Campaigns & Elections: The new special interest: native American-run gambling as a big money pol

PALO ALTO, Calif. -- Come this fall in California, the most polarizing political figure may not be George W. Bush or John Kerry or even the movie star-turned-governor. Instead, the spotlight could shine brightest on Larry Flynt, Hustler magazine's publisher.

It's not because Flynt's name is on the ballot (though he was a candidate in California's 2003 gubernatorial recall election). Rather, it's because of Flynt's association with a ballot initiative that brings new meaning to the term "high-stakes politics"--and show cases the emergence of Native American-run gambling as a big-money player in today's world of campaigns and elections.

At issue are two ballot measures; if both pass, the one with the most votes goes into effect. One of those initiatives, sponsored by 11 card clubs (including one owned by Flynt) and five racetracks, would force all of California's 63 gaming tribes to pay 25 percent of their gross slot machine revenue to the state, as occurs in Connecticut. If so few as one tribe refuses to go along with that, the racetracks and card clubs could then install slot machines at their sites, many of which are in urban areas, as opposed to the more rural Indian casinos. It would break the tribes' monopoly on casino-style gambling in California and, by adding up to 30,000 more slot machines, lead to a 50 percent expansion of slots statewide. The racetracks and card clubs say they would pay 33 percent of their revenues, estimated to be about $1 billion a year, into a trust fund that would support law enforcement, firefighters and programs serving abused children.

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And, to add injury to insult, the racetrack/ card club initiative would require the gaming tribes to waive their sovereign immunity and grant state courts exclusive jurisdiction over civil and criminal matters associated with gaming.

The tribes, in turn, are fighting fire with fire. The Agua Caliente Band of Cahuilla Indians has filed an initiative measure that calls for gambling tribes to pay 8.84 percent per year in taxes on their gambling revenue--the equivalent of the state's corporate tax rate. In exchange, the tribes who choose to pay at that level get unlimited Nevada-style gaming for 99 years, which means access to a range of casino games that are now illegal in California, most notably roulette and craps.

Already this spring Californians got a sneak preview of this coming attraction when voters received an anti-Flynt mailer with the following message:

      "Larry Flynt wants to turn his card club, which is close to more
    than a dozen schools, into a Vegas-style casino. This is the same
    Larry Flynt who presides over a vast empire based on selling smut.
    He owns a strip club in San Francisco, and publishes magazines like
    Hustler, Taboo and Barely Legal. The feminist and Ms. Magazine
    founder Gloria Steinem has criticized Flynt for publishing violent
    images that are degrading to women."

Subtle it's not. And by November, this message may dominate the Golden State's airwaves in a $150 million game of chance that decides the future of gaming in America's most populous state.

Big Business

So what separates this contest from other California initiatives current and past?

Simple: Money and ambition.

Since the passage of Proposition 1A four years ago, California Indian gaming is estimated to generate $5 billion to $8 billion per year, revenue that's not subject to state or federal taxes. The tribes pay about $140 million annually to the state. However, that money doesn't go for state programs in general. Instead, it's directed to non-gambling tribes and to pay for gambling side effects such as traffic congestion.

Because of the gambling riches, the tribes have a monetary advantage much greater than that of other California special interests such as organized labor and the state's teachers' union, which rely on a much smaller stream of political dues instead of casino profits. This enables the gaming tribes to wager on politics--betting heavily, in order to preserve the gambling monopoly.

Yet, not always with the best results.

Last October, nearly one-fifth of all money in the gubernatorial recall contest came from tribes. However, they bet on the wrong horses, giving more than $13 million to losing candidates--primarily former Gov. Gray Davis and Lt. Gov. Cruz Bustamante, Democrats both. They also wagered on and paid for TV ads on the behalf of state Sen. Tom McClintock, a conservative Republican. He wasn't so much a champion of gaming as he was a threat to take away GOP votes from Arnold Schwarzenegger, who at the time was calling the tribes "special interests" and running TV ads insisting that the tribes contribute their "fair share" to the state.

