Prop. 68 Backers Fold ‘Em

Gov. Arnold Schwarzenegger hit the campaign trail again Wednesday -- one year after his victory in the tumultuous recall election -- and quickly saw one of his targets on the November ballot wither away.

Backers of a gambling measure the governor opposes -- Proposition 68 -- announced that after spending roughly $28 million to get the measure on the ballot and promote it, they were pulling the plug on their campaign. The initiative will remain on the ballot, but as of Friday, its supporters will stop spending money to promote it.

The move, coming less than a month before the election, was highly unusual. Many campaigns have run out of money before election day, but “I’m not aware of any campaign that pulled the plug,” veteran consultant Darry Sragow said. “Hope springs eternal. In most losing campaigns, somebody keeps shoveling in money, hoping lightning will strike.”

Schwarzenegger did not take credit for the measure’s early demise. Instead, he issued a statement saying “voters saw through this sham initiative.”

At the same time, the governor faced problems within his party over another gambling measure -- Proposition 70 -- as some Republican lawmakers challenged his leadership. GOP legislators balked at his warning against taking campaign contributions from Indian tribes and supporting the initiative while he is trying to defeat it.

Schwarzenegger’s aides stuck to his position that Republican elected officials should fall in line against the initiative. “The governor is big on teamwork,” communications director Rob Stutzman said.

Schwarzenegger, who was elected last Oct. 7, appeared in Irvine at a staged “Ask Arnold” town hall meeting featuring a supportive audience of business leaders and politicians -- part of an extended campaign to defeat the two gambling measures.

“I am here today once again to say to the people: I need your help,” Schwarzenegger said.

In fact, both propositions have been far behind in several news media polls released in recent weeks.

Proposition 68, backed by companies that own card clubs and racetracks, would allow those firms to offer slot machines unless Indian tribes agreed to a series of provisions that tribal leaders already have rejected. Proposition 70 would allow unlimited gambling on Indian lands in exchange for tribes’ giving 8.84% of their profits to the state.

Schwarzenegger says the two initiatives would lead to unchecked casino gambling and interfere with his right to negotiate agreements with tribes. They would “destroy all the progress we have made on Indian gaming in California” and would pave the way for Las Vegas-style casinos, he said.

Several Republican lawmakers have taken campaign contributions from tribes supporting Proposition 70. Schwarzenegger appears to have taken that as a professional insult and a challenge to his leadership. At a GOP fund-raiser Saturday in Indian Wells, he implied that lawmakers endorsed the initiative because they had received campaign contributions.

At a news conference Wednesday, state Sen. Bill Morrow (R-Oceanside), who has endorsed the proposition, called on Schwarzenegger to allow Republicans to disagree. “When the governor says Republicans who support Prop. 70 are essentially on the take, that bothers me,” Morrow said.

And Board of Equalization member Bill Leonard, a Republican who long has been an ally of Indian tribes, announced his endorsement of the proposition Monday. “I respect his support for the compacts he negotiated,” Leonard said. “I happen not to think they’re as good in the long run for the people as Proposition 70.”

Leonard called the timing of his endorsement “totally coincidental.” He also said the Republican governor’s comment linking donations to endorsements was “very disappointing.” Leonard has received at least $54,750 from tribes since 2000, according to campaign finance reports.

“Connections that raise allegations that are so serious without facts are very disappointing,” Leonard said.

While Republicans squabbled over contributions from the tribes, supporters of Proposition 68 announced they were giving up. Frederick Baedeker Jr., president of Hollywood Park racetrack in Inglewood and chairman of the Yes-on-68 effort, said their pollsters found that voters remained confused and opposed to their measure.

“We have decided to shift gears,” Baedeker said, holding out the option that tracks and card rooms would return with another initiative in the next two years.

Los Angeles County Sheriff Lee Baca, who endorsed Proposition 68, said supporters of the measure “waited too long to get their message out while the Indians have had a month and a half to two months of constant bombardment.” Tribes spent about $33 million to defeat Proposition 68.

Baedeker said racetracks have no choice but to continue seeking slot machines in an effort to prop up their industry, which employs an estimated 60,000 Californians.

Racetracks and card rooms have watched their business decline while Nevada-style gambling on Indian reservations has grown into an industry that generates an estimated $6 billion a year.

Baedeker added that polls indicated that most voters agreed with a key contention in the campaign: that “Indian gaming is out of control.” Some members of the Proposition 68 coalition might spend money against Proposition 70, he said.

But backers of that measure said that, for now, they view the demise of Proposition 68 as a benefit. “Clearly, anything that clears up the airwaves helps. There is a lot of confusion out there,” said Gene Raper, the main consultant pushing for Proposition 70 passage.

Yes on 70 spokesman James Fisfis said the governor’s opposition to the measure shouldn’t hold much sway with voters because the initiative’s language is simple, and “they can make up their own minds.”

Fisfis said the Morongo Band of Mission Indians had joined the campaign and would help pay for more television ads, which currently feature Jon Coupal of the Howard Jarvis Taxpayers Assn. urging support.

“We certainly have the resources” to fight an opposition campaign by Schwarzenegger, Fisfis said.

Wednesday’s meeting marked the beginning of what was scheduled to be a few weeks of intense campaigning by the governor leading up to the Nov. 2 election. He hopes to defeat the gambling initiatives and to support Republican legislative candidates.

He is scheduled to appear at another “Ask Arnold” event in San Jose today, and in Southern California and the Central Valley next week. He’s also raising money -- attending a glitzy event at the St. Regis Hotel in Dana Point on Wednesday night that was expected to bring in as much as $700,000 for the state Republican Party.

The one-year anniversary of Schwarzenegger’s election is today, and his aides said there were no public events planned. The governor may mention it at his town hall event in San Jose, but otherwise the celebration consists of some Schwarzenegger aides gathering at a brew pub near the Capitol.

Times staff writers Jean O. Pasco and Jeffrey L. Rabin contributed to this report.