Casinos Bet on Bustamante and McClintock

*Native Americans donate heavily to the pair while criticizing Schwarzenegger, who favors taxing the gambling industry.

By Eric Bailey and Jeffrey L. Rabin, Times Staff Writers

SACRAMENTO â€" In no time at all, they have established California's fastest growing industry and have become a powerful force in statehouse politics. Now the state's fabulously prosperous casino tribes are the major players in a historic campaign drama: the gubernatorial recall.

Having contributed or spent $11.1 million in the recall campaign, the tribes have much at stake in the contest to determine who sits in the Capitol's big corner office.
The next governor will play a pivotal role in deciding the future of the $5-billion tribal casino industry, while shaping the debate over how much gambling revenue tribes should share with the state.

California's most powerful gambling tribes have put their money squarely behind the candidacies of Lt. Gov. Cruz Bustamante, a Democrat, and state Sen. Tom McClintock, a Republican from Thousand Oaks. Some have reaffirmed their support of Gov. Gray Davis.

In statements from the campaign trail and written responses to a series of questions from The Times, all three politicians make it clear that they regard the tribes as sovereign powers best treated with respect. Tribal gambling, they say, has been a boon to the state, creating an entirely new job sector while improving the lives of long-impoverished Native Americans.

If the tribes have a public enemy, it is Arnold Schwarzenegger.

The Republican front-runner has drawn anger by calling tribes "special interests" and criticizing them for not paying taxes on profits. Last week, Schwarzenegger lashed out in a TV advertisement spotlighting huge tribal donations.

To counter that campaign assault, the tribes have launched an all-fronts war to keep Schwarzenegger from becoming governor.

Mark Macarro, chairman of the Pechanga Band of Luiseno Indians, called Schwarzenegger's advertisement an "act of desperation by team Arnold." He noted that the Schwarzenegger campaign includes Bob White and Sean Walsh, aides to former Gov. Pete Wilson, whom Macarro called "an enemy of Indian gaming."

Macarro also said that Schwarzenegger is "clearly out of sync" with the 68% of California voters who supported Proposition 1A, the Indian gaming initiative that voters approved in 2000.

Most of the tribal campaign spending has come from the Pechanga band and three other tribes that control major Southern California casinos. They have bought large chunks of television time â€" nearly $3-million worth of ads to run about two weeks â€" for ads praising Bustamante or encouraging conservatives to cast their ballots for McClintock.

The Morongo Band of Mission Indians, which operates a sprawling casino on Interstate 10 near Palm Springs, paid for $2-million worth of television time last week for commercials on McClintock's behalf. That is more than triple the sum McClintock spent on television and radio spots through Sept. 20, the cutoff date for candidates' last complete campaign finance filings before the election.

The Pechanga band, which has a casino near Temecula, has joined with the Sycuan Band of Kumeyaay Indians in San Diego County to spend $3.5 million on an absentee-ballot outreach campaign and a round of anti-Schwarzenegger TV spots.

Schwarzenegger said in written responses to questions from The Times that he has serious concerns about the effects of tribal gambling on California.

He also criticized Davis for negotiating a deal with the tribes that Schwarzenegger said failed to adequately reimburse the state and local governments for the drain casinos cause on government services, ranging from police and fire protection to roads and social services.

If elected, Schwarzenegger said, he wants to renegotiate every casino compact with an eye toward funneling more money into the state treasury. As a benchmark, he cited Connecticut, which gets 25% of the gambling revenue from its tribal casinos. In California, he said, that would mean between $1 billion and $2 billion a year for the state.

But Schwarzenegger left plenty of room for negotiation. Asked about the current cap of 2,000 slot machines allowed at each tribal casino, he said the state needed a "fresh approach." He said that, if he is elected, "everything is on the table."

Tribal gambling would get a far softer response from Davis, McClintock and Bustamante.

Bustamante noted that the two voter-approved initiatives that ultimately legalized Vegas-style gambling on reservations set no limits on slot machines.

He suggested that any cap should be "a subject for respectful negotiations" between the tribes and state. As sovereign nations, Bustamante said, tribes cannot be compelled to contribute anything to the state general fund.

