Oct. 4, 1998
By ANDREW LaMAR
Press Democrat Staff Writer
Spend an hour watching TV and you're bound to hear about Proposition 5.
The airwaves are filled with commercials for and against the Indian gaming initiative, and it's no wonder why: One way or another, big money hangs in the balance.
At stake is a $1.4 billion industry and how it is regulated.
California Indians, who say they earned $632 million in revenues from gaming last year, want to continue running their casinos as they do now, with video slot machines, card games and some offtrack betting. With passage of Prop. 5, they would be able to.
If approved, the initiative would change the law to let tribes keep their current electronic games. The measure essentially asks voters to approve casino regulations written by the tribes themselves.
"Gaming has provided a better way of life on reservations, and Prop. 5 protects that," said Dan Pellissier, a spokesman for the Prop. 5 campaign.
The initiative has drawn opposition from Gov. Pete Wilson, labor unions, law enforcement agencies and anti-gambling groups. Prop. 5, they say, doesn't address the social costs created by casinos, doesn't grant employees workers compensation benefits or other state protections, and doesn't give communities a voice on whether casinos can be built.
"The issue is gambling -- more specifically, regulated gambling," said Maury Hannigan, a spokesman for opponents.
The initiative campaign has pitted the gambling profits of Indian tribes against the gambling profits of Nevada casinos, with both sides expected to spend more than $25 million in what probably will be the most expensive initiative campaign in state history. TV ads have filled the airwaves since June, and both sides promise saturation advertising leading up to the election.
Nevada casinos have seen Indian gaming attract an increasing number of Californians, many of whom opt for a trip to nearby Indian reservations instead of the longer trek to the Silver State. With Prop. 5 in effect, Las Vegas casinos would suffer a 7 percent drop in business and Reno a 16 percent decline, according to an analysis by Bear Stearns & Co.
Opponents say Prop. 5 is an end run around the 1988 Indian Gaming Regulatory Act, which requires tribes to negotiate an agreement with the state on what types of gambling they can offer.
Until earlier this year, Wilson refused to negotiate with California's 41 tribes engaged in gaming. He accused them of using video slot machines, which are illegal under state law, and said they had to relinquish the machines before the state would negotiate with them.
Finally, in March, Wilson signed an agreement with a tribe that did not offer gaming but planned to build a casino -- the Pala Band of Mission Indians of San Diego County -- and he said it would serve as the model for agreements with other tribes.
Wilson since has signed agreements, based on the Pala Compact, with 10 more tribes, and the state Legislature has ratified them.
But the Pala Compact drew the ire of Indian officials, who said its terms erode Indian sovereignty and jeopardize the success of their casinos, which have lifted many tribes out of poverty and provided a steady stream of capital for education, housing and economic diversification.
The Pala Compact prohibits the use of the Nevada-style video slot machines in use at many Indian casinos and instead requires machines with lottery-style games. The compact limits the total number of machines statewide to 20,000, and individual tribes can license up to 199 each. Tribes can sell their licenses to other tribes, and a single tribe may amass up to 975 machines.
In addition, the compact prohibits playing against the house and requires payoffs to come from a parimutuel pool consisting of all players' wagers, a stipulation that is part of Prop. 5 as well.
Also, the compact places casino employees under the state's jurisdiction for worker safety, unemployment insurance and collective bargaining -- three areas left to tribes' discretion in the initiative.
There are many other provisions to the Pala Compact, including one that requires any new casinos to win voter approval from the surrounding community, but it's the compact's requirement that tribal casinos use untested machines and the compact's limit on expansion that particularly trouble Indian leaders.
Priscilla Hunter, the tribal chairwoman of the Coyote Valley band of Pomo Indians, said she feels stung by the governor's actions. The tribe, which has operated a 21,000-square-foot casino and bingo hall seven miles north of Ukiah since 1994, twice asked the governor to negotiate but received no response either time, she said.
"These terms hurt us," Hunter said of the Pala Compact.
The Coyote Valley Shodakai Casino in Redwood Valley has 284 popular video slot machines that account for 80 percent of the casino's revenues, she said. Moving to lottery-like machines and lowering the number to 199 probably would send more folks to Nevada and cut casino profits, Hunter said.
To opponents, though, state laws limiting gambling and restricting the Indians are imperative to prevent California from becoming like Nevada.
To illustrate their point, the opponents aired a controversial TV ad over the summer showing casinos popping up in a suburban landscape. The spot intoned that under Prop. 5, Indians could buy land and put casinos anywhere with the approval of just two government officials.
"It will open the floodgates," Hannigan said. "It will change the entire makeup of California. It will make it one giant casino."
Such claims are dismissed by Prop. 5 proponents as simple scare tactics. The two officials cited in the ad are the governor and the U.S. secretary of the interior, both of whom have been reluctant to approve new casinos, they said.
The initiative does not change federal law, which requires Indian tribes that take new land into trust for gaming purposes to win the endorsement of the local community, the governor and the secretary of the interior before moving forward with a casino. In the past 10 years, 10 tribes throughout the nation have tried to do it and only one has succeeded.
Nevertheless, opponents said Prop. 5 could be the harbinger of things to come. Once tribes win approval to run casinos as they like, they said, cardrooms and Nevada casinos will clamor for the same rights.
"We're not against gambling," said Frank Schubert, a strategist for the opposing campaign. "What we're saying is there is a right way and a wrong way to deal with it. Prop. 5 is the wrong way."
So far, voters do not appear persuaded by Schubert and other opponents. According to a Los Angeles Times poll conducted statewide Sept. 12-17, 57 percent surveyed said they favor the initiative, 28 percent were opposed and 15 percent were undecided.
The Press Democrat Poll, conducted in Sonoma County in the same period, showed that the main reason people support the initiative is because they believe it is good for Indians. They also believe Indians historically have been mistreated, the poll found.
With the election still a month away and each side vowing to spend at least $25 million, voters will have plenty more advertisements to contemplate.
"What drives people for it is the sympathy factor for Native Americans and the desire to help them," Schubert said. "One thing that hasn't shown up (in ads) and will is the whole idea that they don't need it. No tribe needs Prop. 5 to operate casinos."
What the tribes do need and get with Prop. 5 is a fair shake at managing their casinos and providing for their future, Pellissier said.
The initiative also addresses concerns raised by state officials by requiring 6 percent of casino profits to be set aside for non-gaming tribes and local government services in the area of the casino, he said.
"We're opposed to the Pala Compact because it's designed to fail. It's designed to limit tribes' growth," Pellissier said. "There's an underlying assumption there that Indians aren't qualified to regulate themselves."