Then again, news of gaming tribes giving to political causes in California was anything but novel. In November 1998, California's Proposition 5 lowered the state's gambling age to 18 and allowed tribes to continue using video slot machines that the state and federal governments had deemed illegal. The tribes spent about $70 million getting that initiative passed (it was thrown out by the courts), plus an additional $30 million two years later to ensure the passage of Prop 1A, which grants tribes a monopoly on Nevada-style casinos.

But it's the current dual gaming initiative fight that takes the tribes' involvement to dizzying new heights. First, they've promised to easily spend $100 million--or whatever it takes--to defeat the so-called "Flynt Proposition." That's a staggering sum, even by California standards, when one considers that Schwarzenegger spent $27 million in his recall campaign and the Bush-Cheney campaign, should it decide to vigorously contest California, might part with all of $15 million.

Second, the tribes are showing more political sophistication by hiring two seasoned California consultants--Democrat Garry South and Republican Dan Schnur. It was South who helped to engineer Gray Davis' climb to the governor's office. Schnur, a past spokesman for former Gov. Pete Wilson and Sen. John McCain's presidential campaign, is arguably the most quoted Republican in the state. Combined, the two consultants from different sides of the track give the tribes a media presence they've always lacked--and, presumably, better advice than the tribes received during recall.

Players On the National Political Scene

What's happening in California fits into a larger trend of Native Americans coming of age in U.S. politics--and, potentially the ability to swing the fall election as tribes constitute an important voting bloc in such potential swing states as Arizona, New Mexico and Washington, plus a key U.S. Senate race in South Dakota.

According to the National Indian Gaming Association, there are 354 tribal gaming operations nationwide. Combined, they generated $14.5 billion in gaming revenue in 2002 (about one-fifth of America's total gaming industry). At present, some 23 states have entered into compacts with gaming tribes since 1988, when Congress passed the Indian Gaming Regulatory Act (ICRA), that allows tribes to negotiate with states to open casinos. Under that law, states can't tax tribes. However, a series of decisions by the U.S. Department of the Interior, which reviews compacts, led to a policy of allowing revenue-sharing in exchange for an exclusivity agreement, like the one that is under fire in California.

In the process, ICRA became the classic law of unintended consequences, as it created a political powerhouse that combines the best of both worlds: a seemingly endless supply of money, and Native Americans, a new voting bloc waiting to be courted. And in this year's presidential election, that number of voters might be more important than the much larger number of tribal dollars.

There are two reasons why.

First, in a computerized and carefully calculated election that likely will be decided by a narrow swing vote, the tribes represent one of America's last significant chunk of untargeted voters. Native Americans who potentially could vote in public elections often live without telephones or automobiles on remote reservations that lack rural address numbering systems. Not surprisingly, turnout among the nation's 4.1 million Native Americans runs between 20 percent to 40 percent, far below the national average of 50 percent.

But, given that turnout in tribal elections can run as high as 70 percent, it is clearly a growth market. Thus, the Republican National Committee has come up with a Native American Web site, and Democratic presidential candidates have campaigned on reservations and pandered for votes by supporting Indian self-determination.

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And, second, there is a track record for deciding an outcome.

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In the 2002 U.S. Senate race in South Dakota, for example, the tribes supported Democratic incumbent Tim Johnson over Republican John Thune, then a House member. As Election Day came to a close, Thune held a 3,000 vote lead. But after the late-arriving votes from the state's Big Pine Reservation were counted, Johnson emerged with a victory by a mere 524 votes. In terms of the 2000 presidential election, that's practically the same margin as Florida (537 votes), which George W. Bush won, and New Mexico (366 votes), where A1 Gore eked out a victory.

