Dan Walters

Q: How do you explain that in Nevada and New Jersey, two lesser states on many measures, they have really rigid, strong and competent regulation. And California, the third largest in terms of legal gambling and the most populous state, doesn't have adequate gaming regulation?

Interview with Dan Walters, political columnist, Sacramento Bee. He was interviewed in the early spring of  1997. Walters: Well, it's a political decision. Dan Lungren, attorney general, has tried for four years, it's his fifth year he's been trying to get some sort of gambling regulation in place. Explicitly to regulate cardrooms, which is a kind of unique California phenomenon of legalized card playing, poker mostly, that are now regulated at the local level. And there's been a number of problems.

But I think it sets the stage for the regulation of the full casino gambling that everybody assumes is coming to California at some point. Nobody knows exactly when, nobody knows exactly where, nobody knows exactly who's going to control it. But that's really what all this is about. If it were just about cardrooms, this thing would have been settled a long time ago.

What this is really about is who's going to control gambling in the most populous state in the nation in the 21st century when everybody realizes it's going to be an immense thing at some point.

Q: The whole gambling regulation fiasco, you find it funny. What is it about it that is so revealing to you? What is it that tickles you about it?

Walters: Well, what tickles me about it is, first of all, all the interest involved in it. There are Nevada interests, Indians, cardrooms, horse racing tracks and everything. And sub-factions of each one are very often at odds with one another. So it's a very complicated political thing. It's all about money, It's money for the gamblers, it's money for the lobbyists, it's money for the politicians in the form of campaign contributions.

And I think what's been happening, and privately a lot of people involved in it will tell you that what's been happening is basically everybody's been milking it. There's no immediate crisis. So there's nothing that forces the legislature to act right this instant.

So what they've been basically doing is milking the thing. All those who are most immediately involved in the process, lobbyists and legislators, all have a built-in reason not to resolve the issue, because as long as they keep it running along the lobbying fees keep rolling in, the campaign contributions keep rolling in... Every year it seems they're about to make it, and suddenly and usually in the last few minutes in the legislative session something happens on some ostensible reason for some ostensible reason that kills the bill.

Q: And that strange reason is?

Walters: Money. It keeps it coming in. It keeps the lobbying fees coming in, and it keeps the campaign contributions coming in. And it's just, we're in a Chinese restaurant so I'll use an old Chinese proverb about don't break somebody's rice bowl. Well, this is the rice bowl, this is a rice bowl, a big rice bowl for all the people involved in it. And it's all about money.

Q: When you analyze the political contributions from the gaming industry in the past five years, and the amount of money paid out by that very same industry full of lobbyists, it's about eight million dollars for the politicians and about nine million dollars for the lobbyists.

Walters: That's a lot of money. Now it pales in comparison to the larger stakes involved, who are billions of dollars. But hey, a million here a million there, pretty soon it adds up to real money, right?

Q: Tell me about the famous Lockyer-Eisenberg showdown....and what it represented.

Walters: I didn't witness it, but I heard about it very few minutes later, thereafter, and talked to people who had seen it. What had happened is that the bill had been, um, it goes through several, as we know, all the committees and houses and there's also the floor amendments. There's a lot of complication part of it.

It had basically been passed by the Senate in a form that had, in the Senate, Bill Lockyer's house had picked up a lot of baggage. Stuff that was put in the bill supposedly to get support for it from some interest group, but it also turned off other interest groups. The thing had become kind of a Christmas tree bill with a lot of ornaments on it.

In the Assembly, at the very last minute, Phil Eisenberg, who's a former assemblyman who was carrying the bill for, for Dan Lungren, a Democrat carrying for Lungren, a Republican, basically stripped the bill back down to its original essence, which everybody supposedly kind of agreed on to begin with. The bill was past the Assembly in that form on the last night, went over to the Senate, needed one more floor vote in the Senate to go to the governor. And Bill Lockyer basically adjourned the Senate in a few minutes before that bill actually physically reached the floor and left no doubt about it. It doesn't leave any doubt about that he did it to kill that bill.

