Indian gambling strategy no sure bet for governor

Michael R. Blood and Chris T. Nguyen

Thursday, June 17, 2004 | 10:55 a.m.

LOS ANGELES -- Gov. Arnold Schwarzenegger's plan to win the state a cut of Indian gambling profit while sidetracking two gambling initiatives on the November ballot is far from a safe bet, analysts said Wednesday.

Looking to ease a budget crisis, the governor has argued since last year's recall campaign that casinos run by more than 50 California tribes don't pay their fair share. The governor announced Tuesday he is close to inking a deal with five tribes that would give the state more than $1 billion for his new budget and smaller amounts in later years.

But leaders of the Agua Caliente Band of Cahuilla Indians, which owns casinos in Palm Springs and Rancho Mirage, said Wednesday they intend to continue seeking passage of a ballot initiative that could undercut Schwarzenegger's proposed agreement with the other tribes.

Despite the pending agreement in Sacramento, "We are prepared to marshal our resources and move forward with the initiative," said Richard Milanovich, chairman of the Agua Caliente Band of Cahuilla Indians.

At the same time, a competing initiative on the ballot -- backed by card rooms and racetracks -- could crack the Indian monopoly on slot machines. And it's not clear where many of the state's other tribes will come down -- with the governor, against him or on the sidelines.

Schwarzenegger "has a split among the tribes -- maybe he has a divide and conquer strategy," Democratic consultant Bill Carrick said. "If at the end of the day he's going to go head-to-head against a relatively monolithic tribal coalition, he's going to have his hands full."

"I see this as a chess game with high stakes," said Bill Eadington, director of the Center for the Study of Gambling at the University of Nevada, Reno, and one of Schwarzenegger's advisers on the negotiations. "The tribes are in a position where they have to think strategically."

Schwarzenegger has said his deal with the five tribes is all but completed.

But getting additional tribes to negotiate with the state and give up a share of their gambling profit will not be a given. Some tribes, such as the Santa Ynez Band of Chumash Indians, say they have nothing to gain because they do not want to expand their casino operations.

Earlier this month, the Rincon Indian tribe in San Diego County filed a federal lawsuit to block the governor from striking a deal with other tribes. The tribe said the talks threaten to "destabilize tribal gaming in California" and "materially alter the state's existing agreement" with Rincon and other tribes.

And even with his broad popularity and string of victories in Sacramento, winning at the ballot box is never guaranteed.

The ballot initiative sponsored by the Agua Caliente Band of Cahuilla Indians would open the way for a vast expansion in Indian casinos in exchange for tribes giving the state 8.8 percent of their net income -- a smaller slice than sought by the governor.

Schwarzenegger has said he expects that "other tribes ... the big tribes, very important ones," would fall in line.

The other ballot measure, backed by card rooms and racetracks, would tax tribes' gambling revenue at 25 percent and require them to accept state laws and court jurisdiction. If any one of the 61 gambling tribes balked, the measure would let 16 racetracks and card rooms operate 30,000 slot machines, with a third of the proceeds going to state and local government programs.

A survey last month by the independent Field Poll found both measures favored by a majority of voters. In general, if two initiatives have conflicting provisions, the one with the most votes becomes law, although the issue has been contested in the courts.

Nikki Symington, spokeswoman for the Viejas Band of Kumeyaay Indians, said Viejas tribal leaders approved broad outlines of Schwarzenegger's deal Tuesday.

"This addresses the state fiscal emergency and allows us to expand and make some of (our money) back," she said.