California Card rooms take aim at tribes' monopoly

California is heading for a ferocious political showdown between the state's influential and well-heeled gambling interests: the racetracks and card clubs that for decades had an exclusive hold on the business of accepting legal bets, and the Indian tribes that were granted sole rights to offer Las Vegas-style casino games nearly four years ago.

The winner of the showdown could be decided by competing initiatives being drafted for the November ballot, but whatever the outcome, gambling is going to grow in California.

The table stakes are huge.

Estimates are that Indian gambling alone generates annual revenue of $4 billion to $6 billion. In 2002, the total money bet at California racetracks was $4 billion, and track officials have complained for years that they are struggling with declining revenue and participation, according to statistics compiled by the California Horse Racing Board.

This week, the state attorney general is expected to approve for circulation an initiative sponsored by 11 California card clubs and five racetracks that would require all 53 gambling tribes to pay 25 percent of their gross slot machine revenue to the state. If one of the tribes refuses, the card clubs and racetracks will be allowed to install slot machines in their sites -- a move that would break the monopoly the Indian tribes have on casino-style gambling, particularly the operation of slot machines with their enormous income potential.

It also would mean having slot machines in the state's population centers, including racetracks in San Mateo and Albany and card clubs in Colma, Pacheco and San Bruno.

"I think there's no doubt the racetracks and card rooms are taking on tribes at what they perceive as their most vulnerable time," said attorney Howard Dickstein, who represents three of the tribes. "They're trying to pounce."

Tribe files own initiative

In response, one of the state's most successful gambling tribes, the Agua Caliente Band of Cahuilla Indians, which operates resort casinos in Palm Springs and Rancho Mirage (Riverside County), filed with the attorney general's office last week an initiative that would have the gambling tribes pay 8.84 percent a year in taxes, equal to the state's corporate tax rate. In exchange, all limits would be removed on the scope and size of gambling the tribes could offer at their casinos.

Also last week, Gov. Arnold Schwarzenegger's lead tribal gambling negotiator, former appellate Judge Daniel Kolkey, began discussing new agreements with several tribes that have the largest gambling operations.

Kolkey's goal is to have the Indians pay their "fair share" of revenue, which the governor estimates at $500 million in the coming fiscal year, into the state's deficit-ridden general fund. In exchange for helping the state solve its financial crisis, the Indians are likely to seek -- and the governor appears willing to give -- an increase in the number of slot machines each Indian casino can operate.

Although state officials stop short of stating that they will agree to more slot machines for each tribe, they affirm it is a key point in the negotiations. They repeatedly say the goal of the negotiations is to achieve a "win-win" set of circumstances, a term tribal representatives also use.