Gambling Industry Studies the Odds : Betting: Lobbyists are intensifying their battle for full-scale, Vegas-style casinos in California. They face determined opposition, but time may be on side of gaming interests.

When the owners of Hollywood Park racetrack decided to build an adjoining poker parlor to help shore up sagging revenues, they had more in mind than straights and flushes.

They built into the new structure a network of ducts that run just beneath the surface of the gaming room floor, even though they are unnecessary for playing Texas hold ‘em and Asian pai gow , to name a couple of popular card-room games.

But the ducts are important because, if and when full-scale casino gambling comes to California, the Hollywood Park Casino will be ready for easy hookup to scores of slot machines, the gaming industry’s most efficient moneymaker.

“It’s cheaper that way,” said board Chairman R.D. Hubbard. When the casino wheels in the slots to replace the poker tables, “we won’t have to tear up the whole floor.”

But Hollywood Park is not alone in quietly betting that full-scale Nevada-style casino gambling will come to California, bringing with it higher profits. In Sacramento, the larger stakes represented by full casino operators lie waiting, just beneath the surface, like R.D. Hubbard’s covered ducts.

No repeal of state laws banning casino gambling is imminent. As positions shift in the Legislature and strange-bedfellow alliances rise and fall among members and lobbyists alike, the confusion of the moment seems to be frustrating the casino expansionists.

But gambling opponents fear that time is on the side of powerful pro-casino forces, and that conditions for bringing down the barriers increasingly ripen as the gambling habit--from the lottery to poker parlors--continues to take hold in the state and nation.

Heading the list is the example provided by Native Americans. If the Indians can run casino-style games on tribal lands where California lacks jurisdiction, the argument goes, fairness and the prospect of new sources of state revenue make it only right that Nevada casino operators be permitted to do likewise.

Gov. Pete Wilson and Atty. Gen. Dan Lungren argue that Indians are breaking the law by operating about 8,500 slot machines at 20 California casinos on tribal lands. More are assumed to be on the way to 21 new reservation sites. The issue is before both federal appellate courts, where the Native Americans lost a round but appealed to the Supreme Court, and the state Court of Appeal, where the latest ruling went in their favor.

Politically, most Democrats in the Legislature, led by Assembly Speaker Willie Brown of San Francisco, and at least one powerful Republican, Senate Minority Leader Ken Maddy of Fresno, tend to favor allowing Native Americans to run slot machines. Brown combines his support of reservation gaming with his oft-stated desire to open the state to all forms of casino wagering, confining non-Indian gambling to certain urban centers.

On cue, according to opponents of wider gaming, the moment the tribes are able to run their games unfettered, the out-of-state corporate casino interests will be positioned to make the case to do likewise. The state could be tempted to look favorably on those requests.

According to casino lobbyist Gene Erbin, a former legislative aide once anointed by state Sen. Tom Hayden (D-Santa Monica) as “smarter than all of us” on gambling issues, the temptation for the state emanates from the corporate checkbook. On the one hand, gambling proceeds on sovereign Indian lands are untaxable by the state. On the other, income from Nevada casinos coming to California would be eminently taxable.

“Too much capital, too much institutional pressure” for the state to forgo the opportunity to cash in, said Erbin. “And once you make that Faustian deal, it’s over”--prevailing legal barriers fall and casino gambling arrives in California to stay.

Harvey Chinn, a church-organization lobbyist and an almost lone voice in the Capitol in his moral opposition to gambling, said he has been tracking gambling legislation in the Legislature for 35 years and believes with others that a final court victory for the Indians “will change the whole complexion in this state. I think that by and large we will have lost the entire battle here.”

Other factors add to his pessimism. Chinn maintains that even as the state prepares to impose strict controls on card room gambling, it is playing into the hands of the big casino interests. Several bills, including one sponsored by Lungren, call for creation of a California Gaming Control Commission to police the card club industry.

Strong commission oversight would send the wrong message to voters whose approval is required before a card club may open in their communities, said Chinn. He has helped defeat card clubs in 18 of 23 local referendums in the past three years. The most potent persuader for voters to reject card clubs, said Chinn, has been their fear that the new gambling activity would attract a criminal element to their communities.