McClintock suggested a strong free-market approach to the tribal casino industry, which experts predict could eventually overtake Las Vegas in scope and annual revenue. He said the current state compacts already cover the effect of casinos on the environment and local government services. And federal law prohibits taxing tribal casinos as a general revenue source, he said.

"The primary cause of California's deficit woes has been Gray Davis' fiscal mismanagement, not California Indian tribes," McClintock said.

Davis defended his regulatory record on tribal gambling, noting that the 1999 tribal compact he forged had established a slot-machine cap and required that money from casinos go to tribes without casinos and to help local governments cope with problems related to gambling.

Earlier this year, Davis proposed that any expansion of Indian gambling hinge on the tribes' giving the state $1.5 billion a year. Later he dropped his request to $680 million.

In his written response to The Times, Davis cited no target for revenue-sharing negotiations, saying simply that any boost in casino profit-sharing would be "a subject in future negotiations."

Davis, Bustamante and McClintock all extolled the benefits of tribal gambling for the state. Indian gambling has created 100,000 jobs, "many in some of the most blighted parts of the state," Bustamante said, and impoverished Indian families have been yanked off welfare and provided money for college education.

Many tribes have proved to be "good neighbors," Davis said, working with local communities to limit fallout from casino operations.

McClintock, meanwhile, said tribal casinos represent "one of the few bright spots" in the state's economy, with job growth outpacing any other sector.

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(BEGIN TEXT OF INFOBOX)

Candidates answer questions about casino gambling

The Times posed a set of questions about the state budget to Gov. Gray Davis and the major candidates seeking to replace him. Excerpts from their responses follow. For candidate responses to past questions in this series, go to http://www.latimes.com/recall . During the course of the campaign, The Times plans to ask the candidates about other major issues.

Q. Should the state seek to cap the number of slot machines that Indian tribes are allowed to operate or should the number be left to the market to decide?

Gov. Gray Davis (D)

There are at least 30 tribes that did not sign compacts in 1999 that now want them. The state has signed three new compacts this year. The new compacts establish a set number of slot machines for each tribe, with an option to renegotiate.

Peter M. Camejo (Green)

I support sovereignty for Indian tribes. Therefore, if they choose to increase the number of slot machines, I would accept that. However, I would encourage them to move away from gambling, as society would generally be better off if we could reduce gambling.

Arianna Huffington (Nonpartisan)

Under current compacts, the gaming tribes have agreed to a limit of 2,000 slot machines each. I would gladly negotiate to remove that cap in exchange for the tribes' agreement that the state begins receiving a fair and reasonable percentage of gaming revenues.

Lt. Gov. Cruz Bustamante (D)

The voters did not impose a limit on slot machines. I believe it would be a subject for respectful negotiations between the tribes and the state.

Arnold Schwarzenegger (R)

California is not getting its fair share of revenues from the gaming industry. As governor, I will renegotiate every compact, representing the people's interest. California should get its fair share of gaming revenues.

State Sen. Tom McClintock (R)

The free market, not the government, should decide how many slot machines tribes operate at their facilities.

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Q. Should racetracks and card clubs be allowed to operate slot machines and other games such as blackjack?

Gov. Gray Davis (D)

I am opposed to Las Vegas-style gaming in urban areas. Card clubs and racetracks are in the heart of many of our neighborhoods, and extending Las Vegas-style gaming to them would be wrong for California.

Peter M. Camejo (Green)

Gambling should be limited as much as possible. Gambling is, in effect, a regressive tax on the less wealthy. In addition to opposing slot machines and blackjack at racetracks or card clubs, I will work to discourage gambling in general in our state.

Arianna Huffington (Nonpartisan)

Yes, so long as the state receives a significant share of the revenue generated, and the local governments where the card clubs and racetracks are located approve of the additional gaming operations.

Lt. Gov. Cruz Bustamante (D)

No. The voters of the state overwhelming approved Indian gaming on sovereign tribal lands. If card clubs and racetracks want Las Vegas-style gaming, they should sponsor an initiative and place it before the voters.

Arnold Schwarzenegger (R)

We need a fresh approach, and everything is on the table.

