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Bits and Pieces from Indian Country - May 2004

16 July 2004

California jumped out of May and raced into June with vigor. In rapid succession: a deal was announced, four tribes have tentatively agreed to a payment of $250 million in exchange for unlimited slots; a compact with another tribe, which will allow for an urban casino, is close to agreement; and two competing initiatives qualified for a public vote in November. If the previous Indian gaming initiative in 1998 is any example, watching television in California will be an exercise in practical and expensive politics. By November, after watching hundreds of millions of dollars worth of gaming funded advertisements, Californians are apt to be exhausted and eager to vote and end it all.

Gov. Arnold Schwarzenegger and several [four] Indian tribes have reached a tentative agreement on a deal that could bring the state an extra $250 million annually from casino gambling and provide $1 billion immediately to help ease the budget crunch…right to install an unlimited number of slot machines in their casinos instead of the current 2,000 limit. …an announcement might be delayed in expectation that others [tribes] can be brought aboard, according to one insider. David M. Drucker, Inland Valley Daily Bulletin, 6-1-04

Gov. Arnold Schwarzenegger and a once-landless Indian tribe are expected to announce within weeks a deal that would bring slot machines to the heart of the Bay Area, creating the state's first full-fledged urban casino in San Pablo. The agreement between the Schwarzenegger administration and the Lytton Band of Pomo Indians would eventually transform a card room in a dense portion of San Pablo near Interstate 80 into…a gaming house… John M. Hubbell, San Francisco Chronicle, 6-2-04

A pair of rival gambling initiatives have qualified for the November ballot, setting the stage for a donnybrook pitting Indian casinos against the state's racetracks and card rooms. "It's going to be a very expensive campaign", predicted Bill Eadington, a gaming specialist at the University of Nevada Reno. "It probably will top the experience in '98." That year, California tribes and Nevada interests collectively spent a record $89 million on Proposition 5, an initiative that would have legalized Indian casinos had it not been found unconstitutional. James P. Sweeney, San Diego Union-Tribune Copley News Service, 6-2-04

What a difference a governor makes. Gray Davis is said to have given the tribes too much, while getting too little. But Davis refused to negotiate for "urban" casinos. Governor Arnold, on the other hand, needs money and does not seem to have any objections to casinos, anywhere. He is keeping his options open; one of the ballot initiatives would either cost the tribes 25 percent of slot revenues or allow for non-tribally operated casino operations. The governor is using the threat of competition or higher fees to bring the negotiations to a conclusion and money into the state coffers.

…But news of a pending agreement is significant because it indicates the governor will not attempt to block the plans…former Gov. Gray Davis said he opposed expansion of Indian gaming into urban areas. By contrast, Schwarzenegger "is the consummate dealmaker", Tony Cohen, the Lytton tribal attorney, said Tuesday. "He wants to do the best he can to ensure that the community is protected and the state derives money", Cohen said. Talks 'going well.' John M. Hubbell, San Francisco Chronicle, 6-2-04

The two gaming initiatives had been expected to qualify, and the future of both may depend on negotiations now in the final stages between Gov. Arnold Schwarzenegger and a group of prominent tribes. If Schwarzenegger gets agreements that substantially increase the revenue tribes pay to the state, he has indicated privately that he will oppose the measure backed by the tracks and card rooms. James P. Sweeney, San Diego Union-Tribune Copley News Service, 6-2-04

May was not a great month for Indian gaming announcements; a good month would include new casinos, compacts and construction. A bad month is filled with courts, closures and competition. First the courts, Wisconsin Supreme Court ruled against the governor and the "new compacts." The governor responded by vetoing legislation intended to control the compacting process. Some tribes threatened to stop payments, but a U. S. Attorney is threatening federal action.

The state Supreme Court has ruled that Governor Doyle exceeded his authority in signing a gaming compact with an American Indian tribe that had no expiration date and allowed Las Vegas-style games such as craps and roulette. The court's 4-to-3 decision wipes out key provisions of the new compact the governor signed with the Forest County Potawatomi last year. That includes nullifying a $34 million payment the tribe was scheduled to make to the state next month. Wisconsin's other tribes operating casinos have signed compacts similar to the one Governor Doyle negotiated with the Potawatomi. Green Bay Press Gazette, 5-13-04

