Long Odds for Larry

Forget the competing “clean money” voter initiatives proposed by gubernatorial candidates Arianna Huffington and Arnold Schwarzenegger. Now stepping up to save the state is pornographer and recall candidate Larry Flynt, with what some would call, in comparison, a dirty-money initiative.

Flynt wants the state’s voters to authorize slot machines in card-club casinos. In exchange, his proposed initiative would dedicate 30 percent of the gross revenue — which Flynt optimistically estimates at $4 billion a year — to reducing the state’s budget deficit. Flynt, who has a card casino in Gardena, said he hopes to work with other card-club owners to get this measure on the ballot in 2004. After the deficit is retired, he added, the money would go into the general fund.

“Look,” said Flynt, “Chicago, Indiana, Mississippi, New Jersey — and on and on and on. States are finding it much easier to say yes to gaming than yes to raising taxes.”

Flynt has yet to file a petition with the Secretary of State’s Office, but he said he has hired a signature-gathering firm to qualify the initiative, and paid for polling that indicates strong potential voter support.

In California, only Native American tribes can offer Las Vegas–style slots, and only on reservation land. The 54 tribal casinos pay no tax revenues to the general fund, although under two recent agreements a handful of future casinos would pay about 5 percent of their revenue to the state. California tribal gaming took in $3.59 billion in 2002. California already has become the number-two state in terms of gambling revenue and could soon surpass even Nevada.

“The Indian casinos are enormously profitable and they’re paying no taxes at all,” said Flynt, “but at the same time they’re paying off the government. They’re paying off Bustamante.”

The gubernatorial campaign of Lieutenant Governor Cruz Bustamante has been sustained by contributions from tribal gaming interests. Governor Gray Davis, the recall target, has himself benefited mightily from such donations. All told, gaming tribes gave a reported $120 million in political contributions since 1998. Which helps explain why Flynt’s proposal to expand gaming has gone nowhere in the Legislature.

“We’ve always known that this is something they’ve been working toward for years and years,” said Susan Jensen, director of communications for the California Nations Indian Gaming Association. “They’ve always wanted to play that hand, but the idea just tends to resonate now that we have a budget deficit. We oppose the expansion of gaming outside Indian land because it would violate current public policy on gaming.”

Flynt does not deny that his 3-year-old card-club casino in Gardena would benefit: “Hey, if I didn’t have the casino, I wouldn’t have had the idea. You know?”

There’s a distinction between Flynt’s plan and the breast-implant tax proposed by fellow vanity candidate, Mary Carey, a porn-film actor. Carey’s publicity is probably good enough for her; Flynt, however, has hoisted the banner of a hurting industry.

“The market for card games is not increasing,” said Andrew Schneiderman, vice president and general counsel for the Commerce Club, the state’s largest card casino. “This business is extraordinarily labor intensive and the cost of operating continues to skyrocket. It’s only a matter of time before we get some form of liberalization in what we offer or we’ll go out of business.” Racetracks face a similar conundrum and also want more gaming privileges. Flynt, 60, is not hurting too much. He presides over a lucrative publishing and filmmaking empire.

The state’s 97 licensed private casinos typically charge a fee for letting patrons play cards against each other. There’s no betting against the house, as in casino-style blackjack. Just allowing casino-style blackjack, as the state of Washington has done, would help clubs stay afloat, said Schneiderman, who sits on the Gaming Policy Advisory Committee of the state’s Gambling Control Commission. Allowing slot machines, as Flynt prefers, could be even better. Scheiderman said he’s heard reports that the slots at a new Indian casino near Sacramento are pulling in $500 an hour, far surpassing a typical Las Vegas take of $100 an hour.

For their part, the tribes and their supporters insist that Indian gaming has turned around generations of poverty, and that California voters have shown no desire to widen the scope or mission of gambling.

“It’s almost sport for the tribes to beat down the card clubs,” said one legislative consultant, who requested anonymity. “I don’t think the card clubs could dream of putting together a big enough war chest to pass an initiative. I think it’s an absolute fantasy on Larry’s part.”

The long odds are not lost on Flynt, who’s frustrated enough to consider supporting Schwarzenegger. “Arnold’s been very disappointing to me because he doesn’t answer the questions,” said Flynt, but “I would rather see him get in there than Davis or Bustamante because . . . the private casinos in California get nothing, you know, from the government. He vetoes every bill that we get to him.”