From Lance Boldrey (this was originally a comment, but the importance of this issue deserves a greater audience):

Here are my general personal observations, not on behalf of any clients or my firm:

(1) The language regarding a general proportionality test to measure whether tribal revenue sharing payments roughly correspond to benefits conferred by the state is broader than past formulations. Importantly, the Department’s recognition that exclusivity is not the sole benefit that can be conferred to support revenue sharing opens the door to tribal exploration of other benefits that can support revenue sharing. Outside of California, which is the only state to have affirmatively waived its 11th Amendment immunity for suit under IGRA, this is often necessary as a practical matter to entice states to the bargaining table. (Even in California, so long as there is a Governor who doesn’t give a rip what federal law requires, some means of inducement appears necessary – unless a tribe wants a decade of litigation.) Barring the Holy Grail of a Seminole fix, tribes need the ability to be creative. For Interior, though, there is a balancing act between allowing tribes some flexibility and giving states carte blanche to turn any of the ordinary elements of a compact into a club to demand revenue sharing…

(2) The analysis of the State’s supposed concession in deducting participation fees from net win implies a lack of understanding on Interior’s part regarding the issue here. Interior says this concession lacks meaning because the NIGC already provides for the deduction of participation fees in calculating net revenue. True. But like most (if not all) revenue sharing percentages, this one is calculated on net win, which is gross revenue, not net revenue. The real point here should be that the method of calculating the percentage paid to the State is what is meaningless – it should not matter how revenue sharing is calculated, only whether the revenue sharing that results is proportional to the economic benefits provided by a state’s concessions.

(3) Interior’s dismissive analysis of the State’s claim that it should get credit for continuing to allow the Tribe’s participation in the Revenue Sharing Trust Fund makes sense. As I understand this Tribe’s compact, the State was “allowing” the Tribe to continue to receive its $1.1 million annual RSTF draw until it operates more than 349 machines. But this isn’t a real concession – the current framework of the 1999 compacts already provides for all California tribes operating less than 350 machines to receive these payments, and this Tribe is a third party beneficiary of those compacts. It almost seems like the State was trying to claw back these payments, since this Tribe would pay 15% of net win even if it operated only one machine.

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