiations between the tribes and King eventually set off a fight in the federal courts.
"Despite the lack of compacts, several tribes expanded their machine gambling operations beyond what existed before enactment of the Indian Gaming Regulatory Act of 1988. Other tribes got into the machine business. The act requires tribes to have state-tribal compacts to operate machines.
"The federal government threatened criminal action but took none. Slot machines flowed into the state with little interference.
"A shipment of four machines was seized in December 1993, according to U.S. Interior Department records obtained under the federal freedom of Information Act.
"By Jan. 1, 1994, eight tribes were; operating some 1,400 machines, according to records received from. the U.S. Justice Department in response to a request under the Freedom of Information Act."
Cole makes some references to the activities of U.S. attorney John Kelly, who is a partner in KGA, a land development corporation. KGA had almost two hundred proposed parcels in Placitas that it wanted to develop into home sites, but there was a protest by the Sandia Pueblo to a transfer of the water rights necessary to proceed with the development. Kelly had secret meetings with the tribes in the spring of 1994, and in May promised to protect the casinos against prosecution if they would agree to a "stand-still agreement." That month, Sandia Pueblo dropped the protest to the transfer of the water rights and KGA became about $10 million richer because of the ability to finally develop the land. The article states, "Kelly became U.S. attorney in late 1993 and in mid-1994 agreed not to prosecute the tribes for machine gambling while they and the state: tried to reach a compromise. In exchange, the tribes provided information on their machines and agreed to limit their number to 1,800.
"The non-prosecution agreements expressly provided no protection for machine suppliers.
"The court-approved stipulate signed by Kelly and the tribes' January 1996 also didn't provide protection for machine supplier! Kelly, as part of the federal court. Litigation over the legality of Indian casinos, obtained more information on suppliers."
There sure is a lot of money flying around the gambling operations. Does this seem to benefit the plight of the average Native American?--very little that astute observers have catalogued. Is the state benefiting from lots of revenue and positive business development?--just the opposite. We do see, however, that the machine suppliers, such as Bally and GTech, and an assortment of distributors and managers, such as Raymond Gallegos, are reaping millions!