Q: But that was his bill!

Walters: In theory it was his bill, in theory. But one of the ways in which a legislator controls, if you put your own name on the bill, you control it. You can control it right down to its death if you want to. Whereas if somebody else puts his name on it, that control is lost. That's what Lockyer had done.

And then he had a confrontation with Phil Eisenberg in one of the back hallways of the capitol. Literally as the place was clearing out, he and Eisenberg ran into each other and, and Eisenberg said in effect, "Why did you do this to me? Why did you kill it? Why did you kill it?" And they got into a big row over the thing and Lockyer, who has a very short temper, yelled at Eisenberg, "F--- you, Mr. Termed Out!" Meaning it was the last legislative session for Eisenberg, who was being forced out of legislature by term limits. "F--- you, Mr. Termed Out."

And that kind of, that's now entered the legend, as it were, of this legislation, also Bill Lockyer's legend. But it indicates kind of how seriously everybody took it. The entire legislature ground to a halt, was literally quit for the year, or was stopped for the year just to prevent this bill from passing.

Q: But basically, is it not true that Senator Lockyer ended up in the end killing the bill that he had presented, and he had basically supported and approved?

Walters: Yes, he had killed the bill that he basically supported and approved. Now he has rationales for it. He says that the bill was changed and there wasn't notice, and so forth and so on...

Q: Do you buy the rational?

Walters: No. I think he wanted to kill the bill. I think he decided he didn't want to have it passed in 1996 for whatever reason, for whatever reason. Bill Lockyer is a very clever man. He's dreamed up all sorts of rationales for killing this bill. He can give you very elaborate, um, reasonings for its deficiencies. And one area, he said at one point, he said we don't need it at all. We don't need this bill. And then he, then he made a deal with Lungren to put it in, controlled it, and then eventually killed it in the end.

Q: Well, you can appreciate how, for an outsider, that's a completely baffling scenario you have just laid out. Does it make sense in Sacramento?

Walters: It makes sense in Sacramento. Politics has a logic unto itself. An internal logic that has nothing to do with reality. I tell people from time to time, first thing you have to remember about politics is it has nothing to do with reality or logic, it has to do with perceptions and, and interests. What seems very logical and rational to an outsider, i.e., California has a lot of gambling, there are evident problems with that gambling, therefore you should have some regulation to clean up the problems, gets completely lost in the instant politics of the issue, which have almost entirely to do with money, or money and power is the case, I think.

Q: Because you see the bills passing by huge margins when everybody's on the record. Everyone in the legislature seems to agree, virtually everyone, that there should be a good regulation bill. And then it disappears.

Walters: That's right, and that's what I mean by milking it. Everybody involved in it has a vested interest in keeping it alive, but never letting it come to its final conclusion, because if it did, the money would go away. No more lobbying fees, no more campaign contributions, it would be resolved. So they just want to keep that, that cow giving milk as long as they can do it.

This is not the first time this has happened. I have seen many other issues milked in this exact same way over the years. Eventually what happens is that the people with the stakeholders, if you will, people are trying to get the, get it, make it happen eventually get tired of being milked, they really, they realize they are being milked finally, and they say, "Okay, we're out of here."

I saw it happen on a thing called unitary taxation. A very complex thing involving how you tax multinational corporations. The multinational corporations put up tons of money to get this system changed year after year after year. Longer than the gambling thing, it went on for eight or nine years. Finally the multinationals realized they were being milked. And they finally, then they just told everybody involved, "This is the last year. Either you do it this year or we're pulling out and we're never going to try it again." They said, "Okay, if that's the way you feel about it, we'll do it." And they did it. So this is not the first time this has happened.

You're talking about a tremendous amount of money. Once again, California does nothing small. And this is one of those things. Look, campaigns, legislated campaigns, just every two years a hundred seats in the state legislature come up. Eighty seats in the Assembly, twenty seats in the Senate. They spend an average of about a hundred, about a million dollars on each one of those races and campaign funds. It costs more to run for a legislative seat in California than it does a typical seat in Congress. So you're talking once again about a scale. A hundred million dollars has to be ponied up every two years here by somebody. [I]t's big business, it's very big business. And gambling is just one of the sources. It's not even the most important of those sources by any means, but it has emerged in recent years as a new source of money.

