Jackpot for Indian Casinos

Times Staff Writer

Gov. Arnold Schwarzenegger, who spent his first two years in office battling Indian tribes with casinos, is now giving at least four of them a vast expansion unlike anything they received from the man Schwarzenegger swept from office.

Under new Schwarzenegger compacts awaiting lawmakers’ approval, Southern California would have up to 19,500 more authorized slot machines. The region could become home to some of the world’s largest casinos, each containing as many as 7,500 slot machines.

In exchange, the tribes would pay the state tens of millions of dollars more. Additional agreements are being negotiated.

On Tuesday, the Republican governor authorized each of three tribes -- the Morongo band of Mission Indians near Banning, the Pechanga band of Luiseno Mission Indians near Temecula and the San Manuel band of Mission Indians on the outskirts of San Bernardino -- to add 5,500 slot machines to the 2,000 they have.


“This new agreement will provide our people and our employees with long-term certainty and new opportunities,” Pechanga Tribal Chairman Mark Macarro said in a statement.

Pechanga’s backers include state Senate President Pro Tem Don Perata (D-Oakland), who is among the authors of the bill that would ratify its deal. Last week, Pechanga donated $50,000 to a political account controlled by Perata.

There was no connection between the donation and the legislation, said Paul Hefner, Perata’s political spokesman: “The pro tem makes decisions based on the merit.”

The donation went to a fund intended to help Perata push for November ballot measures intended to improve roads and other public works systems.


“A reliable infrastructure is important to all Californians, including Indian people,” Macarro said in a statement.

Schwarzenegger struck a separate agreement earlier this month with the Agua Caliente band of Cahuilla Indians for a new casino and 3,000 new slots; the pact stalled Monday in the Assembly but awaits another vote. The band has two casinos and 2,000 slot machines.

In reaching election season accords with politically aggressive tribes, the Republican governor may be trying to neutralize political foes. Democrats, along with some Republicans, have found tribes to be a main source of campaign cash.

Morongo, Pechanga, San Manuel and Agua Caliente have spent more than $2.5 million on state political campaigns this year. Indian tribes overall have spent $220 million on campaigns since 1998, the year of their first big push for legalized gambling on their land.


San Manuel council member Vincent Duro, at the Capitol on Tuesday to lobby legislators, said he and his team were trying to line up votes.

“We’re working on it,” Duro said.

Former Gov. Gray Davis limited individual tribes to two casinos and 2,000 slots, large by Las Vegas standards. During the 2003 recall that ousted Davis, Schwarzenegger aired commercials blasting casino-owning tribes as special interests. He said they should pay their “fair share” to the state, an amount he pegged at 25% of their revenue.

The governor struck deals with five tribes early in 2004, allowing some of them unlimited expansion. But he remained at odds particularly with Agua Caliente, San Manuel, Morongo and Pechanga.


In 2004, the governor led the opposition to an initiative pushed by Agua Caliente, Morongo and San Manuel that would have granted California’s 108 tribes unlimited rights to expand gambling on their land. The initiative failed.

The governor has since shifted. Appointment calendars show that his chief of staff, Susan Kennedy, had at least two meetings related to Indian casinos in her first few weeks in office in January.

Additionally, Agua Caliente Chairman Richard Milanovich said recently that he had urged the administration to replace Schwarzenegger’s lead gambling negotiator, Daniel Kolkey, a former state appellate court justice. Kolkey was Gov. Pete Wilson’s lead negotiator in the 1990s and angered many tribes.

“We said that would be a point in his favor if he was not part of the negotiations,” Milanovich said, adding that Agua Caliente probably would not have participated in talks if Kolkey had been involved.


The governor replaced Kolkey in June with Legal Affairs Secretary Andrea Hoch. Schwarzenegger spokesman Darrel Ng said the governor did not remove Kolkey at anyone’s behest.

California tribes are not required to publicly disclose their gambling profits, nor would the new compacts require them to reveal what they pay the state. But gambling proceeds in the state are estimated at more than $6 billion a year, second only to Nevada’s $11 billion last year.

Under the new accords, the state would collect up to $320 million a year from the Pechanga and San Manuel bands and $233 million from Morongo if each operation grew to 7,500 slots.

“This is within the tribes’ vision,” Hoch said of the possibility that the tribes would build to capacity.


The new compacts would permit Morongo, Pechanga and San Manuel each to have two casinos, the number allowed by Davis.

Before tribal gambling began in earnest in the mid-1990s, the three bands had little money and some members lived in poverty. If San Manuel and Pechanga increased their holdings to the 7,500 slots that would be allowed in the compacts and each machine earned $300 a day -- roughly half of what the Schwarzenegger administration estimates they now net on their slots -- each would earn more than $820 million annually from the devices. Morongo would earn slightly less.

“Nothing makes as much per square foot as a slot machine,” said Whittier Law School professor I. Nelson Rose, a gambling law expert.

Two Indian-owned casinos in Connecticut are the nation’s largest, one with about 6,200 slots and the other with 7,100. No casino in Las Vegas has more than 3,000 slots.


According to the Schwarzenegger administration, under the new deals, Morongo would pay $36.7 million a year to the state for its existing 2,000 slot machines, Pechanga would pay $42.5 million for its first 2,000 slots and San Manuel would pay $45 million. Those payments are roughly 10% of the tribes’ 2005 slot machine earnings, the administration estimates.

Each tribe would be required to pay 15% of its gambling profits on its next 3,000 slots, or an estimated $115 million for San Manuel and Pechanga annually, and 25% on the next 5,001 to 7,500 slots, or $160 million per tribe annually. Morongo’s percentage payments would be the same, but the amount of its payments would be lower.

The administration also approved a deal for the Yurok tribe -- the state’s largest with 4,800 members, many living in poverty -- in far Northern California. The deal would permit Yurok to have 99 slot machines. If the operation succeeded, Hoch said, the tribe would earn an estimated $5 million a year and pay the state $500,000 annually.



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Casino expansion

Four Southland tribal casinos could expand under compacts requiring lawmakers’ approval.

San Manuel Indian Bingo and Casino: Has 2,000 slot machines; would get 5,500 more.


Agua Caliente Casino: Has two casinos and 2,000 slot machines; would get a third casino and 3,000 more slots.

Morongo Casino Resort and Spa: Has 2,000 slot machines; would get 5,500 more.

Pechanga Resort and Casino: Has 2,000 slot machines; would get 5,500 more.



Source: Times reporting

Los Angeles Times