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No More Casinos

September 30, 2004

People used to talk about the "Californication" of neighboring Western states, but Californians must now worry about the Nevadization of their state, given the incessant spread of casino gambling.

It wasn't supposed to be this way, of course. As Californians prepared to vote in the 2000 primary, they were assured that Proposition 1A, which changed the state Constitution to allow slot machines and other Nevada-style games on tribal lands, would produce only a modest increase in gambling -- just scattered casinos in rural, even remote, parts of the state. The measure passed, as expected. Then came the explosion.

Native American tribes have opened 54 casinos jammed with as many as 60,000 slot machines. These gambling palaces take in an estimated $6 billion a year, though no one knows how much exactly because the tribes are considered sovereign nations, subject to minimal state regulation or taxation. The notion that these casinos are remote destinations has become laughable. From San Diego to Sacramento, casinos are increasingly besieging California's cities.

The good news is that the public is beginning to say enough is enough, as witnessed by the uproar that caused Gov. Arnold Schwarzenegger's recent reversal on the proposed mammoth casino for San Pablo in the San Francisco Bay Area.

Either of two competing measures on the Nov. 2 ballot would produce yet another quantum leap in casino gambling in the state, which could even overtake Nevada in gambling revenues. Voters need to call a halt by rejecting both Propositions 68 and 70. Schwarzenegger and the Legislature should decide, incrementally and carefully, how much more casino gambling is appropriate and where it should be allowed.

Proposition 68 would demand that tribal casino owners agree to a tax of 25% on their revenues within 90 days of passage. But that's a Trojan horse meant to expand non-Indian casinos; the measure's sponsors know the tribes won't agree to such a thing, in which case the measure allows racetracks and card clubs to grab some of the action by installing up to 30,000 slot machines. These would be heavily taxed, but that's little solace for the harm of expanding casino gambling into metropolitan areas.

Proposition 70, sponsored by a handful of successful gambling tribes, would allow tribes to run as many casinos and slot machines as they wanted. Current compacts allow as many as two casinos and 2,000 slot machines per tribe. Tribes could add craps and roulette games to their existing slots and card tables. The measure is more generous in sharing revenue with the state than existing pacts, providing the equivalent of the 8.25% corporate income tax. No one knows how much that would bring in.

The argument for these measures and for the new gambling compacts negotiated by Schwarzenegger is that the state needs the money. Taken to its extreme, it's an argument for Nevada to simply annex our state, we suppose. There is a point of diminishing returns in this gambling craze, and we are past it. It's shortsighted to buy into a fiscal panacea that preys on people's weaknesses and imposes enormous environmental consequences on localities -- on traffic, water and sewer facilities and police and fire services. Defeat of the two initiatives would give the state time to establish a logical gambling policy that is fair to the tribes, gives the state a reasonable return and requires the tribes to mitigate the environmental problems created by a mushrooming gambling industry.

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