Momentum Builds Toward Casino Deals

SACRAMENTO — For the last five months, Gov. Arnold Schwarzenegger’s emissaries have convened in the stylish office of an attorney for several Indian tribes and fashioned something Schwarzenegger has sought since his campaign last fall -- a way to get a bigger share of tribes’ gambling revenue.

The principal negotiators -- attorney Howard Dickstein representing the tribes and Daniel Kolkey acting on the governor’s behalf -- are the same ones who struck a gambling deal in 1998. But then they watched it unravel, degenerating into the most costly initiative war in California history.

Schwarzenegger, in need of revenue to help balance his budget, hopes times have changed. Whether they have is unclear.

On Tuesday, he announced impending deals with four tribes willing to pay the state about 15% of their gambling profits in exchange for the right to operate an unlimited number of slot machines. The tribes also would obtain a $1-billion bond for the state to help close the coming fiscal year’s budget gap, estimated at $14 billion.

At the same time, the governor vowed to make sure that two November ballot initiatives on gambling -- both of which would essentially take matters out of his hands -- were defeated.

On Wednesday, an attorney for five more tribes said that in coming days his clients would probably sign similar pacts, which would replace compacts negotiated by Gov. Gray Davis in 1999. But it was not clear how many more of the state’s 107 tribes might sign on to the deals, which are expected to be unveiled next week.

And leaders of some tribes with large casinos suggested that they would battle Schwarzenegger over the deals. Some representatives said tribes might lobby to derail ratification by the Legislature of any such agreements.

“I just think this administration doesn’t understand what tribes are and what they do,” said Deron Marquez, chairman of the San Manuel Band of Mission Indians, owners of a casino near Highland in the San Bernardino area. “We are not here to bail out the state of California.”

Critics of the deals note that the governor is settling for less than the 25% cut of tribal gambling money that he had called for during his campaign. But legislative leaders voiced support Wednesday for the pacts, which in addition to the $1 billion could provide California with annual payments of $275 million into future years.

“It’s a good deal for the tribes and a good deal for the state and good deal for local government,” said Senate President Pro Tem John Burton (D-San Francisco).

Assembly Speaker Fabian Nunez (D-Los Angeles) concurred: “I think it’s a mutually benefiting compact. The only thing that is regrettable is that we do not have more tribes in.”

Advisors to Schwarzenegger said that if his deals failed in the Legislature, or if other tribes declined to sign up, the Republican governor could respond by devising his own ballot measure to redefine the terms of gambling in California.

“There has to be some pressure on the more recalcitrant tribes,” said a political advisor to Schwarzenegger, speaking on condition of anonymity. “The best mechanism is a potential ballot measure. It is one path that looks attractive.”

The governor does not oppose gambling. Before entering politics, he promoted a partnership that sought to open a casino in Las Vegas. But he helped turn Indian gambling into an issue by airing TV ads during the recall campaign critical of tribes for failing to pay “their fair share” to the state.

And he has said that he frowns on more gambling in urban areas, although he is negotiating with a tribe that wants to install slot machines at a card club in San Pablo, near Oakland and San Francisco.

One of the November ballot measures, pushed by the Agua Caliente Band of Mission Indians, which owns casinos in and near Palm Springs, would allow unlimited expansion of gambling on Indian land. In return, tribes would pay the state 8.84% of their net income.

At least some tribes that want to expand their casino operations appear likely to back this initiative.

Political consultant Gene Raper, who represents the Agua Caliente, said his client was beginning to solicit support from other tribes. Several leaders said they were contemplating joining the Agua Caliente effort.

The other initiative, sponsored by horseracing tracks and card clubs, could break the Indians’ monopoly on Nevada-style gambling in California by allowing 30,000 slot machines in non-tribal casinos.

Under that measure, tribes would be required to pay 25% of their profits, after paying off jackpots, to local programs. If any tribe balked at the payments, or at any one of several other provisions, 11 card rooms and five racetracks would split the 30,000 slots and pay 33% of casino profits to local police, fire and education programs.

Consultants for that measure said Schwarzenegger’s opposition would damage its chances. At the same time, several sources said, representatives for those interests have conferred with tribes that have no casinos, hoping to form an alliance that would let them lease the tribes’ slot machines. Such an arrangement would require the card rooms and tracks to pay the state a portion of profits.

Administration officials say they oppose such a deal, at least as initially described.

Money is only part of the issue, many tribes say. If they signed onto the governor’s deals, they would have to waive some sovereignty.

“Our sovereignty is not a commodity,” said San Manuel Chairman Marquez. “We’re not going to use it to barter.”

Vincent Armenta, chairman of the Santa Ynez Band of Mission Indians, owners of a casino near Santa Barbara, noted that the state cannot tax tribes.

“I feel it infringes on every tribe’s sovereign rights when the state asks tribes to pay a tax to help offset their deficit,” he said. “And really that’s what they’re asking for.”

Under the governor’s deals, tribes also would have to let state building inspectors monitor their facilities; allow arbitration for patrons with disputes; and take steps that could permit unions to organize their workers.

San Manuel and Santa Ynez are among the most successful tribes in the state. Others struggle to survive and say they are prepared to make trade-offs.

Attorney Rob Rosette, representing five tribes in generally rural parts of the state, said his clients were close to reaching deals similar to those being structured by Dickstein and Kolkey.

“It is easy for tribes in perfect situations to critique what we’re doing,” Rosette said. “But these are tribes that want the opportunity that others have.”

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Time staff writers Robert Salladay and Glenn Bunting contributed to this report.