Compact opponents claim deals won’t deliver on $9 billion promise

The campaign against the four amended gaming compacts is releasing a new report this morning claiming that financial promises to the state will fall far short of what is being advertised.

Meanwhile, the pro-casino side will be releasing their own numbers in a teleconference later in the day.

The report comes as casino opponents have begun a media campaign against the compacts, financed by several million in donations by rival tribes and horse racing tracks. Pro-compact forces have been giving heavily as well, led by a $10 million contribution by the Morongo Band of Mission Indians on Thursday.

Governor Arnold Schwarzenegger negotiated deals with four major gaming tribes last year-the Agua Caliente, Morongo, Pechanga and Sycuan. The group Californians Against Unfair Deals has put four referenda on the Feb. 5 ballot, allowing voters to invalidate the compacts with a no majority "no" vote. They also hired a pair of consultants to evaluate the tribes financial claims.

The tribes and the governor have been quoted in television commercials supporting to compacts that they will add more than $9 billion to the state's general fund by the year 2030. In their report issued at10 a.m. this morning at the Senator Hotel, next to the Capitol, Tim Gage and Matthew Newman said the actual state revenues are likely to be far lower. The report came out less than a week after the no side introduced their first television ads.

The co-founders of the Blue Sky Group said that even if everything goes perfectly for the state, the revised compacts would only deliver $8.4 billion to the state-and could be as low as $3.4 billion. The report gives two major reasons for the lower revenue estimates. First, they say the addition of 17,000 new machines will lead to lower revenues per machine. Second, they say 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, they say, much of this money would be diverted from other existing sources of taxation, as people shifted 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.

"Although the tribes have stated that the compacts will generate more than $9 billion for the state, this estimate has received little scrutiny," the report states. "The rate at which tribes install the new machines, the appetite for Southern Californians for additional slot-machine gambling, and the ways in which the compact language is interpreted by the tribes and by the courts could all result in lower payments to the state."

The claims are certain to draw a sharp rebuke from the tribes and their supporters. They 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.

The Coalition to Protect California's Budget will release their own competing financial analysis on Monday, according to spokesman Roger Salazar. It will be written by Dr. Alan Meister of the Analysis Group; Meister came up with the original $9 billion state revenue estimate. The Coalition also introduced a new ad this week, featuring Schwarzenegger and Superintendant of Public Instruction Jack O'Connell.