Gov. Jim Doyle rejected a third attempt by lawmakers to give themselves oversight of the gaming compacts he signs with American Indian tribes. …Doyle vetoed Thursday the legislation, which was identical to two bills he vetoed last year. He said it would be impossible to negotiate the deals with the 11 American Indian tribes that run casinos in Wisconsin because all 132 lawmakers would likely try to place demands on the compacts to secure their votes. "I do not believe you can negotiate with 11 tribes and 132 legislators", Doyle said. JR Ross, Associated Press, Duluth News Tribune, 5-28-04

U.S. Attorney Steve Biskupic said he warned the Forest County Potawatomi tribe this week it must pay the state $40.5 million owed under its gambling compact by June 30, or risk violating federal law. The tribe cannot continue to assert it has the right to offer new casino games authorized by its 2003 compact, but also insist it has no obligation to pay the $40.5 million because of a recent state Supreme Court ruling, Biskupic said Thursday. "They can't have it both ways", he said. Steve Schultze, Gina Barton and Stacy Forster, Milwaukee Journal Sentinel, 5-28-04

In Kansas the courts continue to support the closure of the Wyandotte casino in Kansas City. The case is not apt to be resolved quickly, as the state is challenging the trust status of tribal land in the state. And state authorities are not the only ones challenging tribes and tribal operations. In South Dakota and California, federal officials are investigating the use of casino funds.

The U.S. Court of Appeals on Tuesday denied a request from the Wyandotte Nation of Oklahoma for an injunction against an earlier court decision that led to its downtown casino being closed. Kansas authorities closed the tribe's Kansas City, Kan., casino on April 1, taking more than $1 million in cash and property, including about 150 gambling machines. In a series of challenges in federal court, the tribe has argued that state and local authorities had no jurisdiction over the casino, which it claims is on tribal land. Associated Press, Wichita Eagle, 5-19-04

The National Indian Gaming Commission is conducting an "inquiry" into possible misuse of casino revenue by the Standing Rock Sioux Tribe. …NIGC spokeswoman Affie Ellis said an inquiry was under way, but would not comment beyond that other than to say, "We are aware of the allegations and have been working with the tribe to correct some of the allegations and the tribe has been cooperative thus far", she said. "We have been aware for several months and have been working with the tribe for a while." The tribe operates the Prairie Knights Casino north of Fort Yates and Grand River Casino in Mobridge, S.D. Deena Winter, Bismarck Tribune, 5-26-04

Federal and state law enforcement agents have raided a Mendocino County Indian casino and the residences of tribal council members, seizing computers and paper documents but making no arrests…More than 60 agents from the U.S. Department of the Interior's Office of Inspector General, the state Department of Justice and other agencies also searched the residences of all seven members of the Coyote Valley Band of Pomo Indians' governing council and the tribe's administrative offices. The casino is the only one in California being operated without a state compact. …Tribal and law enforcement sources said it was not connected to the lack of a compact, but to allegations of misuse of funds by some tribal administrators. Steve Wiegand, Sacramento Bee, 5-27-04

And then there is competition; now mind you, this story is not really about competition. Or is it? Nevada Senator Harry Reid would like to become chairman of the Senate Committee on Indian Affairs. That is an idea that should really play well in Indian country; hire a fox to guard the hen house. But then, that is what Reid thinks is necessary--a Nevadan on the ground floor of discussions that ultimately impact his state's major industry, gaming.

Nevada Sen. Harry Reid says that if Democrats win control of the Senate this November, he may try to become chairman of the Senate Committee on Indian Affairs to head off Indian gaming measures that could hurt casino companies. …Reid, who is a member of the committee but would have a greater influence in setting policy as its chairman, made the comment Thursday during a question-and-answer session following a brief presentation at the two-day Nevada Society of Certified Public Accountants conference. Richard N. Velotta, Las Vegas Sun, 5-28-04

Some months the course of Indian gaming and corporate gaming is very much the same. As, for example, when Foxwoods and Caesars are both spending to get back some of their lost luster. And then there are months when the developments in Indian and conventional gaming separate over new jurisdictions and new legislation, unless the corporation is IGT (or other slot manufacturers) which walks both paths. Usually new legislation creates an opportunity for one segment, but not the other. But the place that really separates the two major segments of the gaming industry is in the courtroom. Conventional gaming is tightly controlled and operators only test legislation or regulation at the risk of loss of license or even freedom. Tribes on the other hand, routinely test the limits of their own, a state's or federal authority. California and the November election promise to bring the two segments of the industry together as they battle for opportunity in California. The citizens of California, and the not courts, will decide the issue in California this year.


But now, that is simply my opinion, isn't it?

Ken

Ken Adams

Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.

Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.

Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.
Ken Adams
Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.

Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.

Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.