OCTOBER 24 -- 30, 2003

Dissonance

No Time for a Sucker
Arnold needs to play tough with the Indians

by Marc Cooper

I thought it only fair to spend Columbus Day weekend with some of Southern California's Native Americans, giving them back at least some of the booty stolen over the centuries by the White Man.

I dutifully did my stint at the blackjack tables run by the Cahuila tribe's Agua Caliente casino down in Rancho Mirage, and as I got hammered with one stiff hand after another, I kept telling myself it was all Custer's fault.

But before you get all teary-eyed about the plight of the California indigenous, you might want to take a cruise by the string of their Coachella Valley tribal casinos and update your history a bit.

Agua Caliente is quite a glitzy spread, with row after row of state-of-the-art slot machines and banks of gambling tables. Ranks right up there in the Vegas category. Check out the showroom, a buffet, lounge and a couple of higher-end restaurants. On a weekend night, people line up for seats at the tables, many of which require a $25 or higher minimum bet. Close your eyes on the road in, open them at the tables, and you're on The Strip.

The Cahuilas are also sinking scores of millions into the expansion of their other casino, the Spa, a few miles north in Palm Springs. And one of the local competing tribes, the Cabazon-based Morongos, broke ground this summer on a $250 million, 275-room, 44-acre mega-resort and casino designed by Jon Jerde, the world-class architect who fashioned the Bellagio.

Or you might want to take a spin through San Diego County one Sunday and check out the caravans of cars streaming toward the Indian casinos at Pechanga, Pala, Barona, among others — veritable palatial resorts that rival the newest Vegas properties.

More than 60 California tribes — some of them as small as a few dozen members — are now in the gambling business. Their take? Oh . . . just about $5 billion last year. The nearly 200 casinos in Clark County, Nevada (which includes Las Vegas), only took in $7.7 billion by comparison. Industry analysts figure that within this decade, California Indian gambling profits will surpass those of all of Nevada casinos combined.

And yet, during the past recall campaign, there were charges that Arnold Schwarzenegger was a racist, picking on the hapless Indians, when he proposed levying a hefty tax on their gambling operations.

Any governor trying to balance the books would be irresponsible if he didn't tax such a lucrative industry, especially one that cannot by its nature pack up and leave the state. Yet, in 1999, when Gray Davis signed the compacts with nearly all the tribes now operating casinos, he literally threw the game. No gaming tax was imposed. Grateful tribes put up $12 million in the last election hoping to prolong the Davis-Bustamante gravy train. Wouldn't you if you were running a rapidly expanding multibillion-dollar industry tax-free?

Let's do some comparative math. Connecticut collects a 25 percent levy on its very successful Indian casinos. The Nevada casinos pay 6.75 percent (and they run the state!). In January, Illinois raised its gambling tax from 50 percent to 70 percent. Almost 10 percent of Delaware's state budget is paid by gambling tax. New Jersey resort casinos pay 7.25 percent plus more than 4 percent on complimentary rooms and meals casinos dole out as perks. Missouri is considering a gaming tax of 22 percent. A California gambling tax rate of 25 percent sounds about fair to me, especially on an industry so specialized in extracting its wealth on such a regressive basis.

It's not going to be easy for Schwarzenegger to make good on his vow to wring $1 billion a year out of the tribes. The giveaway sweetheart deals that Davis signed with the Indians expire 17 years from now. But gambling has proved to be so damn lucrative that the tribes want more. They're pushing for a lifting of the current limit of 2,000 slot machines per property. They also want to expand casino operations off reservation lands and into urban areas.

Those demands provide an opportunity for the incoming Schwarzenegger administration to reopen and renegotiate the tribal compacts: more machines and more casinos in exchange for a fair tax. Levying that tax would be a worthy achievement for the new governor.

The danger is he might go too far, as did Davis, in accommodating the tribes. Contrary to the campaign run against him, Arnold is pro-gambling. Virtually unreported during the campaign, he recently settled a lawsuit with gambling-machine giant IGT allowing the company to market a Terminator video slot machine. And he's on the record saying of the Indian gaming industry, "I want to help them build it from a $5 billion industry to a $10 billion industry . . . Let them increase the amount of slot machines. Boom. Let their business go crazy . . . But be fair about this, and just come in and give the state some money."

Calm down, Arnold. Giving the tribes a bit more leeway in return for the tax they ought to have been paying in the first place shouldn't mean Nevada-izing California. We don't need slot machines in the 7-Elevens or any casinos in downtown Oakland. The casinos should be held to fair and equitable standards and not given any special status.

Tribal leaders are no softball wussies. They've coughed up more than $120 million in campaign contributions over the past handful of years to buy vast political influence. They haven't shirked from financing some of the dirtiest pool of ad campaigns — like the last-minute smear job that helped sink Antonio Villaraigosa's mayoral bid. Many of the tribes have fought unionization of their low-wage workers with ruthless tactics.

And, for toppers, most of the tribal casinos run the absolutely most restrictive versions of popular table games, further skewing the odds in favor of the house. The Morongos, rather outrageously, still charge players a quarter a hand on top of their bets, just to play blackjack — because they can get away with it and not because any state law requires it (as was the case in the past).

So if you believe, as I do, that lavishly wealthy businesses have to start paying their fair share of taxes in California, then don't go soft on the Indians and their gambling business. Don't be a sucker.