GAMBLING MEASURE HIGH-STAKES BET; CAMPAIGN RECORD SUM MAY BE SPENT ON INDIAN CASINO INITIATIVE.

Byline: Todd S. Purdum The New York Times

A century after Indian wars roiled the West, another battle is raging here over a ballot measure that would expand the state's $1.4 billion Indian gambling industry. It pits California's gaming tribes against an unlikely coalition of Nevada casinos, unions, church groups and other businesses in what may become the most expensive fight in California political history.

A visit to the San Manuel Indian Bingo and Casino on a patch of tribal land 60 miles east of Los Angeles makes the stakes clear. The afternoon sun is still high, but the parking lot is filling fast, and inside the smoky 90,000-square-foot gambling hall, the hopeful already sit glued to most of the 1,000 video slot machines and to row after row of bingo tables.

This 24-hour no-frills casino is an economic miracle for the tiny San Manuel tribe, which once scratched out an income raising apricots and lived in shacks and trailers on a dusty 648-acre reservation. Now, 40 landscaped houses dot the hillsides behind the casino's walls, and security officers on bicycles patrol newly paved roads.

Hotly contested measure

But the San Manuel Indians have a problem: They and about 40 other tribes began installing slot machines over the last decade without first reaching compacts with the state, as required by federal law. So Gov. Pete Wilson and federal prosecutors consider their casinos illegal and have moved to shut them down.

In response, the gaming tribes are sponsoring a hotly contested ballot measure in the Nov. 3 election that would allow broad expansion of casino-style gaming on Indian lands statewide. In a potent illustration of the power of gambling money in politics, it seems likely to set a new record for spending on a ballot initiative here.

Already, the two sides have raised at least $60 million and spent about $53 million, mostly for a barrage of competing television commercials. About $43 million has been raised by tribes, $22 million of it from the San Manuel tribe alone, while opponents, led by the casino operators at Hilton Hotels Corp. and Mirage Resorts Inc., who fear untaxed Indian competition, have raised $15.5 million and spent $1 million more. The previous spending record for a single measure was $57.5 million on a securities fraud proposal two years ago; $84 million was spent on a group of competing insurance reform measures in 1988.

Public polls have shown the gambling measure, Proposition 5, winning majority, but not overwhelming, support among voters, many of whom are sympathetic to decades of Indian privation in a state that paid bounties for Indian body parts in the 1850s.

Accused of scare tactics 

The gaming tribes contend that nothing less than their historic sovereignty and economic survival is at stake, and their advertisements feature members attesting that Indian gaming has broken the cycle of poverty.

``This is our livelihood,'' said Ken Ramirez, 38, vice-chairman of the San Manuel tribe, who grew up on the reservation when it held only a handful of families, with water too fetid to drink. He declined to disclose the tribe's revenues from gaming, but noted that about 110 people now live on the reservation, where, with gambling proceeds, the tribe has drilled 16 deep wells and plans to market bottled water commercially.

But opponents of Proposition 5 accuse the gaming tribes of scare tactics. They say the tribes' campaign exaggerates the threat to Indian welfare and obscures the real menace of a measure that would allow the spread of gambling throughout the state, divert business from privately operated theme parks, racetracks and card rooms and yet provide few economic benefits over all, because Indian casinos pay no taxes on their profits, though gamblers pay income taxes on their winnings.

``Frankly, I think it's an incredible con game,'' said Frank Schubert, who is managing the No on 5 campaign for the Coalition Against Unregulated Gambling, which has run ads in which a jogging couple is stunned by a volcanic eruption of garish casino signs in their neighborhood. ``We've had millions and millions in TV ads bombarding the state for months now about reservations getting electricity and being able to be linoleum on a dirt floor, when in fact it's a handful of tribes spending a fortune to keep a special deal.''

Vagaries in the law

About one-third of the 557 Indian tribes around the nation, including tribes in Connecticut, Minnesota and Wisconsin, now offer some form of gambling. The 1988 federal Indian Gaming Regulatory Act affirmed tribes' rights to offer bingo, and, subject to negotiated compacts with individual states, slot machine games. But some governors have complained about vagaries in the law and Congress has debated making clarifications.

In other states where Indians are either seeking gambling compacts or negotiating the renewal of existing ones, the California debate is being closely watched.

``From a national perspective, many states and tribes have already resolved this,'' said John Dossett, general counsel of the National Congress of American Indians in Washington, which represents 250 tribes. ``If this issue were to be resolved in California, there'd be less pressure in Congress.''

Tied up in litigation 

But resolution here seems unlikely any time soon. Opponents of Proposition 5 warn that if it passes, it will immediately be tied up in years of litigation, and could well violate the California state Constitution's ban on ``Nevada or New Jersey-type casinos.''

``We're in for a long battle here instead of a politically negotiated solution in which both sides say, Let's make this work,'' said Cathy Christian, counsel to the Coalition Against Unregulated Gambling.

The gaming tribes say they are prepared to fight. They complain that they have been caught in an impossible situation because, eager for revenue, they began offering gambling while their right to do so was still being litigated. Since then Wilson, a Republican and a foe of gambling in general, has refused to negotiate a compact with any tribe that was already gambling.

``Without Proposition 5, the gaming that currently exists on Indian lands in California could be taken away from the tribes,'' said Waltona Manion, a spokeswoman for the tribal alliance known as Californians for Indian Self-Reliance. ``Why remove something that's working, and that's proven to have taken these tribes off of welfare dependency and put them on the road to self-sufficiency?''

Clear alternative

But Wilson has offered a clear alternative. Last spring, he reached an agreement with the Pala Band of Mission Indians in San Diego County that would allow a new form of video slot machine but outlaw those now used by gambling tribes. In the months since, 10 more tribes, some of them under threat of federal action, have signed the Pala compact, which limits each tribe to 199 of the new machines but allows them to lease rights for unused machines to other tribes, up to a maximum of 990 for any tribe, with a statewide cap of 19,900. The Legislature ratified the agreements in August.

Most of the gaming tribes contend that Wilson, who is barred from seeking a third term this year, refused to negotiate in good faith, as required by the 1988 federal law. So Proposition 5 leaves little to chance, flatly requiring the state to grant a compact allowing slot machines in perpetuity for any tribe that wanted them, though, as is now the case, the measure would only allow games in which players bet against a pool of other players' money, not against the casino house itself, as in Las Vegas and Atlantic City.

Television advertisements

Opponents of the measure contend that it is not needed to protect Indian gambling, and to hammer home the point, they are now running television advertisements featuring Paula Lorenzo, head of the Rumsey Band of Wintun Indians, which signed the Pala compact and is expanding its Cache Creek Casino 45 miles northwest of Sacramento.

``We're doing all this without Prop. 5,'' Lorenzo says in the 30-second commercial as she walks through the construction site. ``No tribe needs Prop. 5 to operate casinos.''

For their part, supporters of the measure have accused their fellow tribes of being turncoats recruited by ``the big Nevada casinos,'' to oppose the proposition, in an echo of internecine betrayals of the past.