Every once in awhile something pops up that creates a new source of political money. This is like a new vein of gold up in the foothills or a new placer deposit in one of the streams. And all the miners are rushing in there to get it until it plays out. So they're all grabbing everything they can get a hold of, and it plays out. Now in this particular case, the outside stakes, literally billions of dollars, are so immense that it will probably keep on rolling.

Because in back of all this is an assumption that one way or the other casino gambling is coming to California, big time casino gambling. And if it comes the potential of it is unimaginable. If you can create what they've created in Las Vegas out in the middle of the desert, can you imagine what they could create on southern California beaches, or in the mountains of the skiing, or...California is a tremendous tourist draw as it is without full-scale gambling. Catalina Island, can you imagine gambling on Catalina Island? It could be the new Monaco, it could be the new Monte Carlo.

It's coming, everybody knows it's coming. It's coming little bits at a time. The Indian casinos, the big new cardrooms that are really casinos waiting to happen. The big new resort hotels that are casinos waiting to happen. Everybody knows it's coming. Nobody knows exactly when or where or who's going to control it, and this is what it's all about. So this cow is going to give a lot of milk. It can be milked and milked and milked and milked and milked for a long time, 'cause it's not something that's going to go away all by itself.

Q: You know, it is in the end, though, a bill that only essentially regulates cardrooms. Which is only part of the gambling story in California. It doesn't touch the Indian casinos specifically at all.

Walters: Versions of the bill have touched the Indian casinos in terms of, clarifying who negotiates with the Indians on compact, but you're right. Primarily it's a bill that will shift the direct regulation of the cardrooms, this unique California little quirky thing left over from the gold rush, from local governments. It's what they call "local option." Cities and counties can choose to have cardroom gambling or they can choose not to have cardroom gambling.

Now that's all done purely locally, and the attorney general's reasoning and the law enforcement reasoning is that cities are at conflict of interest. They are in the business of regulating some industry that is a major source of revenue for the city coffers. And so there's a lot of built-in reason to look the other way. To go easy, to not really put on tough regulation.

Lungren says what you really need is state licensing patterned after what they do in Nevada and New Jersey. The state commission, and background checks, and the whole nine yards of professional licensing. And by and large, the cities are not opposing that. As long as the, uh, the ground is equal, the playing ground, they're not opposing that. And a lot of the gambling interests want it as well, but some of them don't, some of them do. But yeah, but it's only the precursors I said before, it's only the precursors. Everybody assumes that full casino gambling is coming to California in some form sometime, and this sets the regulatory mechanism for what will be a huge gambling industry in this state sooner or later.

Q: That's going to be a shocking statement to a lot of people, I think, a lot of people in California.

Walters: I think so, too. In fact the, the laws, the current laws specifically forbids casino gambling in this state, Las Vegas or Nevada-style gambling. That was part of the lottery initiative passed by the voters. Our lottery is, you know, it's a huge, they have two billion dollars a year right there.

But....I think it will happen this way. The Indians will finally get their legal status clarified and they will start erecting bigger and bigger casinos on Indian land. Not only current Indian land, but lands that they acquire. They're already doing that in places like Palm Springs and so forth. And these will become so big, they'll be like Foxwoods in Connecticut. They'll be big resort destinations that the rest of the gambling industry in California, particularly the horse tracks and the cardrooms that exist now--and there's at least one horse track that has a cardroom attached to it--will say, "Hey, we're getting, we're getting rooked by these people." They're going to go to the legislature, they're going to go to the governor and they're going to say, "Look, casino gambling is here. It's a fact of life, the Indian's got it, we need it, too."

And that's why they're building these huge cardrooms now. It's not to play cards in, it's to get set to become the next round, the next level of casinos. Plus the fact that they're kind of edging up on these cardrooms. These cardrooms are getting a little more creative in designing games that they think will pass muster legally. And it's kind of a grey area legally as to what's a legal game and what's not a legal game. So they're kind of edging up.

