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Democrats Favored by Casino Interests in California Recall

by Liz Benston

LAS VEGAS -- As the spectacle of California's gubernatorial recall effort unfolds, one of that state's most powerful special interest groups -- along with the Las Vegas gaming industry -- is following the action to see who will emerge as governor of the fastest-growing gambling state in the nation.

Since 2001 legislation that allowed Nevada-style casinos in California, tribes across the state have emerged with resorts on par with medium-sized Las Vegas properties and revenue that is already estimated at more than half of Nevada's roughly $9.6 billion in annual gaming win.

California Gov. Gray Davis negotiated 20-year compacts with tribes that gave them the exclusive right to have up to 2,000 slot machines each and an unlimited number of table games and bingo machines -- leaving many tribes in a comfortable financial position and smaller operations with room to grow in the coming years.

That's why many tribes will either actively oppose the recall effort or remain neutral in the weeks leading up to the vote on Oct. 7, experts say.

"Tribes have certainly made more progress toward economic self-sufficiency under Davis than all the previous administrations put together," said Howard Dickstein, a California attorney representing five gaming tribes as well as other tribes seeking compacts with the state.

"When he came to power, their legality was questionable, there was little stability, it was difficult to obtain financing and licensed vendors and operators had to stay away," said Dickstein, whose clients are opposing the recall. "Now there's a new era -- and this governor has had a lot to do with it."

The California Nations Indian Gaming Association -- which represents the majority of the state's 61 gaming tribes -- hasn't yet taken a formal position on the recall because it hasn't yet met with all of its members to discuss the issue.

The group is also expected to oppose the recall and support the governor, said Victor Rocha, a member of the Pechanga Band of Luiseno Mission Indians in Riverside County and an Internet newsletter publisher.

Some tribes may yet lend support to Lt. Gov. Cruz Bustamante, a backup candidate forwarded by the Democrats should Davis be booted from office, said Rocha, who said he has had recent conversations with top tribal officials about their recall positions.

"If Cruz comes in and asks for money, he's going to get it," he said.

Bustamante is considered a longtime friend of California tribes, issuing a key vote in opposition of a bill signed by then-Gov. Pete Wilson in 1998 that granted a San Diego tribe access to lottery-type machines but rejected pleas by other tribes to introduce the kinds of traditional slot machines that have yielded spectacular growth for Las Vegas casinos over the past decade. A constitutional amendment later paved the way for tribes to offer slots.

"Cruz stood up and called (the bill) a dark day in history when there was no real political advantage for him," Rocha said.

Bustamante has received hundreds of thousands of dollars in contributions from tribes over the years, including contributions in the last month alone from the Morongo Band of Mission Indians in Cabazon, the Sycuan Band of the Kumeyaay Nation in El Cajon, the Pechanga Band in Temecula and the Cabazon Band of Mission Indians in Indio.

"Bustamante has already said that Indian casinos are a very important part of the state's economy," said I. Nelson Rose, a gaming attorney and professor at Whittier Law School in Costa Mesa, Calif. "My guess is that he will lift the limit on slots in exchange for almost nothing" from tribes, he said.

Historically, Bustamante has been less concerned with limiting tribal casinos than Davis, Dickstein said.

"How that translates into his policy as governor remains to be seen," he said.

It's still premature to know how the recall will affect tribal casino growth because the candidates haven't yet articulated their positions, he added.

"We are realists," he said. "I think the tribes we represent will end up supporting one candidate or the other. We will be trying to determine what (their positions) are over the next several weeks."

Though tribal support is expected to provide a significant boost for the Davis-Bustamante camp, tribes aren't likely to be hurt if a Republican takes office, observers say.

State compacts already allow up to 2,000 machines per tribe, an "enormous" number considering that only a small percentage of their casino revenue -- about $120 million of an estimated $4 to $5 billion -- goes to local governments and non-gaming tribes, Rose said.

Tribes that don't yet have casino compacts should have little to fear because federal law guarantees the rights of tribes to enter compacts in states with gambling.

Davis has attempted to delay signing some new compacts in reaction to the proliferation of tribal casinos, he said. But tribes have already sued to obtain state recognition and are likely to do so again if they are thwarted, he added.

Las Vegas casino bosses will be watching one particular tribe as it aims to secure a compact in the coming year.

In April, Station Casinos Inc. announced a deal to develop and manage a casino for the Federated Indians of Graton Rancheria in Sonoma County.

The company recently opened a casino near Sacramento for the United Auburn Indian Community.

The Sonoma casino faces local opposition as well as a Congressional challenge in the form of a bill that, if passed, is expected to delay the project.

Station executives are still bullish on the plan, which some analysts believe could yield at least $50 million a year in management fees and open the door to future tribal contracts.

During an earnings call last month, company bosses called the recall effort "a distraction" but said the tribe will eventually be successful in obtaining a compact even if someone else becomes governor.

"It's a question of how long it will take to get a deal together," Chief Financial Officer Glenn Christenson had said.

"It's too early to tell what impact, if any, the recall would have on the compacting process," Station Casinos spokeswoman Lesley Pittman said this week.

The apparent Republican front-runner, Arnold Schwarzenegger, hasn't taken a public position on tribal casinos.

Tribes aren't likely to support the actor's bid because he has surrounded himself with advisers of former Gov. Wilson, who opposed casino expansion and efforts to offer lucrative slot machines, Rocha said.

"Arnold could have had the tribes in his hand if he had not ... picked the wrong advisers," Rocha said.

Hustler Publisher and fellow Republican candidate Larry Flynt has simply said that he aims to "tax" California casinos to raise revenue.

Not all tribes will be entering the political fray.

The San Manuel Band of Mission Indians in San Bernadino County has passed up candidate solicitations for financial support and requests to collect recall signatures in its casino.

"I feel that the proper position for the tribe is to remain neutral and to allow the will of the voters of the state of California to perform what they feel is needed for the state," tribal Chairman Deron Marquez said. The tribal council, which will soon take up the issue again, will ultimately decide whether to lend its support, he added.

"This is hyper politics at its best," Marquez said of the recall. "We truly don't know who is real and who is not real."

Davis still hasn't endeared himself to California tribes.

The governor once proposed raising $1.5 billion from gaming tribes in exchange for additional slot machines. Tribes were upset because they weren't contacted about the plan and said they had no obligation to shore up the state's budget gap. None of the hoped-for negotiations have yet taken place.

The San Manuel tribe, meanwhile, is satisfied with its compact and isn't looking to renegotiate. The tribe is still willing to discuss the compact with the state, though it won't concede any gains, Marquez said.

California's future governor will no doubt agree with tribes in some respects and attempt to curtail their growth in other areas, he said.

The Barona tribe in San Diego, which opposes the recall, also is satisfied with its compact.

"We are happy with what we have, but that does not preclude us from looking to renegotiate," the tribe's Director of Government Affairs David Baron said.

The Barona Casino is the first California casino to run major ads luring Las Vegans and visitors from other feeder markets. It was a modest bingo hall for more than a decade until recent years, when the introduction of slot machines helped it blossom into a full-scale luxury resort.

"If it wasn't for Gov. Gray Davis, we wouldn't be in the position we are today," Baron said.

Copyright © Las Vegas Sun. Inc. Republished with permission.

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