Rolling the Dice

California looks to gambling to solve its financial woes.

Like so much else in California, it all started with Proposition 13. When voters capped property taxes in 1978, they spared seniors on fixed incomes from escalating tax bills, but also gave corporations a massive tax break, drained money out of California’s schools, and sparked a tax revolt that still sweeps across the country. The voters of Maine, for example, will be asked to implement their own version of Prop. 13 on November 2, and opponents there point to the collapse of public education in California as why their state should not imitate our own.

But something else happened in 1978, something that fundamentally transformed the tax structure in American society. The first casino opened in Atlantic City, making that city the first outside of Nevada to institutionalize gambling as a form of state revenue. In the late 1980s, Native American casinos began opening in states such as Arizona and South Dakota, and soon riverboat gambling swept up and down the Mississippi River as state leaders tried to figure out how to replace tax revenue from their dwindling manufacturing and agribusiness sectors. Faced with the slow decline of traditional industries and the political challenges of raising taxes, states around the country seized on gambling as an easy way out of their problems, just as many had previously flocked to lotteries. Of course, gambling is far from a painless revenue source. Like almost every other social problem, it afflicts poor people disproportionately, and as states raced to get a piece of the action, they traded progressive tax structures for various schemes to bleed dry their most vulnerable citizens.

Now this monster has come to California, which is so broke that it, too, is willing to substitute gambling proceeds for rational fiscal policy. Once Arnold Schwarzenegger put off the state’s most difficult budget decisions for about ten years, he cozied up to the operators of Casino San Pablo and signed a five- thousand-slot-machine deal right in the Bay Area’s urban heart. That plan has since been cut in half, and still requires legislative approval, but don’t think that slot machines aren’t coming soon to a neighborhood near you. No fewer than four additional casinos have been proposed for the East Bay, each of which would house thousands of slot machines. And according to gambling expert and University of Nevada Las Vegas professor Bill Thompson, each machine will take its marks for an average of $90,000 per year.

In a graceful bit of symmetry, these proposed casinos are all located in or near Richmond and Oakland, the type of cities hit hardest by Prop. 13. First the proposition cut state revenue for public education, which is the only ticket out of poverty for urban young people. Then it gave outlying cities an incentive to build shopping malls, wiping out older retail centers. Finally, Prop. 13 starved county governments and thus public hospitals — the very ones inner-city residents depend upon. With almost no options left, it’s hardly any wonder that Richmond and Oakland have succumbed to the lure of easy money, and that their leaders are trying hard not to think of the thousands of poor and fixed-income constituents who will blow their Social Security checks overnight.

Faced with such a regressive potential redistribution of wealth, one would think that at least one of the two state gambling measures on the ballot this Tuesday would regulate the number of slot machines in California. Silly rabbit — of course they don’t. In fact, both try to sucker us into approving the installation of more slot machines.

Let’s start with Proposition 68, the one that won’t win. Backed by a consortium of non-Indian card-club and race-track operators — including Albany’s Golden Gate Fields — the measure is an obvious bait-and-switch to legalize slot gambling throughout the state. Prop. 68 starts off sounding great, asking Native American casinos to renegotiate their compacts with the governor and give the state 25 percent of their proceeds. But here’s the catch: If just one tribe refuses to go along, the card clubs and racetracks would be allowed to install up to thirty thousand slot machines of their own. They make a lot of nice-sounding noises about giving a third of the profits to cops and social programs, but don’t be fooled: This is greed, pure and simple.

Fortunately, just about everyone saw through this ploy immediately. Polls project that Prop. 68 will go down to defeat, and once the governor vowed to campaign against it, the measure’s backers abandoned their campaign to pass it, although it remains on the ballot.

Proposition 70, on the other hand, has a lot more momentum. Casino-operating tribes conceived and financed the measure, which would allow tribes to abandon their old compacts with the state and install as many slot machines as they want. Under Prop. 70, tribes could sign onto a new compact that would give almost 9 percent of their revenue to the state, the same amount paid by other California corporations, and a lot more than the nothing most pay now. The compacts would last 99 years, lift the ban on other types of gambling such as roulette and craps, and restrict casino operation to Native Americans.

According to Prop. 70 spokesman William Rukeyser, the measure would yield substantially more revenue for the state. Schwarzenegger’s compacts have set aside a flat annual sum equivalent to between 10 and 18 percent of the current proceeds from five tribes. But under Prop. 70, the 9 percent cut, when applied to the 107 tribes in California, would give the state up to $2 billion in added revenue over the first five years. “It represents a reasonable slice of a very big pie,” Rukeyser said.

And he says no one should worry about casinos flooding into urban areas. “Tribes don’t like urban gaming,” he said. “They recognize that the public overwhelmingly opposes urban gaming, and they don’t want anything to give them a black eye in terms of public relations. And if your reservation is located in a rural area, you don’t want any roadblocks between you and your customers. Urban casinos would be such a roadblock.”

That would be fine if the moneymen behind the East Bay’s proposed casinos were willing to play ball, but they aren’t. The fact is that if the federal government recognizes any of these tribes and declares that their East Bay real estate can be considered illegally stolen from Native Americans during the nation’s past, the governor will be required to negotiate a casino deal with them. The East Bay would then be awash with slot machines — and the poverty and social problems that accompany them.

If there’s one upside to casino construction in the East Bay, it lies with the proposed Point Molate gambling den, located right next to Richmond’s ChevronTexaco refinery. The oil giant vociferously opposes the casino and has even offered to buy the land for $80 million. Why, you might ask? Because gambling, of all things, might finally force it to clean up its refinery.

For years, Chevron has periodically released clouds of toxic gas over the homes of its neighbors, who are generally too impoverished to do anything about it. But if Chevron spewed a layer of nitrogen oxide atop a casino packed with thousands of high-rolling gamblers, the tribe could no doubt muster an army of lawyers quicker than most of us could lose our paychecks playing blackjack. “That’s funny, isn’t it?” said Torm Nompraseurt, the lead organizer for the Laotian Organizing Project, which has long fought to improve air quality for Richmond residents. “It’s gonna take that to get justice. … Chevron can deny the community because they are poor. Now the Indians are coming, and they have the money to influence the city.”

Slot machines are the crack cocaine of the 21st century. But if we have to have a crack house on our block, let’s hope it’s next to Chevron.

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