I have to say, though, that what the real action is about, there's one thing that drives this whole thing. That's slot machines. The cardrooms, the this, the that, the thing, what this is all about is video slot machines. Those are the big moneymakers. Those are the ones that are issued on the Indian reservations as to what the Indians can do in terms of slot machines and what they can't do, and that's what the cardroom people want next. All this other stuff, baccarat, blackjack, all this other stuff is okay, but the real action, the real money, the real turnover, the guaranteed profit in gambling has to do with slot machines.

And what constitutes a legal slot machine and what constitutes an illegal slot machine, as you might, as you probably know, the state itself was operating what amounts to slot machines in its keno games. Its instant games that was running in bars and other places, in restaurants around the state. Uh, that encouraged the Indians to put in their slot machines, says, "The state is doing it, then we can do it, too." It has to do with very complex nomenclature of what is a bank game, a non-bank game and so forth. Very legalistic, very technical. But the state basically had to give up its own games and....I mean, it's who controls those slots is what's really going to determine the whole thing.

Q: What you seem to be describing is the gambling version of the arms race. The Indians got this, the tracks want that, the cardrooms want that, and the escalation seems to be inevitable.

Walters: It is an arms race among these various groups, and what complicates it more is there's sub-factions. There are groups of Indians who, who want expansion. There are groups of Indians who don't want expansion. There are groups of cardrooms who want expansion, there are those who don't. There are tracks, the Nevada interests are divided a couple of different ways. So for every major faction, Nevada, cardrooms, horse tracks, Indians, there are at least two sub-factions and sometimes more, often warring with each other internally, which complicates the issue even further.

But it also provides a ready excuse for the politicians to continue delayed action, because nobody's going to be happy with whatever they do, therefore they can use it. "Well, we have to make this group happy, we have to make that group, have to take care of this concern, have to take care of that concern." And it, and it, it's because it's so complicated, it provides a rationale for, for, for procrastination.

Q: All that also seems to provide the initiative for more and more gambling.

Walters: Yes.... and we are getting more and more and more gambling. What's happening in the absence of state regulation, uh, the promoters of cardrooms have gone to local communities and, and financed campaigns to bring bigger cardrooms into the, into play. These big casino-style cardrooms. And of course the Indians are continuing to expand. Uh, hardly a week passes without some new tribe in California announcing the, uh, construction of a new casino or an expansion of a casino out on the, uh, urban periphery someplace, kind of out on the edge.

So the gambling is increasing in the absence of regulation. And I think there's implicit acknowledgement by Lungren, who really opposes gambling in all forms. That "Hey it's going to happen, uh, and look it is happening, we need to get a handle on it. We need to control it. We need to regulate it."

Q: Dan Lungren also said at his press conference quote, "Few can resist." The money, he was referring to, and that opens it up then to corruption, and that's disastrous. Has that in fact happened?

Walters: Yes, what's happened is that when he's talking about the few can resist the money, he's talking about cities primarily. Cities being talked into allowing cardrooms or the expansion of cardrooms in their communities lured by the idea of more money coming into the city coffers. Andhas there been corruption? Yeah, in southern California particularly there have been several instances of overt corruption. Interestingly, the federal government itself is one of the biggest casino gamblers in California. It owns, it sees one of the casinos. And even under federal ownership the operators of that casino have been charged with illegally giving campaign contributions and so forth...

Q: What does that tell you?

Walters: It tells me that there's a lot of money in gambling. There's a lot of cash in gambling. There's a lot of flow in gambling. And that the temptations, as Dan Lungren says, are just too great to resist in some cases. And what he was really talking about is that city officials and police officials in local communities, small local communities many times, are just kind of overwhelmed by these gamblers.

Many of these communities in which gambling is located, particularly in southern California, are poor communities. They're predominantly African-American or Latino communities that have city problems, a lot of municipal needs. And it's very lucrative, or very, very tempting for these city officials, even honest city officials do kind of be soft on who's coming in and operating this gambling and kind of telling maybe the police chief, "Hey, you know, don't go too hard on these guys, you know? They're bringing a lot of money. They're paying the salaries of your cops, so you better be, you know you better treat them nicely."