With a state commission in place, he believes, the image of gaming would be cleansed and voter concerns over crime would be put to rest. New gaming territory, he fears, would proliferate.

For Chinn and his organization, backed by 10,000 churches, gambling is seen as an addictive, impoverishing vice whether crime-ridden or not. In the California Legislature, he said, “it would be giving away our argument to support a control commission.”

Apart from Indian slots or local elections, a more immediate issue for Nevada interests is their corporate status. State law now prohibits gambling companies that are publicly traded from operating in California. The larger gambling firms are publicly traded.

Several gambling bills before the Legislature, including a proposal sponsored by Lungren, have contained language that would drop the prohibition as a bargaining chip to gain legislative support for the oversight commission.

As debated in the Legislature, proponents of allowing the publicly held casinos into California focus attention only on card clubs. They have argued that the large casino companies such as Caesars World and Hilton are clean and easily monitored, although there is evidence that they are now having second thoughts.

As Chinn said and others such as lobbyist Erbin agree, casino companies “are not coming in with all that money to be satisfied with card clubs.”

As represented by their Sacramento lobbyists, casino companies are reluctant to admit as much. They tend to refrain from a hard-sell approach.

Jo Linda Thompson, representing Caesars World, tells legislative committees that the casino giant wants only the opportunity to bid for whatever California decides on its gambling future. She adds that Caesars favors legislation dropping the ban on publicly traded corporations and opposes bills that maintain it.

Jack Leon, a spokesman for Caesars at corporate headquarters in Century City, conceded that Caesars has no interest in card clubs, and it recently terminated a business association with an Indian casino in Palm Springs. That leaves full casino gambling, if and when it comes, as the California pot-winner for Caesars.

Similarly, Kathleen Snodgrass, lobbyist for Las Vegas gaming impresario Steve Wynn, argues the case for the same all-important first step--allowing in the public companies.

Mirage, Golden Nugget, Treasure Island, Circus Circus, MGM, Prima Donna and Caesars are some of the casinos represented here. “Nevada interests have hired lobbyists galore. It’s a full employment act,” said Maddy, who is concerned that “we’re headed toward full casino gambling,” which he opposes.

But the path leading to big-time gaming is anything but clearly marked, despite the concerns of opponents. For one thing, such a move may require voter passage of a constitutional amendment.

For another, of 24 bills in the current legislative session related to gambling, only one has passed in one house, a measure unrelated to casino interests that would allow racetracks to accept bets in their parking lots at drive-up windows.

Lungren’s measure, once considered the lead bill for controlling card clubs, is stalled in an Assembly committee where it was rejected and awaits a second vote. Another measure with casino implications advanced further, then stalled. Pushed by Assemblyman Curtis Tucker Jr., the Inglewood Democrat whose district includes Hollywood Park, the bill would allow tracks--but no one else--to operate card clubs as publicly traded entities and to expand to other card club sites through lease arrangements.

Lungren’s office, which once worked with Tucker to craft mutually acceptable legislation, now vigorously lobbies against the racetrack bill, calling it a special-interest exercise in unfairness, as does Assemblyman Phillip Isenberg (D-Sacramento), the author of Lungren’s competing measure.

While Democrat fights Democrat and former alliances collapse, Republicans face their own problems. In committee, the Tucker bill and others that would drop the barriers to publicly traded companies attracted many GOP votes, allowing the bills to advance.

The Republican support plummeted, however, on the Assembly floor. In the interim, the Rev. Lou Sheldon and his conservative Traditional Values Coalition of Orange County raised the alarm to voters in several districts that their Assembly members in Sacramento were supporting an expansion of gambling.

“We put out a full alert,” Sheldon said, making phone calls to about 4,000 churches where the message was relayed to the congregations. At the same time, Sheldon said, warnings were sent to at least 10 GOP Assembly members who depend on conservative support.

When the Tucker bill failed late last month on the Assembly floor, Sheldon said, “I never felt so good.”

Even the lobbying corps is in conflict over the state’s gambling future. While Caesars representatives and others push for repeal of the ban on publicly traded corporations, Circus Circus has decided it must “protect our investment in Nevada,” said Erbin, one of that casino’s lobbyists. Circus Circus thus opposes gambling bills that advance casino interests in California, and has joined Sheldon in his anti-gaming crusade.