It was one of those surreal moments that often punctuate a reporter’s life. I was in Palm Springs in a union organizing office last week doing some research on an Indian gambling story when news broke that Governor Schwarzenegger had reached a compromise with five casino tribes. Under the new terms, the tribes will not only maintain their monopoly on Nevada-style gambling but will be allowed to field as many slot machines as they want beyond the current limit of 2,000 each. In exchange they will pay the state an immediate $1 billion, as well as a progressive levy on each new machine — creating an annual revenue stream for the California treasury of $200 million or so. Maybe more. With tribes also agreeing to stay neutral in labor organizing drives, another 1,200 workers or so among the 43,000 who work in California casinos would now be able to join a union without any interference.

“The governor’s really holding the line on this issue,” said an elated official of the hotel workers union as we read the news wire report coming in. “This is fantastic,” he added, unconsciously using one of Schwarzenegger’s favorite words.

You’ll remember, of course, this is the same Schwarzenegger whom organized labor had vowed to crush last fall. The state Federation of Labor pledged millions to defend Gray Davis. Its president, Art Pulaski, made a bit of a fool of himself by flying around the state with the doomed Davis and loudly proclaiming him “the state’s greatest governor in a century.”

My, how times change. This weekend the hotel workers union — about whom I have the highest opinion, by the way — are busily converging on Sacramento not to bury Arnold but to lobby vigorously to support ratification of his new agreement with the Indians. And they’ll have to do so over the resistance of some old Davis Democrats. Politics is a bitch, isn’t it?

The cold facts, however, are that in the ongoing and often tumultuous negotiations with the Indians, Schwarzenegger has been labor’s best friend. His negotiators held firm that if the tribes wanted to expand their casinos, they had not only to step out of the way of union organizing but also to comply with California’s environmental, health and safety standards. They could no longer dodge regulation under the cover of tribal sovereignty. Indeed, after this new deal was inked, a group of powerful tribes in the Palm Springs area led by the wealthy Agua Caliente Band of Mission Indians offered a counterproposal. They would cough up even more cash for California if they could expand gaming, but rejected new state regulation and vowed to keep fighting unionization. Schwarzenegger told them no dice.


Before you ask, no, I didn’t get hit in the head. Nor bought off by a box of Davidoffs FedExed down from the Governor’s Office. (Note to Arnold: I prefer Diplomaticos.) Nor do I believe that he has taken such a pro-union stance out of a closet fondness for anarcho-syndicalism. The governor simply knows that to follow through on his campaign promise of getting the state a “fair share” of the annual $5 billion raked in by the tribal casinos, he’s going to need the Democrat-dominated Legislature to ratify his new agreements. And state Senate Pro Tem John Burton and Assembly Speaker Fabian Nuñez have been unwavering in their insistence that neutrality on union campaigns be part of any new package with the Indians.

The new agreement is tinged with some more worrisome aspects. The actual revenue that the state will collect, which will be directed toward communities hurt by casinos, is substantially less — percentage-wise — than what other states extract from their local tribes. Also, gambling expansion will quickly accelerate statewide. While 60,000 slot machines currently dot California, industry experts predict that demand might top out around 350,000. That’s one money-sucking machine for every 100 residents — a mind-boggling number which could translate into six times the casinos we already have. Former Lieutenant Governor Leo McCarthy, now working at a gambling-addiction institute, has warned Schwarzenegger: “Your proposal will . . . elevate California to the world’s gambling capital.”

Maybe an exaggeration. But maybe not. Either way, let’s make sure the historic record is clear. California’s destiny as a gambling mecca was guaranteed not by last week’s agreement but rather by the 1999 compacts that then-Governor Davis signed with 50 tribes. Simply put, Davis gave away the candy store, granting the tribes unprecedented economic and, therefore, political power. Now the biggest group of political donors in the state, California Indian tribes have poured more than $135 million into state races over the last several years, virtually buying out some politicians on both sides of the aisle.

If Schwarzenegger had done nothing at all, the Agua Caliente tribe alone was going to spend $50 million on a November initiative that would have allowed unfettered expansion. Let me rephrase that: As of this week that tribe says it’s still going to take on the governor and go ahead with the initiative regardless of the deal that Schwarzenegger cut with the five other tribes. It wants its cake, period. If that initiative wins, it will invalidate the governor’s deal and allow California to be paved with casinos with little return for the state, no union protection and no environmental standards.

So expansion was coming either way. The question was only if the state and local communities would have some say in (and derived some benefit from) managing it and if the workforce and customers would be protected by state laws, or if the industry would continue to go unchecked and rogue.

Fortunately, the governor, the Democratic leadership and the unions have insisted on the former and have won an important first round. Now they are teaming up to terminate the Agua Caliente runaway initiative. Strange times.

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