Q: But it is the local cops under current law who are responsible for making sure these cardrooms are on the up-and-up.

Walters: That's right. It's purely local. There is a little...state regulation. Dan Lungren has a kind of minimal role in vetting those who want to operate gambling and gambling permits. But in the main, it is a purely local operation. It's up to a local city council, local voters, and local cops. How many tables they have, how many casinos they have, how big they are, you know, how much they operate, and how tough they are on all this kind of the side effects of gambling, which you know could be home invasion robbery and skimming of money and all this other stuff that might go on.

Q: Is it true that Willie Brown is probably the main reason why there has not been a bill passed out to date?

Walters: I think for the first, this is in its fifth year now. For the first three years, basically Willie Brown killed the bill.

Q: Why?

Walters: I think for all the same reasons we've been talking about. Money, campaign money. He personally is very, very close to gambling interests. When New Jersey legalized gambling whenever it was twenty years ago, Willie Brown, who had not yet achieved great power in the legislature, was actually hired by the gambling interests in New Jersey to campaign among black voters in New Jersey to legalize gambling in Atlantic City. And that began a relationship that has continued on. When he was in the Assembly, the law firm that he was affiliated with in southern California represented one of the big casinos. He has proposed himself that casino gambling come to San Francisco on Treasure Island out in the middle of San Francisco Bay. He has a long history of involvement with people in the gambling industry or who want to come into the gambling industry. One of his very closest friends and party pals and campaign contributors are very wealthy southern California businessmen, is played some sort of mysterious factor in all this, because it's assumed that he wants to get into the gambling trade. I mean, he's been right in the middle of it all this time.

Q: How could he be a neutral party and have actual direct economic connections to, say, a law firm representing gambling interests?

Walters: I questioned that myself, when I wrote a column reviewing that he had done this. But it's not, Willie Brown has always kind of shrugged off the interconnections between his personal business and political business in Sacramento. This is only one of the many instances. He obviously can't be a neutral party.

But I don't know if there are any neutral parties in the legislature on this, they all have a stake in it to some degree or another. Every party leader in the legislature, Democrat and Republican, has gotten some kind of gambling money out of all this. They all have a vested interest in it to a certain extent. Willie just happens to be a little more personal because it's involved his personal law firm and his legal business and so forth.

Q: What does that tell you about Willie Brown?

Walters: Willie Brown skates right up to the edge. He's never been caught going over the edge so far, but he skates right up to it.

Q: So he's not afraid of it?

Walters: No, he's lived dangerously politically. I mean, skates right up to the edge. Like I said, this is not the only case, but this is one of those instances.

Q: Now you're talking about a guy who was essentially the only vote in the Assembly against this law, that even an outsider with minimal information would say, "Yeah, I guess you need some rules here." And yet he did it, and he didn't seem to pay the political price a mere mortal might. That's pretty amazing, isn't it?

Walters: Willie Brown is a very smart politician. A very adept politician. He runs circles around anybody else here, when he was here and around the capitol and Willie's Willie. And Willie can do things that other people could never do and get away with. And he'd get away with stuff. Like I say, that's just one example of many. To have a bill that was passed by the entire house that he's a speaker of, and he simply puts the bill in his pocket and says, "I don't care what the house did, this bill isn't going out of this house," and nobody challenging him on it shows you how powerful he was when he was speaker of the Assembly.

Q: I mean shocking to an outsider.

Walters: But not very shocking in Sacramento since people in Sacramento just shrugged their shoulders and said, "That's Willie." That's him. That's the way he operates.

Q: Let's talk about the role of government in promoting gambling....the lottery phenomenon across the country, and the heavy promotion of the lotteries, is it at least partly responsible for the astonishing growth of gambling? Do you buy into that theory?

