Californians set to vote on massive expansion of Indian casinos

The four measures on the Feb. 5 ballot are being hotly debated. Officials say the state needs the revenue.

By Daniel B. Wood | Staff writer of The Christian Science Monitor

from the January 18, 2008 edition

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Studio City, Calif. - With his elbows resting on a restaurant oyster bar, Greg Waldo – part Choctaw, part Shawnee, part Cherokee – explains why he has mixed feelings over a Feb. 5 California referendum that could dramatically expand Indian gambling operations statewide.

"Anything that could help native Americans get better education, more jobs, more opportunities is a good idea," he says. "But at the same time, I worry about the crime [that more gambling] can bring, whether government and the corporations that run these operations will be honest and fair, and that poorer tribes will not benefit at all."

Mr. Waldo's words help frame a debate heating up in California as the referendum date approaches. Proponents and opponents are battling over the issue through costly TV ads, including a plea by Gov. Arnold Schwarzenegger (R) that casino expansion will boost revenue for a state saddled with a $14 billion budget deficit.

In last week's budget speech, he declared a "fiscal emergency," warning that the state may be forced to release thousands of prison inmates early and proposing budget cuts for most state agencies.

California is not the only state looking to casinos for new income. Ten other states, including New York, Michigan, and Iowa, have similar expansion plans. Two states – Ohio and Massachusetts – are considering whether to introduce casino gambling.

"More and more states that are trying to fill budget gaps are finding expanded gambling operations are a way around … tax increases," says economist Donald Peppard at Connecticut College in New London, who studies the economics of gambling. "They don't have to raise the sales or income tax, but they get revenue anyway which is in effect voluntary … in that if you don't want to pay it, you don't gamble."

In television ads that began airing the first week of January, Governor Schwarzenegger urges voters to endorse Propositions 94, 95, 96, and 97, which would expand gambling operations. The measures were approved by the legislature last summer and were supposed to take effect this month, but a coalition of unions, competing gambling interests, other Indian tribes, and community groups campaigned to place the issue before voters.

The agreements allow four tribes – the Agua Caliente Band of Cahuilla Indians, the Pechanga Band of Luiseno Indians, the Morongo Band of Mission Indians, and the Sycuan Band of the Kumeyaay Nation – to add 17,000 slot machines to the existing 8,000. In exchange, the tribes will give the state between 15 and 25 percent of the revenue from the added machines.

Last May, Schwarzenegger estimated that the compacts would generate $293 million just this fiscal year, but state finance spokesman H. D. Palmer says this figure has since been revised downward to $154 million. The ads claim the state will receive $9 billion over 20 years.

"[The] likelihood is that all of this additional income is dust in the wind … if you look at the magnitude of the state budget," says Daniel Mitchell, a professor of management and public policy at the University of California, Los Angeles.

Others, such as California's nonpartisan legislative analyst, Liz Hill, give much lower revenue estimates. She says the state will get less than $200 million for the next few years, and less than $500 million a year in the distant future.

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