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Big money fight over gaming compacts

Rivals fighting over four amended tribal gaming compacts have raised more than $40 million in the last six weeks in an effort to get their message to voters. Both sides have released economic impact studies to back up their positions.

Gov. Arnold Schwarzenegger negotiated deals with four major gaming tribes last year: the Agua Caliente, Morongo, Pechanga and Sycuan. Californians Against Unfair Deals has put four referendums on the Feb. 5 ballot, allowing voters to invalidate the compacts with a majority “no” vote.

It has also hired Blue Sky Consulting Group to do a financial analysis of the deals. Blue Sky co-founder Tim Gage and Matthew Newman presented their results to the media on Monday. The pro-side estimated $9 billion in returns to the state’s general fund by 2030. But even if everything goes perfectly for the state, the consulting group said, the revised compacts would only deliver $8.4 billion to the state — and the number could be as low as $3.4 billion.

The report gives two major reasons for the lower revenue estimates. First, it says the addition of 17,000 new machines will lead to lower revenues per machine. Second, it says that the compacts are worded in such a vague way that the tribes would not have to count all the additional revenue in calculating payments to the state.

Worse, the consultants say, much of this money would be diverted from other existing sources of taxation, as people shift their money from other entertainment to casinos. They estimated these lost revenues would be $138 million a year, or $3.2 billion by 2030 — almost equal to their low-end estimates for the state’s revenue from the deals. Furthermore, many of the 1,800 new jobs promised via the compacts could come from jobs shifting from other businesses to casinos.

“All of the money that comes to these slot machines comes from somewhere else in the economy,” Gage said. “It’s not new money.”

The Coalition to Protect California’s Budget, which supports the compacts, released its own competing financial analysis later on Monday. It was written by Dr. Alan Meister of the Analysis Group, who wrote the original study.

Meister upped his revenue estimate to $10.2 billion, or about $445 million a year to the general fund. He also said economic activity in and around the casinos would bring in $5.4 billion in state and local taxes. Tribes would pay in $275 million in revenue sharing with state and local governments, and $128 million to non-gaming tribes, for an overall economic benefit of $16 billion.

“There is a substantial increase in revenues,” Meister said. “There doesn’t seem to be anything close to a saturation point in California gaming at this point.”

When asked why his numbers were so different from Blue Sky’s estimates, he said, “I was given access to the most controversial data there is by the tribes.”

California voters are sure to see lots of these competing numbers in television ads before Feb. 5. Last week, the Morongo Band gave $10 million to the pro-compact committee, the Coalition to Protect California’s Budget and Economy. This followed a $5.5 million donation the committee on Dec. 5.

The Pechanga Band of Luiseno Mission Indians made donations in the same amounts: $10 million on Dec. 21 and $5.5 million on Nov. 30. Overall, the Morongo and Pechanga bands have given $21.5 million each to the pro-compact campaign.

Agua Caliente gave more than $5.3 million on Nov. 21, bringing its total to $10.5 million. The fourth compact tribe, the Sycuan Band of Kumeyaay Indians, has reported $500,000 to the “yes” side — including a $1 million donation filed Monday.

This money has been going to support an ad campaign that’s been running for weeks. The coalition also introduced a new ad this week featuring Schwarzenegger and Superintendant of Public Instruction Jack O’Connell.

The four tribes with compacts at stake have sought to portray the opposition to the compacts as merely an attempt by other gaming tribes and gambling interests such as horse tracks to fend off competition. Two horse tracks, Bay Meadows and Hollywood Park, have each given $1.3 million to Californians Against Unfair Deals, the major group opposing the compacts. Labor union UNITE HERE has donated $1 million.

Since Nov. 21, two anti-compact tribes—the United Auburn Indian Community and the Pala Band of Mission Indians — have given more than $7 million to an organization called Tribes for Fair Play, No on 94, 95, 96, & 97. This includes a $4.5 million donation from the Auburn tribe on New Year’s Eve. Tribes for Fair Play, in turn, gave $3.8 million to Californians Against Unfair Deals on Jan. 2.

Californians Against Unfair Deals began its own television ad campaign last week. Spokeswoman Shelly Sullivan said the group has about $15 million.

“We continue to raise money every day, and we’re going to spend as much as we can,” Sullivan said.


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