Column: The Most Expensive State Election in History





Mr. Thompson, Professor of Public Administration, University of Nevada, Las Vegas, is the author of Legalized Gambling: A Reference Handbook (Santa Barbara and Denver: ABC-Clio, 1994 and 1997-2nd ed.).

The demise of moralistic politics was decried in my column of June 17 (Can Anybody Teach Gray Davis to Behave Himself?). One issue in particular has typified that demise: gambling. While an American California has had a modicum of gambling since its first Gold Rush days, most of its long moralistic era saw gambling repudiated by both the leaders and the people of twhe state. In recent decades, this has changed.

In 1911 Hiram Johnson signed legislation to prohibit race track gambling and ban slot machines. Earl Warren shut down illegal dog tracks, gambling speakeasies, and bookmaking operations. Warren closed casino boats operated by mobsters off state shorelines. Warren called gambling" corruptive, dishonest in operation, and often cruel in its consequences."

There have been campaigns for commercial casinos, which have been opposed by governors and leading political actors. However, after the 1978 adoption of tax limits, public attitudes shifted. The first gambling referendum to follow Proposition 13 concerned the establishment of a lottery in 1984. The lottery issue had come up before. In 1964 interests placed the question of a privately-run lottery on the ballot. Governor Pat Brown opposed it as trading"on human weakness." The measure failed; 69 percent said"No." In next two decades six more proposals were advanced for lotteries. Only the one in 1984 reached the ballot stage.

In 1982 a lottery proposal failed in the legislature. The next year polls showed that the public wanted a lottery as an alternative to having budget cuts or new taxes. The 1984 campaign was promoted by Scientific Games, a company that manufactured lottery tickets. Scientific Games wrote the ballot proposition.

It called for the lottery to start within 135 days, and it had to have an instant game with tickets of certain specifications. Only Scientific Games made the tickets. All officers of supply companies had to make full income disclosures. Only Scientific Games officials had done so because it was a subsidiary of Bally's Casinos. Bally's was required to make the disclosures for casino licensing. Lottery funds were for education. Scientific Games recruited teachers to circulate petitions. The company invested two million dollars in the campaign.

The proposition assured the public that the lottery was not going to lead to"bad" gambling. It banned casino games. The public was not informed that Bally's was about to purchase the large M.G.M. casinos in Nevada. The proposal protected Bally's from casino competition from California.

The lottery was opposed by the governor, the attorney general, and local school boards. They felt lotteries would draw revenues mostly from poor persons. Money won. The measure passed with 58 percent voting"Yes." Scientific Games won a first year contract for instant tickets unopposed. The contract was for $40 million.

Education received lottery funding, but the legislature cut other funding for education so the total school budgets did not change much.

A new public sentiment was also reflected in votes favoring Native American casinos. In the early 1980s tribes ran charity games such as bingo. To gain a competitive advantage over other charities, tribes chose to ignore state rules regulating hours and prize limits. Local officials tried to stop the violations, but federal courts ruled that the state could only stop games if they were criminally illegal per se, not if they were merely operated in violation of regulations. The rulings led Congress to pass the Indian Gaming Regulatory Act of 1988 (IGRA).

The IGRA allowed states and tribes to enter into compacts to regulate casino gambling if that gambling was permitted in any form in the state. California officials balked at making compacts with tribes that now wanted slot machines and casino games. Tribes started the games anyway.

As enforcement of gambling on tribal lands was by the federal government (in accordance with the IGRA), state governors could not close the casinos. U.S. Attorney General Janet Reno judiciously decided not to authorize more raids after"Waco." Desiring legal status, the tribes sponsored legislative initiative Proposition 5 in 1998. It authorized unlimited and unregulated (by outsiders) casinos on the tribal lands--California has over 100 tribes. The tribes put almost $70 million into the campaign--one tribe--the San Manuel in San Bernardino--contributed $26 million. Nevada casinos responded with $25 million in opposition. This was the most expensive political race in American history with the exception of the last three presidential races. Money won. Voters gave the proposition over 60 percent approval.

However, the proposition was in the form of a legislative initiative, and the courts found it unconstitutional. Nevada casinos paid for the court challenge, using the 1984 lottery provision to stop the casinos.

The tribes regathered and lobbied new Governor Gray Davis for support of a constitutional initiative--Proposition 1A--to allow casinos. He helped write the proposition. The measure limits individual tribes to casinos with up to 2000 slot machines as well as traditional casino games. It provides for some state regulations and taxation. Nevada interests, stung by the amount of money that the tribes were willing to spend in 1998, were content with the new provisions. They were pleased not to have to spend money against casinos again--a position that makes them feel hypocritical.

In the formerly Moralistic state of California, gambling has ceased to be seen as an activity that can harm people or compromise moral values. Rather it is seen in terms of money--who gets the money and who doesn't get the money. An unsuspecting public easily neglects the source of gambling dollars (their own pockets) as it is drawn to appeals from those who will receive the money--the government treasurers and tribes who collect the funds. They are playing a win-lose game mandated by the new culture of California. Only in a game with selfish outcomes will political interests--California tribes and Nevada casinos--invest nearly a hundred million dollars in a political referendum campaign. Where is the golden beacon at the top of the hill? Where is the Golden State?


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