He will earn $3.1 million this season and $3.6 million in 2008-09. Cammalleri asked for $6 million per season while it's believed the Kings offered $2.6 million.
Cammalleri, 25, made $1.7 million last season and was the team's leading scorer with 34 goals and 46 assists. He also played on Canada's gold-medal winning team at the IIHF World Hockey Championship in Russia last spring.
The arbitration hearing was held last Thursday in Toronto after difficult negotiations between the Cammalleri's agent Mike Gillis and the team.
"We got there the hard way," Kings GM Dean Lombardi told the Times. "Nobody wins at these things. I think it is safe to say it came out closer to our end. But these situations aren't for winning and losing."
Contacted Tuesday, Gillis had no comment on the decision.
Cammalleri is eligible to become an unrestricted free agent when the deal expires in 2009.
"The challenge for him and the team is to go to another level," Lombardi told the Times. "He had a good year last year, but it's one year and the team still has not had success."