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Not that either party has monopoly of the vote. Historically, American's 557 Indian tribes have gone Democratic (the Citizenship Act of 1924 gave American Indians the right to vote). However, the money is now flowing in an opposite direction: across the aisle. In 1990, Indian tribes gave no money to Republicans. Today, almost half of all tribal contributions--about $8.6 million on congressional and presidential races since 1993--go to Republicans.

Indeed, tribal money seemingly breaks down into two categories. There's the matter of winning races, which includes the aforementioned donations to Republicans, as well as the $500,000 spent in media ads against GOP Sen. Slade Gorton (he opposed Indian sovereignty) in Washington state's 2000 U.S. Senate race. Gorton lost his re-election bid.

Looking Forward

Then there's the matter of building inroads.

As the Washington Post reported earlier this year, four tribes--Michigan's Saginaw Chippewas, Mississippi's Choctaws, Louisiana's Coushattas, plus the Agua Caliente of California--paid more than $45 million for lobbying and public relations work conducted by firms connected to Jack Abramoff, who is considered close to House Majority Leader Tom DeLay. By comparison, General Electric Co. paid more than two dozen lobbying firms $30.4 million over the same three-year period; the nation's top four pharmaceutical companies spent a little less than $35 million on lobbying and law firms. The fees paid for by the tribes "are all the more remarkable," the Post wrote, "because there are no major new issues for gaming tribes on the horizon, according to lobbyists and congressional staff."

However, the same is not true at the state level, where there is one prevailing issue-the need for new revenue-and deals waiting to be struck.

That's been the case in Wisconsin, the home of Indian casinos since 1992. Then tribes were granted Las Vegasstyle gaming in exchange for a $200 million tithe to the state. (The state Supreme Court has since invalidated that deal, which was orchestrated by Democratic Gov. Jim Doyle, a recipient of tribal money in his 2002 campaign). It's also true of New York, where Gov. George Pataki (R) negotiated agreements for Seneca casinos with slot machines in Buffalo and Niagara Falls in exchange for 25 percent on the proceeds. In Minnesota, Gov. Tim Pawlenty (R) also talks about cutting a gaming deal with his state's gaming tribes, similar to the agreement in nearby Wisconsin.

Then again, the governments' actions reflected what voters were showing at the ballot box. In Arizona, voters approved a measure in November 2002 that allows tribes more slot machines and Nevada-style blackjack while giving the state more than $100 million in gambling revenue annually.

California, Here We Come

But it's California with not only the mother of all gaming initiatives, but the most complicated politics.

After campaigning against the gaming tribes during recall, Gov. Schwarzenegger factored a $500 million contribution into his 2004-05 budget, based on the assumption that, as in other states, California's tribes would offer more cash in exchange for expanded gaming. The odds were in the governor's face, he needed the money to balance his budget. But just as compelling was the tribes' need to undermine their opponents by offering up more cash to the state.

However, there were complicating factors. During recall, Schwarzenegger both ran against the tribes but didn't close the door on expanded gaming--as long as it was in rural and not urban areas. And, while Schwarzenegger did not support the Agua Caliente initiative, he was reluctant to support the rival measure. That despite the fact that one of the consultants working for the tracks and card rooms was George Gorton, who ran Schwarzenegger's Proposition 49 campaign in 2002 and was part of his recall team of advisors.

Which only goes to show the new order, as Indian gaming becomes more of a political force. Tribes support Democratic candidates; they learn to work with Republican governors. Mean while, consultants of all stripes manage to work all sides of the issues.

Which doesn't seem to worry those running the casinos.

"Tribes found a source of income to fund our governments, thus allowing us to take our place in the California political landscape," Viejas Chairman Anthony Pico told a Sacramento Press Club audience back in April. "Shouldn't we all be celebrating? America is finally living up to its promise to American Indians."

And, he might have added, rapidly changing the face of American politics.

Bill Whalen is a research fellow with the Hoover Institution at Stanford University, where he specializes in California politics. He writes frequently for The Weekly Standard, as well as such leading California publications as the Los Angeles Times and the San Francisco Chronicle.