Walters: I think you're right. I think ithe passage of the lottery, the acceptance of the lottery as a legitimate function of government...eliminates, as far as I'm concerned, any moral argument against the expansion of gambling in California, because we've already made that decision. They've already said, "We want to gamble." The state is itself a promoter of gambling. The California Lottery is the largest single purchaser of television ad time in California.

Q: So it promotes gambling heavily!

Walters: It promotes gambling heavily. And it's always trying to dream up new games. Like I said before, they had one game that was virtually a slot machine. That they finally had to kind of do away with, because it came under a legal challenge. But they're always trying to dream up new games to keep in, in, to keep the money flowing in. I mean, all the, the, uh, management of the state lottery is, is charged with trying to get the money going. More and more, more money. Uh, so, yeah! The state promotes the idea.

I mean, the ads that the lottery runs--I just listened to one on the radio coming in here today. You can't, you can't avoid 'em, 'cause they're all over the place. Said basically, "get rich quick. You too can be a lottery million." The one ad I heard this morning was, "There have already been twelve hundred millionaires created by the California Lottery! You can be one, too! Just go play the lottery." So that the, the state itself, the state of California, and an agency of the state of California, promotes gambling as a personal and economic enterprise. And says it's a good thing to do. Go do some more of it!

So for the state to say, "Oh, well, but we don't we want casino gambling." Or, "We don't..." What's the difference? What's the difference? Gambling is gambling is gambling.

And the state, I might add, is also a virtual partner in the horse racing tracks. And that's gambling. They get a lot of money from the horse racing tracks. And, and the, there's a kind of a symbiotic relationship between the state and the horse racing tracks already. And then there's a symbiotic relationship between local governments and the card groups. We're already there! And it's gonna get bigger. The question is, who's gonna control it? And who's gonna get it? Who's gonna be--and who's going to get it? Or who's going to be frozen out, who's gonna get their foot in the door, who's gonna be frozen out, who's gonna control it? That's really the issue at this point.

Q: Well, based on that, what you described as stirring the pot, if you will. We shouldn't be very surprised that there is more and more and more gambling, and there will be more in the future.

Walters: No! We shouldn't be surprised at all. I'm going to add something else here that's probably gonna get me in trouble. The very fastest growing ethnic groups in California are gamblers. Particularly Asians. The backbone of the gambling industry in Reno are buses full of Asians coming up from San Francisco and Oakland. Asians gamble. The, uh, there's been a tremendous surge of gambling in San Jose. Because that has become a center of southeast Asian population in California. There's a long history of gambling in the Asian cultures. And this has transported itself to California. And so for one thing you see cardrooms offering Asian-style gambling games.

And so that that's another factor that, that fuels the whole thing. Everything, everything about the lottery, the rise of the Asian population, everything that's happening in California now pushes up the gambling industry. And it's just kind of trembling on this verge of exploding into the huge, big time. It's not quite there yet, but everybody assumes it's gonna happen.

Q: And you do.

Walters: Absolutely. I have no doubt in my own mind that in five to ten years we are going to have full-scale casino gambling in this state, at the very least on Indian reservations. In fact, some people argue it's already there. I can drive half an hour from Sacramento--no, about an hour from Sacramento right now, and I can play blackjack, I can play poker, I can pull a slot machine, I can do all that stuff on an Indian gambling thing right now. So one could say we're already there. But we haven't got there in terms of having the big resort gambling meccas...yet. We're gettin' real close.

Q: You've written that glitzy cardrooms in hotels are being, quote, "designed for eventual conversion to Nevada-style casino gambling when it becomes legal again." The word when. You also wrote, "The inevitable expansion into the full-style, casino-style operations." Inevitable. Usually political writers tend to be a little bit more wishy-washy about things. But you're pretty, you're pretty firm on this. Why are you so convinced?

Walters: I travel a lot in this state, and I see what's happening. And one of the things that's difficult to get a handle on in California is that, it doesn't have much of a unified state vision of itself. You have to kind of take little pieces that are half being here and there, and then put it together. When I look at the totality of California, when I travel around the state as I do very much, I look at what's happening. I see the cardroom being proposed here, and a cardroom being proposed there. And there's no real central registry of all this stuff. You have to kind of track at the local level.

