Gambling Issue Inspires Big Spending

Gambling interests have shattered campaign finance records in the fight over the Indian gaming initiative, as major donors opened their wallets wide in October and poured millions of dollars into several California contests.

Campaign finance reports filed Friday show that $86 million has been raised by both sides in the battle over Proposition 5, which would allow continued use of electronic slot machines now in place on Indian reservations. Tobacco companies have contributed $29 million to defeat a tobacco tax initiative, and utilities have raised $40 million in their attempt to crush an initiative aimed at the electric industry.

With the Nov. 3 election 10 days away, Democratic Lt. Gov. Gray Davis maintained a financial advantage over his Republican foe, Atty. Gen. Dan Lungren, in the gubernatorial campaign. Davis raised $5 million to Lungren’s $4.4 million in the first 17 days of October, and spent $10 million to Lungren’s $4.9 million, campaign finance statements filed Friday show.

But although Davis and Lungren have raised a combined $49 million so far this year, the truly big money is flooding into three high-stakes initiatives on the same ballot.

Tobacco Industry’s Large Contributions

Tobacco giant Philip Morris has donated $20.2 million to defeat Proposition 10, which would raise cigarette taxes by 50 cents per pack to pay for a variety of early childhood health and education programs. Brown & Williamson Tobacco Co. dumped in $4.8 million. Lorillard Tobacco Co. added $2.6 million. R.J. Reynolds is the one major tobacco company that has not spent any money to defeat Proposition 10.

“It’s big tobacco doing what they do best--throwing an awful lot of money into the mix,” said former Assemblyman Mike Roos, of the Los Angeles educational group LEARN. Roos is a co-sponsor of Proposition 10, along with actor and director Rob Reiner.

The Yes on 10 campaign collected $4.6 million. Reiner gave more than $1 million, and his mother, Estelle Reiner, donated almost as much. Other large donors include the American Cancer Society, at $332,000, and the California Medical Assn., which contributed $50,000.

In a second high-priced initiative, electric utilities, led by Edison International and Pacific Gas & Electric, have raised more than $40 million to defeat Proposition 9, which promises a 20% electric rate reduction and would replace parts of the 1996 legislation that began the process of deregulating the electric industry. Edison and PG&E; each have given more than $17 million to defeat the measure.

Proposition 9’s backers, a group of consumer advocates, have a mere $11,813 in the bank after raising $1.3 million in 1998. Most of that was spent placing the measure on the ballot.

The sums being spent by the tobacco industry and utilities pale when compared with the $86 million gathered so far by California and Nevada gambling interests in the fight over Proposition 5, which would permit Indians to expand gambling on their reservations.

The $86 million eclipses the record of $84 million raised and spent a decade ago on five initiatives in a war between the insurance industry and trial lawyers. The two sides have so far spent $70 million on the gambling initiative--far more than the $57 million spent in 1988 on the most expensive of the five measures.

By the time the campaign is over, gambling concerns will have spent more than $100 million, said Craig Holman, project director of campaign finance studies for the Center for Governmental Studies in Los Angeles.

The sums being spent on the initiatives are far more than the amounts spent on legislative races, or on lobbying the Legislature, Holman added.

“The special interest wars are shifting from lobbying the Legislature to the initiatives,” Holman said.

Because of the size of California and the heavy reliance on television advertising, spending on ballot initiatives far surpasses campaign costs for measures in other states. Outside California, the highest-priced initiative was an Ohio measure two years ago that drew a total of $10.1 million in spending.

So far, backers of Proposition 5 have raised $60 million and spent $46.6 million. A handful of Southern California Indian tribes with major casinos are financing it. The San Manuel tribe has spent $7.7 million, the Pechanga tribe has spent $8.6 million, and the Viejas tribe has spent $10.2 million.

Opponents have raised $26 million and spent $24.4 million, the bulk of it coming from Nevada gambling interests, which fear competition from Indian casinos. The Mirage casino corporation is leading the effort at $9.5 million, while Hilton Hotels and Circus Circus have contributed $6.5 million each so far.

The latest numbers come from campaign finance reports filed Thursday and Friday, which cover the first 17 days of October, and from daily reports filed this week detailing late contributions to various campaigns.

The reports show that tribes engaged in gambling have spread their money beyond their initiative campaign. They spent $250,000, for example, to get on a slate mailer that will be sent to voters by a police officers union and $230,000 on a slate card to be sent by firefighters.

Assemblyman Cruz Bustamante (D-Fresno), who is running for lieutenant governor, received $350,000 from gambling tribes, nearly half the $717,000 he has raised so far this month. The campaign finance report for Bustamante’s Republican opponent, Sen. Tim Leslie of Tahoe City, was not available Friday.

Gambling Interests a Factor in Race

In the race for California attorney general, Republican Dave Stirling, Lungren’s chief deputy, raised $764,000 in the first three weeks of October, while Democratic Sen. Bill Lockyer received $1.1 million.

Stirling draws heavily from gambling sources, too. He received $500,000 in October from Indian tribes that have casinos. The attorney general oversees a unit that regulates gambling in California, and would defend the gambling initiative in the courts if it passes on Nov. 3.

Lockyer continues to rely heavily on trial lawyers and unions. His largest single donation came from San Diego trial attorney William Lerach’s law firm, Milberg, Weiss, which donated $50,000, pushing its total contribution to Lockyer to $150,000.

Lockyer also accepted contributions of at least $145,000 from gambling interests, including $25,000 each from the Commerce Club and a horse racing concern, which oppose expanded gambling on Indian reservations. He also has received smaller sums from tribes.

In the governor’s race, Lungren, though trailing Davis in the money race, was boosted by two major fund-raising events in October, and began the last two weeks of the campaign with $4.4 million in the bank.

To finance his campaign, Lungren continued to rely on various arms of the state and national Republican Party. He received $680,000 this month, pushing the GOP’s total to $2.8 million.

Davis, by contrast, had spent much of his money buying television time--$2.5 million in each of the final two weeks, and $500,000 over the final 48 hours before polls close, said Garry South, Davis’ campaign manager.

In October, the California Teachers Assn. donated $500,000 to Davis, pushing the teachers union 1998 total to $913,000 for Davis. A separate campaign committee controlled by the union gave Davis an additional $250,000.

Also giving Davis a $500,000 check in October was the Southern California carpenters’ union. Lerach’s law firm gave Davis $100,000, pushing its total to $250,000. Lerach has given Davis $121,000.