State Sen. Tom McClintock (R)

The people of California approved of slot machines and table games for Indian tribes in a ballot referendum. If card clubs and racetracks seek the same privileges, they should have to follow the same procedure and ask for the voters of California to approve.

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Q. Should the state seek to renegotiate compacts with the tribes to require them to give the state a percentage of their gambling revenue? If so, what percentage would you advocate?

Gov. Gray Davis (D)

The tribes involved in the three new compacts signed so far this year have agreed to give the state a share of their gaming revenues. This will be a subject in future compact negotiations.

Peter M. Camejo (Green)

It would not be right for California to tax tribal revenues, just as California does not tax French or Japanese revenues when Californians visit those countries. Because of sovereignty, my role would be more like that of an ambassador.

Arianna Huffington (Nonpartisan)

I would do everything in my power to persuade the tribes that it is in our mutual best interest to renegotiate fair two-way deals. California should adopt a provision similar to New York's; that state collects 10% to 25% of gaming revenues.

Lt. Gov. Cruz Bustamante (D)

Tribes are sovereign nations and we cannot compel them to contribute anything to the general fund. This is another issue that can be determined through respectful negotiations.

Arnold Schwarzenegger (R)

Absolutely. When these compacts were originally negotiated, Gov. Davis said getting a share of revenues wasn't on his mind because the state budget was in surplus. Such shortsightedness from the governor is costing us billions.

State Sen. Tom McClintock (R)

The primary cause of California's deficit woes has been Gray Davis' fiscal mismanagement, not California Indian tribes. We should look for the solution to these problems in Sacramento, not on Indian reservations.

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Q. Should non-Indian patrons of casinos have the right to sue tribes for personal injuries or other civil wrongs that occur on tribal lands?

Gov. Gray Davis (D)

Tribes are sovereign and, under federal law, civil claims are subject to tribal claims procedures. However, the new compacts signed this year improve patron protections by requiring that insurance companies not assert tribal sovereignty as an immunity to insurance claims.

Peter M. Camejo (Green)

Yes, I agree with this, and it is already happening. We need to work out clearer understandings about which suits should be heard in tribal courts and which should be heard in California courts, as well as a few other details about the process.

Arianna Huffington (Nonpartisan)

While recognizing and respecting Indian tribal sovereignty, I believe that everyone should have a legal remedy if they are injured or civilly wronged on tribal lands. I would make this a condition of any new or renegotiated compacts.

Lt. Gov. Cruz Bustamante (D)

This is a matter of federal law.

Arnold Schwarzenegger (R)

Yes. With the privilege of engaging in gaming comes responsibilities. Those responsibilities include full accountability to patrons and to vendors.

State Sen. Tom McClintock (R)

The current California gaming compacts govern these concerns and already provide individuals with remedies should personal injury befall them on their visit to tribal lands.

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Q. In your opinion, is casino gambling a net plus for California or do the problems associated with it outweigh the benefits?

Gov. Gray Davis (D)

BTD Experience has shown that the state, tribes and communities surrounding reservations must work together so that Native American gaming results in universal benefits. Where communities and tribes have done that, gaming has been a net plus for California.

Peter M. Camejo (Green)

The problems associated with gambling currently outweigh the benefits. In addition to being a regressive tax, it also adds to our crime rate, and through gambling addiction it is a health problem. I will work to discourage gambling in California.

Arianna Huffington (Nonpartisan)

It certainly can be a net plus, but only if the state begins receiving a fair share of gaming revenues, and the tribes agree to comply with state and local laws and regulations protecting the environment and the rights of casino workers and patrons.

Lt. Gov. Cruz Bustamante (D)

Indian gaming has created 100,000 jobs, many in some of the most blighted parts of the state. In addition, thousands of Indian families are no longer on welfare, have health insurance and money for a college education.

Arnold Schwarzenegger (R)

BTD The people have spoken on this question. My goal is to be sure we get our fair share of the revenues from this highly profitable industry.

State Sen. Tom McClintock (R)

During the last year, California tribal casinos were one of the few bright spots in our state's economic picture. The contributions that California Indian tribes and their various business ventures make to our state's economy are vitally important to California.


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