Industry Split on Tribal Slots Vote

Feb. 5 referendums on tribal casinos have ramifications for the racing industry.

It began as a ballot-box skirmish led by two racetracks allied with organized labor in opposition to expanding the size of four large casinos owned by Indian tribes, but it has turned into one of the most expensive campaign slugfests in California history.

With more than a week to go before the Feb. 5 election, total spending has topped $120 million, with most of the stake being waged in a non-stop television advertising war between the two sides.

In what appears to be a close race, California voters are being asked to approve four propositions that would ratify agreements negotiated by Gov. Arnold Schwarzenegger and approved by the state legislature. California’s celebrity governor has campaigned strongly for the compacts, the major hook being that gaming revenue will help the state fight a staggering budget deficit of more than $14 billion.

The four Southern California Indian tribes could add 17,000 slot machines to their current casinos in exchange for agreeing to pay the state a percentage of profits on the additional slots: 15% of the net win annually on the first 3,000 machines. The compacts would be in effect through the end of 2030.

Opponents said the tribes in question would then have more slots than Las Vegas resorts Bellagio, MGM Grand, Caesars Palace, Mirage, and Mandalay Bay combined. Proponents said California can expect to reap up to $9 billion from the compacts.

The non-partisan state legislative office puts the state share at a minimum of $131 million per year once the expansion is in place. Currently, the four tribes pay nothing to the state general fund under 1999 compacts giving them the right to operate up to 2,000 slot machines each.

More than $90 million in the current campaign has been contributed by the four inland tribes: the Pechanga Band of Luiseno Indians ($41.2 million), the Morongo Band of Mission Indians ($30.5 million), the Agua Caliente Band of Cahuilla Indians ($14.5 million), and the Sycuan Band of Kumeyaay Nation ($6 million). Through committees with names such as the “Coalition to Protect California’s Budget and Economy,” they have funded a huge TV and direct-mail advertising campaign attacking their opponents’ self-interest.

Bay Meadows and Hollywood Park have combined to contribute $5.5 million to defeat the propositions. Stockbridge Real Estate Fund, whose holdings include the two tracks, recently shelled out $1.25 million. But two tribes with less favorable state compacts--United Auburn Indian Community ($9 million) and the Pala Band of Mission Indians ($10.5 million)--have taken the leadership of the anti-forces as the stakes climb. Unite Here International Union has also contributed $3 million, according to the latest available figures.

Their spots have focused on the size of expansion--which would increase the number of slot machines in the state to 77,000--as well as what they contend are sweetheart deals with the state that cheats taxpayers. They criticize “flawed revenue formulas” that can be manipulated by the tribes.

Aside from the aforementioned tracks, most of the racing industry has taken a wait-and-see attitude. Bay Meadows and Hollywood Park see the expansion as a further encroachment of racing’s gambling stake and fear the additional length of the compacts further reduces the possibility of Vegas-style gaming ever making it to their mostly vacant grandstands.

But the revenue the compacts would generate could also bring legislative action for license fee relief for racing. That influx could be used to fatten purses and fix county fair racing facilities, which are expected to play an increasingly important role in the future of the sport.

The board of the California Thoroughbred Breeders’ Association, which initially opposed the gaming expansion in the legislature, has decided not to take a stand on the propositions.

“Our board initially opposed the compacts, and we did explain to the legislature what we felt the impact on us would be. But they went ahead and approved them anyway,” said Doug Burge, general manager of the CTBA. “We were pretty vocal in the beginning. But now we’re trying to find the best way forward once the election is over.”

The Thoroughbred Owners of California, involved with talks with the tribes on several topics, has endorsed the compacts.

The hard feelings many horsemen have over the damage tribal casinos have done to racing aren’t that easy to ignore, however. A poll on the CTBA Web site, while hardly a representative sample with 119 votes, was running in opposition to the agreements by nearly 4-1.