SACRAMENTO — Talking tough in television ads during last year's recall race, Arnold Schwarzenegger denounced Indian tribes that own casinos as special interests handing out fat campaign donations while giving little back to the state.
"I don't play that game," he intoned in a commercial featuring a spinning slot machine.
But those were a candidate's words. As governor, Schwarzenegger this week signed deals allowing five tribes unlimited expansion of their gambling operations, subject to legislative approval. In exchange, the state would take a larger cut of those tribes' casino profits than it does now, albeit less than the 25% Schwarzenegger demanded in his campaign.
"This is a jaw-dropping political metamorphosis for a candidate who railed against the ... influence of Indian gaming," said Jason Kinney, who was an aide to former Gov. Gray Davis and now works in public relations.
In fact, Schwarzenegger has never opposed gambling. Indeed, before entering politics, he was a pitchman for a group that sought to open casinos in Las Vegas and Atlantic City. And his "Terminator" image appeared on slot machines sold internationally.
After his election in October, Schwarzenegger said in interviews with reporters that he wanted to help tribes expand their operations, saying at one point that he hoped to turn what was estimated to be a $5-billion industry into a $10-billion industry.
Now, facing a yawning budget gap, Schwarzenegger is moving to see that expansion through -- as long as tribes pay the state. What is unclear is how much expansion he will foster as he tries to persuade more tribes to renegotiate the deals they made with the Davis administration, and authorizes tribes that don't have casinos to open them.
Gambling critics, including former Assembly Speaker Leo McCarthy, predicted that if Schwarzenegger wipes out Davis' limit of 2,000 slot machines per tribe, the governor could double the casino industry in California. Bear, Stearns & Co. analyst John Mulkey, who tracks the gambling industry in California and elsewhere, projected "modest growth," noting that the new deals include only five of the 53 tribes that have casinos.
"Certainly the tribes that signed these compacts were willing to renegotiate their compacts for a reason, and that is that they see more growth," Mulkey said.
