Governor ‘Not Supporting’ Initiative on Indian Casinos

Gov. Arnold Schwarzenegger is “not supporting” a proposed ballot initiative challenging Indians’ monopoly on Nevada-style gambling in California, a top aide said Friday.

Meanwhile, 10 tribes offered to open talks with the administration that could increase the amount that casino-owning tribes pay the state.

Schwarzenegger’s communications director, Rob Stutzman, stopped short of saying the governor would oppose an initiative planned by horse-racing tracks and card clubs, should the measure be on the ballot next year.

But Stutzman said the proposal could complicate the governor’s intended negotiation of new compacts with 53 tribes that own casinos and several others that hope to open them.

“In principle, the governor would like to negotiate the compacts himself,” Stutzman said.

Commercial gambling interests sponsoring the planned initiative, some of them with ties to the Republican governor, are expected to unveil the proposal next week. If approved by voters, it would give Schwarzenegger 90 days to renegotiate key details of agreements struck by former Gov. Gray Davis and tribes in 1999.

Those accords gave tribes the exclusive right to operate slot machines in California.

As drafted, the measure, aimed at next November’s ballot, would require that tribes pay 25% of their net casino revenue to the state. That could be as much as $1.25 billion of the roughly $5 billion they are believed to take in annually from gambling.

If the tribes failed to agree, five horse tracks and 11 card rooms in California would be allowed as many as 30,000 slot machines and pay 35% of their net winnings to local governments, including schools. Such an agreement would make slots readily accessible in urban areas. Tribes operate about 54,000 slot machines, mostly in casinos in less developed areas.

Although Schwarzenegger may be cool toward the initiative, various political experts, including some close to the governor, say the possibility of such an initiative could give him important leverage in talks with the tribes. Under federal law, states cannot require tribes to pay state taxes.

The governor has said he has no problem with an expansion of gambling, as long as tribes pay their “fair share” to the state. He has cited Connecticut’s arrangement with tribes there, which gives the state 25% of their casinos’ net revenue.

Currently, tribes that own casinos in California pay about $130 million a year into two funds. The bulk of the money goes to rural tribes that have no gambling operations; a far smaller sum goes to local governments to ease the effects of nearby casinos.

On Friday, attorney Rob Rosette, representing 10 California tribes, sent a letter to the governor asking to open talks on new gambling compacts. The group was the first to formally make such a request. Rosette said the timing was unrelated to the news that race tracks and card rooms were preparing their initiative.

Rosette is among the tribal representatives who sought deals with Davis earlier this year to expand casinos in exchange for payments to the state. Davis was ousted before agreements could be reached.

Rosette represents three tribes with major casinos: Rincon in San Diego County, the Santa Rosa Rancheria in Kings County and the Picayunne Indian Rancheria in Madera County. Four tribes he represents have relatively small, 350-slot casinos, and three others want to open casinos in coming months or years.

“We now come to you with renewed vigor and a sense of urgency,” Rosette said in his letter.

Other tribes had previously expressed, less formally, a willingness to confer with the new governor.

“The ball is in the governor’s court,” said Sacramento attorney Howard Dickstein, who represents several major tribes that want to expand gambling operations.

He called the 25% payment percentage in the race tracks’ possible initiative far too high. More slot machines and 25% of the take from only the new machines “would be a good starting point” for negotiations, Dickstein said.

He added that the presence of such a measure could complicate talks if tribes “thought they were going to be deprived” of their exclusive right to Nevada-style casinos in California.

“It creates an unknown that makes coming to an agreement more difficult,” Dickstein said.

Others said the possibility of such a measure would strengthen Schwarzenegger’s hand.

“The threat of this initiative means that the tribes have an incentive to come back to the table,” said Republican consultant Dan Schnur, who is not involved on either side of the issue.

He also raised the possibility that Nevada casino owners might try to expand their California holdings by buying existing card rooms or applying for their own casino licenses.

“Once the tribes have competitors, it becomes much harder for tribes to hold the line,” Schnur said.

Nevada corporations spent more than $25 million to battle a 1998 initiative to legalize gambling on California reservations. Tribes spent $65 million in favor of it, winning in a landslide.

The state Supreme Court struck down that initiative, leading to the proposition sponsored by Davis in 2000 that granted tribes monopoly rights to slot machines.

The commercial gambling interests behind the proposed initiative are apparently betting that tribes harmed themselves politically in the recall campaign, by spending millions in a failed effort to get Lt. Gov. Cruz Bustamante elected as Davis’ successor.

“The commercial gambling industry is thinking this is a very good time to move on something,” said Jack Gribbon, California political director for the Hotel Employees and Restaurant Employees International Union, which represents many casino workers in Nevada and at horse-racing tracks in California.

“The situation has changed, for good, bad or indifferent,” said Gribbon, whose union is not involved in the fray.