And I visit the big hotels, the new resort hotels in the Los--in the Palm Springs area. And you walk in, you say, "Why do they have all this open space in this hotel?" And you talk to a couple of waitresses and, or bellboys, say, "What's going on?" "It's casino." They're waitin' for the casino to happen.

Q: They built it for a casino in the future?

Walters: I think the new hotels, particularly those in the Palm Springs area, are being built for ready conversion into casinos when the occasion allows. So once again, it's all a matter of timing. Whoever gets in there first gets it all. And a lot of the politics of this thing is who's gonna get in there first? Uh, I mean, you walk into these hotels and you say, "Look at these humungous open spaces!" They're just ready. They're just ready to go.

But the, the hotel employees themselves think that's what's happening. That that's the grapevine within the hotels. That the wiring is already there for the slot machines, that the plans exist in some safe somewhere so that literally, or almost, overnight, you can roll in the machines, roll in the tables, and instant casino.

There is one hotel in, in Palm Springs in which they have an artificial lake, and a boat actually comes up into the lobby. I mean, this is, you look at this place as, this is Las Vegas! You know, this is like the Luxor or something like this. This is not the traditional little laid-back Palm Springs kind of place. This is, there's somethin' else goin' on here. You know? It has that Las Vegas feel about it.

Q: So...for all this niggling over small details of regulation, the real truth is there's an irresistible force here.

Walters: There's an irresistible force. One of the things that's happening is that, as you know, the Indians a lot of the land in and around Palm Springs. Most of the stuff is built on Indian land. And there are deals that are cooking here, and rumored here, and rumored here, that the big casino corporations from Nevada would roll in and set up...theoretically, Indian casinos, basically right in the heart of Palm Springs. It seem like that.

There's--you just talk to people around, who are kind of on the fringe of this. The lobbyists and the people involved. It's just, "Yeah, it's comin'. It's comin'." It's all gonna happen some day, either through the Indian avenue or through a statewide ballot issue. There've been several ballot issues proposed to legalize gambling. Through a ballot initiative, through the Indians, through just evolutionary--evolution of the cardrooms. In some way, casino gambling's coming to California.

Q: Ready or not.

Walters: Ready or not. Once again the question is will we be ready for it?

Q: Do you think we are?

Walters: We're not ready for it right now. We are at the stage that Las Vegas was in the...'40s and '50s, when it was kind of wide-open, just kinda come on in. And eventually Nevada smartened up and said, "Hey, if we're gonna have this thing, we can't have, we can't have it as an illegal thing." Yeah, it's gotta have a little, a little tawdry air to it to attract people. It's gotta have a little adventure. But it's gotta be straight up. Because people are not gonna come if they fell they're gettin' cheated, if they're feeling that, you know, it's organized crime.

And so basically Nevada, I think with Howard Hughes, as I understand the history was Nevada, with Howard Hughes' encouragement, in the 1960s cleaned up their act. And they put in very stringent, uh, gambling. And now you have publicly-traded corporations and it's all kinda on the up-and-up.

California isn't there yet. Maybe we have to have a problem like Nevada did before we, we see it. Uh, before the politicians are willing to act. Right now, the politicians look at this thing and says, "What's the problem?" In fact, Bill Lockyer said that one time. He produced an elaborate state report that...said, "We don't need this! There is no--gambling's a very small business in California. We don't need any kind of regulation." In response to that, Lungren put in a kind of a two-stage bill that said, okay, well, it's a very low-level thing. And then it kicks up if it gets bigger, and so on and so forth. Well, that didn't fly either.

...[B]ut we're kinda at the stage, the politicians are at the stage of most of 'em are, "Ehhh, well, what's the problem? We can milk this thing for a little bit longer. You know, get the money, keep rollin' in." There's no real, there's no public clamor for this. See, the media haven't clamored for it, the public hasn't clamored for it. There haven't been any big scandals. Yeah, you got the Bicycle Club, you got a couple of little things. But nothing, nothing that just kind of forces the legislature into acting. So they feel that they can continue to, uh, procrastinate on this thing, milk it, without paying any political penalty. Now, at some point, they will pay a political penalty. But they're not quite there yet.

