Voters in California have approved a huge expansion of four Native American Indian casinos, effectively paving the way for the state to become home to the biggest gambling venues in the US...

However, while advocates of Propositions 94-97 said the expansion would provide a vital boost for the Golden State’s troubled economy, opponents have voiced strong concerns that the deals play favouritism on a tiny percentage of California’s tribes and that the proposed returns have been grossly inflated.

On February 5, 2008, four virtually identical measures - Propositions 94, 95, 96 and 97 - appeared on the primary presidential ballot in California and were signed into law by Governor Arnold Schwarzenegger. They served to modify existing gambling compacts between the state and four Native American Indian tribes: the Pechanga Band of Luiseño Indians, the Morongo Band of Mission Indians, the Sycuan Band of the Kumeyaay Nation and the Agua Caliente Band of Cahuilla Indians.

The new agreements, which will last for 22 years to 2030, allow the tribes to add additional slot machines to their casinos in exchange for giving the state government a higher percentage of their profits. The tribes were previously limited to 2,000 slots each. With these amended agreements, Pechanga and Morongo can add 5,500 new slots each, and Agua Caliente and Sycuan may expand theirs by as much as 5,000. By comparison, the largest tribal casino complex in the US, Foxwoods Resort Casino in Connecticut, has 7,000 slot machines.

Under the previous compacts, the four tribes did not contribute to California’s overall budget. Now, in addition to a guaranteed US$123m a year the tribes must pay, the new deals give the State of California 15 per cent of the revenue from as many as 3,000 of the new slot machines per tribe, and 25 per cent of the revenue from additional machines above that number through to 7,500. In total, Propositions 94-97 are purported to give the state $9bn over the life of the contracts.

A fundamental split

"We just reached an historic agreement with the California Indian gaming tribes, and that will mean billions and billions of dollars over the next two decades," said Schwarzenegger on the evening of February 5. Yet, while many high-profile state figures have said the move will help alleviate California’s budget shortfall of $14.5bn, many have said the move to add up to 17,000 slot machines is far beyond the "modest increase" that was promised. Others have voiced concerns that the deals give away too much to tribes that are already counted among California’s richest.

Scott MacDonald, a spokesperson for the No on Propositions 94, 95, 96 and 97 campaign, said: "Some of the casinos would house two-and-a-half times the number of slot machines that are in the largest Las Vegas casinos." In the weeks leading up to the vote, MacDonald’s party reported that the Hollywood Park and Bay Meadows horse tracks, along with "a handful of Indian gaming tribes," were vigorously opposed to the action, fearing that increased competition could shut their businesses down. "It plays favouritism by giving a third of the state’s gambling pie to these four tribes out of 108 in the state," MacDonald said.

Officials from the Pechanga, Morongo, Sycuan and Agua Caliente tribes, however, said they were in dire need of the new slots. "When people line three or four deep and wait an hour - or two, or even three - to play a slot machine, you don’t have enough on the floor," commented Pechanga tribal chairman Mark Macarro.

In the weeks leading up to the presidential ballot, the debate between those for and against the new gaming compacts spilled very much into the public arena. Alarmingly, as it became apparent that Californians would indeed vote ‘yes’ to Propositions 94-97, opponents adopted an increasingly controversial advertising schedule that was tantamount to an all-out smear campaign, implying that the "sweetheart" deals were the direct result of the tribes offering millions of dollars to Sacramento politicians over recent years.

In their defence, the four tribes said they would not be the only ones to benefit from the new compacts, arguing that every Californian would benefit from the revenue sharing scheme. Refuting MacDonald’s claims, they also drew attention to the fact that just two other tribes - the Pala Band of Mission Indians in northern San Diego County and the United Auburn Indian Community near Sacramento - opposed the agreements. Rumours also surfaced that the opposition’s advertising campaign, which itself ran into millions of dollars, was funded by a concerned Las Vegas casino operator.

