Thursday, February 05, 2004
Copyright © Las Vegas Review-Journal

Growth of California casinos uncertain, says panel

Experts say new governor, several initiatives may bring widespread changes

The growth of California's tribal casinos remains uncertain given a new governor and a handful of initiatives that could bring significant changes in the years ahead, a panel of industry experts said Wednesday.

Seven tribes are negotiating with Gov. Arnold Schwarzenegger, which could affect how the rest of the state's tribes operate their casinos, said Howard Dickstein, a Sacramento, Calif.-based lawyer representing three of the tribes.

"The negotiations have been constructive," Dickstein said during a discussion at the annual American Gaming Summit at the Four Seasons.

Although the tribes have long-standing contracts with the state, the seven decided to renegotiate to try to expand the number of slot machines allowed at each casino and to receive a guarantee that gambling will not be allowed anywhere in the state except on tribal land, Dickstein said.

The amended contracts could result in the seven tribes agreeing to contribute a portion of casino winnings to the state in exchange for the exclusivity guarantee, Dickstein said.

Dickstein characterized current contract negotiations with Schwarzenegger as a "refreshing change" from discussions with his two predecessors.

Revenue-sharing already exists within tribal contracts. Some earnings are funneled into a fund for nongambling tribes.

"Tribal government gaming is not about profits, it's about rebuilding tribal nations and preserving a way of life virtually destroyed by generations of poverty (and) neglect," said Dave Palermo, media director of the California Nations Indian Gaming Association.

Sixty-one tribes have gambling contracts with the state, and 50,000 slot machines are in operation at casinos restricted to tribal land.

One of California's proposed initiatives would allow gambling to extend to 16 card rooms and race tracks in urban areas unless all gambling tribes agree to pay 25 percent of their net win to the state's general fund.

Two other initiatives would preserve exclusivity rights for tribes, with one allowing the expansion of table games like roulette and craps and the other imposing a 3,000 per-tribe cap on slot machines.

Tribal gambling's future could affect business ventures by Nevada casino companies, experts said.

Glenn Christenson, executive vice president of Las Vegas-based Station Casinos, said his company is moving forward with plans to develop casinos in partnership with two California tribes. The company has a deal with the United Auburn Indian Community and is operating its Thunder Valley Casino near Sacramento.

"It's a very large market, and we plan to take advantage of it," Christenson said.

Las Vegas will likely continue to benefit from the expansion of gambling in California, said Andrew Zarnett, a Deutsche Bank analyst. On the other hand, Laughlin and Reno already have seen gambling declines.

"Reno needs to think about things they can do to improve the gaming industry, but probably also to diversify their economy," Zarnett said.