Q: Are they being naive?

Walters: Oh, I don't think they're being naive. I don't think they're being naive about this. I think they're being like politicians are, short-sighted. I think they know what's going on. They just don't, they just don't think there's any real pressure to do something about the issue.

Now, if you had a, you know, some sort of huge scandal, then would probably, "Oh, yeah. Oh, we gotta do this sort of thing." But as long as there's nothing, nothing, there's no meaty clamor for it, other than Dan Lungren and a few newspaper editorials and things like that, then they don't feel like they have to do it.

Q: So until there's enough noise forcing them, they are not gonna...

Walters: So maybe...the Indians have to get themselves, maybe the Indians have to start building big casinos, maybe there's, something else has to happen. There has to be another stage of the development of the industry before the legislature will act. I don't know. It's...hard to say. There are some theories, there are some theorists who believe the legislature will act this year...on the fifth year of the thing, because campaign contributions are now restricted. So that there's not as much money in it. And because Dan--or because, uh, Bill Lockyer may be wanting to run for attorney general. He may want to have--put this behind him before he runs for attorney general. So there is a, one set of theorists that this may be the year it happens.

Q: That's sort of a cynical kind of reason to be doing it.

Walters: Politics is a very cynical business, isn't it! What is it? People talk about the media being cynical. We're pussycats compared to people who are actually in politics themselves! They are the true cynics of the business.

Q: The Indian casinos, when the compact gets signed, and when they can roll up...

Walters: If.

Q: Well, if, I guess. But there's, again, just like the bill, the compact...this could be the year.

Walters: And it could be the year.

Q: Is there a certain "casino envy" going on outside of that, where, "Hey, if the Indians can, why can't we?" And therefore, that will accelerate the very train you're talking about?

Walters: Yes. I believe that one of the avenues by which casino gambling comes to California is that the Indians settle up, there is a compact with the governor that delineates the kind of games that the Indians can have in their casinos. And it will include some form of slot machines.

And it has to do with banks and non-bank games. Bank game being something which is controlled by the house. Non-bank gaming something where players are technically playing against each other, like a poker game. Okay? In which the house merely takes an administrative fee, as it were. There's technology kicking around right now that creates what they call "non-bank slot machines." Where it's a parimutuel pool, like a horse race or a poker game, in which the players are playing against each other rather than against the house. If they can create--if, if the compact allows--to a player it makes no difference. He's playing the slot machine. He doesn't care whether he's playing against the house or against, against a pool.

But, if the compact that eventually emerges from the negotiations that are going on now includes some form of slot machine, non-bank, presumably, slot machine, then I think that the cardrooms will clamor and successfully, I might add, to have the same thing. 'Cause they will say, "Look, we're playing non-bank poker games right now. The Indians are gonna have non-bank slot machines. Why should we have non-bank slot machines? And the state was operating slot machines itself in its Keno game. Why shouldn't we have non-bank game ourselves?"

And that, that I think will be successful. I think the legislature...will slide around the issue of the voters' decision not to have full casino gambling, which they passed as part of the lottery initiative at the behest of a lottery company because they didn't want the competition. The legislature will slide around and say, "This isn't Nevada-style gambling, because Nevada-style gambling is banked. You're playing against the house. This is non-bank. This is, this is on the up-and-up. This is like poker game. This is like horse racing. We've already got--this is like the lottery. We've already got non-bank games. Therefore, we will give these cardrooms the right to have non-bank slot machines."

Once you have that, the door's open. Then you've got it all. Then you can go to the casino and play slot machines. You can go to the casino and play the horses. You can go to the casino and play poker. You can go to the casino and play a form of non-bank's blackjack, which they're already dealing in the Indian casinos, called "Jackpot 21." And you've got it all. You have, then, full casino gambling. You can do anything in California that you can do, essentially, in Las Vegas. There'll be some technical differences between, but to the players there'll be no differences.

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