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Bits and Pieces from Indian Country - October 2004

30 November 2004

Indian gaming was more on the fringe than at the center of voters' focuses. For the most part, ballot issues that would impact Indian gaming were couched as attempts to "level the playing field" or "giving the state a fair share." Or, it might simply be termed anti-Indian: California and Washington each had an initiative on the ballot with the expressed intent of allowing non-Indians to operate casinos or slot machines to compete with Indian casinos. Neither passed even though each promised significant revenues for the state. The slot measure in Florida might also be put in the same category. The tribal casinos in Florida are very visible and very successful. However, the argument in Florida, which began using slots as a way to save horse racing and the thoroughbred industry, has evolved into the argument of "slots for lower taxes and better schools."

California again is an illustration of the spectrum of Indian gaming. The tribes in urban areas operate very successful casinos, while card rooms and race tracks have seen their business decline, or at the very least not keep up with the phenomenal growth of tribal casinos, and the governor needs money to balance the budget and fund the programs the voters want. The tribes want to protect their revenues, the card rooms and tracks want more revenue, the governor wants tax money and along those lines the battle was fought. The three parties spent over 100 million dollars on the election campaign. The tribes had an initiative, the card rooms and tracks had an initiative and the governor opposed both; 11.7 million people voted, 73 percent of the 16.5 million registered voters in the state and that is about eight dollars and fifty some cents a piece. 76 percent voted against proposition 70, the Indian gaming measure and over 80 percent voted against proposition 68, the racetrack/card club initiative.

Where does that leave gaming in California? While the racetracks and card clubs seem to be out of luck, at least in the short term, the tribes are in a different position. Tribes without a compact will be forced to negotiate with the governor and will have to share revenues at levels much higher than the 9 percent proposed in proposition 70. Tribes with a compact are in a very different position, the issue is the number of slots. Current Compacts allow a tribe to have up to 2000 slot machines; the governor believes that the tribes will be forced to negotiate if they wish to have more than 2000 machines. Many tribes disagree. Rather than give the state up to 25 percent of the slot revenue, they would rather use Class II games that are not subject to a Compact.

Governor Arnold Schwarzenegger may have misjudged the Class II issue, as the Class II games have been very profitable for tribes in Florida and Oklahoma. They may not make as much per day as the best of Class III games, but if you are not paying a 25 percent tax you can afford a little less in daily win. And, and it is big. All of the major manufacturers are working on new Class II games, hoping to duplicate the success of the best of their Class III games.

The Class II-Class III controversy is not going to be limited to California. In any state tribes could use Class II games to avoid limits on the number of games, revenue sharing and many other limitations that states have placed on Indian gaming.

The election is over, now the wars begin. In California the governor will try to force negotiations. In Florida opponents will most likely go to court over the last minute "found votes." In Michigan there are plans to introduce racetrack slot legislation and test the voters' resolve to limit gaming. In Illinois there is still a license in doubt, a mayor that would like the city (Chicago) to own a casino, and a tribe from Minnesota shopping for a community to put a casino. In Minnesota the governor is going to continue to attempt to force the tribes to pay more to the state, using a threat of allowing non-Indian gaming competition as a hammer. In Pennsylvania the law is subject to change and clarification, sites have to be identified and a time-line developed. Class II games are getting better and could start to appear in more jurisdictions as tribes resist moves to impose a higher "participation fee," such as those in California and Minnesota. So, while there may not be much expansion in the works, there is lots of expansion in the works.

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.