2 Key Democrats Keep Gaming Legislation Bottled Up : Capitol: Plan to create state regulatory panel is backed by Hollywood Park and several Nevada casinos. Some smaller card clubs oppose it.


The future of the lucrative card club industry in Los Angeles County is at the heart of an intense struggle over proposed legislation intended to establish strict regulation of gambling in California.

The proposal is sponsored by Atty. Gen. Dan Lungren, who seeks to set up a tough, Nevada-style commission to license the state’s fast-growing card rooms, partly to keep out organized crime. It is backed by Hollywood Park and several Nevada casino operators who would be allowed to own card clubs in California for the first time under the legislation.

But Assembly Speaker Willie Brown (D-San Francisco) and Senate President Pro Tem Bill Lockyer (D-Hayward) have managed to bottle up the legislation, complaining about special concessions to Hollywood Park and other major card room operators in Los Angeles County written into the bill. Brown contends that the bill would thwart plans for a proposed casino in Downtown Los Angeles.

The Assembly approved one version of the bill, but opponents, led by Brown, invoked a parliamentary maneuver to keep the measure from going to the Senate. Meantime, a second version is stalled in the Senate Rules Committee, chaired by Lockyer, and a third one is stuck in a joint Assembly-Senate conference committee where Sen. Tom Hayden (D-Santa Monica) has raised objections.


With the end of the legislative session on Aug. 31, it remains unclear whether proponents have enough time and muscle to break the logjam.

If successful, the proposal that passed the Assembly would lay the groundwork for statewide expansion of card rooms, where bettors now wager an estimated $7.5 billion a year, a figure expected to grow if out-of-state casinos are allowed to own card rooms in California.

Gaming interests in Nevada, whose government relies heavily on revenues from slot machines, roulette and other games not allowed in California, are keeping a close eye on events unfolding at the Capitol.

For years, the belief has been that Las Vegas casino operators sought to contain legal gambling within Nevada borders and prevent California from competing for customers. But now, at least three Nevada casino operators favor Lungren’s proposal, arguing that it would lift an unfair restriction that has prohibited them from owning card rooms in the nation’s most populous state.


Combine these disparate gaming interests with hefty campaign contributions, add some casino pitchmen and throw them together in the steaming final days of the legislative session, and what emerges is a recipe for one of the season’s spiciest legislative stews.

Last year, efforts to set up a gaming commission fell apart at the end of the session and Gov. Pete Wilson vetoed a bill to allow Hollywood Park to run its own card club. Under California law, only individuals, not corporations such as the racetrack with scores of anonymous stockholders, may hold card club licenses.

This year, to help him win passage of a comprehensive package, Republican Lungren recruited Assemblyman Phil Isenberg to carry the bill. A pragmatic Sacramento Democrat, Isenberg is a longtime friend of Speaker Brown.

Lungren and Isenberg seek a new regulatory framework to replace the patchwork system of local regulation. Now, clubs are approved by cities, but their operators must be licensed by Lungren’s office.


“No expansion of gambling should occur in California until a strong regulatory commission with adequate law enforcement resources is created,” maintains Lungren, who has been seeking stronger gaming regulation for two years.

Boiled down, the legislation would establish a Nevada-style regulatory scheme, complete with seven-member gaming commission to license and discipline card rooms and a gaming division within Lungren’s office to serve as the legal and investigatory arm of the commission.

Much of the momentum for the bill is fueled by Hollywood Park and other large card rooms, as well as Caesars World Resorts and other Nevada casino operators who could benefit if the bill becomes law.

Together, these gaming interests contribute sizable sums to a variety of state elected officials. State documents show that in the first three months of 1994, contributions from Hollywood Park included $5,000 to Wilson; $5,000 to Assemblyman Bill Hoge (R-Pasadena), a member of the Assembly-Senate conference committee considering the bill; $5,000 to Sen. Ken Maddy (R-Fresno), another conference committee member; $5,000 to Lockyer, and $10,000 to Assemblyman Curtis Tucker Jr. (D-Inglewood), chairman of the Assembly committee that handles gambling legislation.


The proposal is opposed by some smaller clubs, hotel workers who want to ensure new clubs hire union labor and the promoters of a contemplated Downtown Los Angeles hotel-casino. Also watching, and contributing to various lawmakers, are Native American tribes operating casinos on reservations. Some tribes favor the legislation and some oppose it.

Critics complain that the bill favors the big card rooms in Commerce, Bell Gardens and Inglewood’s Hollywood Park, which under current law cannot operate its new casino but must have it run by someone else.

The measure would lift that restriction against corporate ownership and allow individuals to conduct gaming in California even though they are engaged in gambling in other states that is unauthorized in California.

“There are compromises in the bill,” said Assemblyman Isenberg, who has been at the center of behind-the-scenes negotiations.


Much of the criticism arose over protecting existing clubs by allowing only 500 new tables in Los Angeles County for four years and limiting new clubs to such areas as Pomona, Compton and Arcadia, home of Santa Anita Race Track.

On Monday, Isenberg proposed doing away with these restrictions and instead prohibiting out-of-state casino operators from immediately moving into California.

Hayden says he supports tougher gaming regulation but only if “comprehensive campaign and lobbying reform” is placed on the ballot.

Hayden says state reports show that gaming interests have spent $5.3 million since 1990 on state political campaigns and lobbying in Sacramento. He said that if the gaming bill is enacted into law “the potential money power of gambling interests will grow.”


But the biggest roadblock seemed to be Brown, who last week told reporters: “If you support it, you are clearly enhancing Hollywood Park’s efforts over the next few years to dominate; you are increasing the value of Hollywood Park’s assets.”

Donald Robbins, president of Hollywood Park, brushed aside the complaint, saying the track is “not looking for any edge. We’re looking to be treated like everyone else.”

But Brown said the legislation would halt plans for new card rooms, citing a nascent effort to build a hotel and entertainment complex, with card room, near the Los Angeles Convention Center.

“It may be that the people who are going out (of the city to gamble) . . . might want to stay in Downtown Los Angeles,” Brown said. “So you may very well want to have a facility in Downtown Los Angeles that will provide revenue for the city.”


Brown is a longtime friend of Stephen A. Wynn, chief executive officer of Mirage Resorts, a casino company. The speaker also recently associated his law practice with a Century City firm that represents MGM Grand, a major casino operator.

Neither Mirage nor MGM have taken public positions on the Lungren proposal, and Brown denies that his stance is influenced by these relationships.

But other publicly traded companies with Nevada gaming interests are pressing for the Lungren bill. Caesars World, a casino operator headquartered in California, favors the measure because it wants the same opportunity as private individuals to run card clubs in California.

“We simply want a level playing field in the competitive marketplace,” said Jack Leone, vice president of communications for Caesars World.