"Tribes throughout California support these agreements," said Raymond Torres, chairman of the Torres-Martinez Desert Cahuilla Indians. "They provide the state with much-needed new revenues and provide smaller, non-gaming tribes with funding to help our people become self-reliant and to fund healthcare, education, and other services on our reservations."

The temperature rises

During the campaign, opponents to the compacts were not the only ones guilty of hyperbole. A barrage of television adverts by those in favour of Propositions 94-97 stated that the gambling expansion would pump $9bn into the state’s empty coffers and help avert a tax increase. The non-partisan Legislative Analyst’s Office in Sacramento, however, called that estimate "overly optimistic." The LAO instead estimated annual slot revenues in the "tens of millions" of dollars - far, far less than initially suggested.

Even as the tribes and their supporters celebrated their victory at a downtown Los Angeles ballroom, Roger Salazar, spokesman for the tribes’ campaign, said it was too soon to say exactly how much they would be able to pay the state in the next year. "We’re probably looking at an additional $200m over the next year but we’ll wait till the dust settles before deciding how many slot machines the tribes will add," he said.

Moreover, it is unlikely that the casinos will expand quickly enough to help fix California’s projected $14.5bn budget gap. Schwarzenegger’s financial experts assume the new slot machines would not be installed until September 2008 at the earliest, and tribal leaders said in recent interviews that they hesitate to rush into large-scale expansion. "We have to go with the market," Daniel Tucker chairman of the Sycuan Band of the Kumeyaay Nation, told the LA Times. "We’re not going to go and just put in 3,000 machines and think it’s going to work."

Pechanga’s Macarro told a senate committee in April last year: "We can accommodate, I believe, an immediate 1,500 devices on our floor currently without expanding at all. The ability to go beyond that, which could require more floor space and more physical plant space, is something that we’re leaving to future tribal leaders of Pechanga."

The need for additional space has led many opponents to draw attention to environmental factors that may arise from casino expansion. While the Big Four tribes remain adamant that the ‘yes’ vote authorises new protections for the environment through strict standards, critics say the deals failed to include language that truly mirrors the California Environmental Quality Act, and even failed to allow communities to protest over the possible impact future developments would have on the state’s ecology.

One more additional factor that plays a large role in the political landscape surrounding the tribal gaming compacts has to do with labour union contracts. Some of the traditional unions in California have opposed Propositions 94-97 because they believe they get an unfair shake under the tribal compacts. According to MacDonald, the hotel workers’ union Unite-HERE opposed the compacts because they would change the way employees get union representation if they decided to organise, and fail to ensure basic rights for casino workers, including affordable health insurance. The coalitions, however, refute this claim, arguing that the new compacts will create thousands of new jobs and strengthen environment and employee protections.

A very American debate

The signing of Propositions 94, 95, 96 and 97 generated intense debate not just between economists, but throughout California. Unfortunately, the more heated the debate became, the more muddy the arguments, as lucid ideas and comments were replaced in favour of vote-grabbing tactics. This much is undisputed: the battle over the gambling measures may become the most expensive initiative fight in California’s history - and the huge sums of money spent to influence voters reflect the profitability of the tribal casino industry. Indeed, the tribes whose accords were at issue sunk more than $104m into their campaigns. The opponents invested $34.5m.

The debate surrounding the compacts remain soaked in rhetoric, and for every high profile figure seen appealing for the compacts, the opposition was always there with one to match with a ‘no’ vote. Fundamentally, while the overall amount expected to be handed to State of California over the life of the compacts is still uncertain, Roger Salazar succinctly noted: "Whether it’s $100m or $500m, it’s all money that can help stave off at least a few of the potential [state budget] cuts that are being considered."

The campaign was never about Indian gaming in general. It was always about four wealthy tribes and four specific deals - and whether California’s residents considered those deals fair for taxpayers, fair for California’s 104 other tribes, fair for the workers at those casinos and fair for the communities around those casinos. If nothing else, the passing of Proposals 94-97 demonstrates that voters are concerned about California’s economy, and they are willing to waive their concerns of gambling expansions and the dominance of these four tribes in the wake of the state’s financial woes.