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California on Verge of Gambling Expansion

CALIFORNIA – As reported by the Sacramento Bee: "Arnold Schwarzenegger has the hottest hand in California politics in many years.

"…But the rookie politician's skillful use of the perception and reality of his ability to use statewide initiatives to impose his will - which nonetheless always involves important compromises with Democrats - is about to run into a buzz saw on the November ballot in the form of what looks to be the biggest spending initiative battle in California history.

"In the process, California seems on the verge of a major expansion of gambling that was not favored in last year's recall campaign, and Schwarzenegger may lose control of his prized negotiations for revenue from Indian casino tribes (which currently pay nothing into the state's general fund) and end up squaring off against two of his top political advisors.

"A Schwarzenegger-negotiated settlement with casino tribes made early progress but may be falling apart as tribes peel off to back an initiative pushed by the Agua Caliente tribe that would provide much less revenue to the state, at an 8.8 percent corporate tax rate - and that would likely end up being much less, as is the case with most corporations.

"…In the end, Schwarzenegger may square off against casino tribes and some of his own top advisors, something which may have been inevitable at some point given the multiple interests involved. Everyone, Schwarzenegger included, looks as if they are pushing an expansion of gambling few foresaw last year during the recall campaign.

"…Unless the governor can get more tribes back to the bargaining soon with his well-regarded negotiator, Daniel Kolkey, he may find himself in an uncontrollable situation, with his once promising emerging deal with the casino tribes in tatters and with him forced either to choose one of the initiatives to back or to oppose both and try again next year, foregoing needed revenue for the current budget crisis for at least a year…"

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