California tribes dig down
deep for Election Day props

Sep 21, 2004 9:21 AM

With an estimated $5 billion in annual casino profits, California Indian tribes have developed major political clout by using their overflowing cash registers to support or oppose office seekers or referenda items. The point was underscored last week by an Associated Press story that identified contributors for and against Proposition 68 on the Nov. 2 ballot.

Proposition 68 puts existing Indian casino operators on notice: either they pay 25 percent of their slot machine revenues to local governments or 16 card rooms and racetracks in six counties would be allowed to install some 30,000 slot machines whose revenues would be taxed at a 33 percent rate.

And the 30,000 slot machine provision would kick in if only one of the estimated 64 Indian casinos refuses to pay the 25 percent tax.

The measure would eliminate the slot machine monopoly established a few years ago by Proposition 1A and would make moot the recent negotiations between nine Indian tribes and Gov. Arnold Schwarzenegger that re-wrote the existing gaming compacts.

Topping the contributors in favor of Proposition 68 was Bay Meadows Racecourse in San Mateo which kicked in $2.4 million. Bay Meadows was followed by Magna Entertainment Corp. (MECA) with $1.8 million, and Pinnacle Entertainment Inc. (PNK) with $1.6 million.

But these amounts paled in light of the Indian casino contributions. These included: Pala Band of Mission Indians, $4.5 million; Rumsey Band of Wintun Indians, $4.5 million; United Auburn Indian Community, $3.5 million; Pechanga Band of Luiseno Indians, $3.41 million, First Californians for Self Reliance, a group of smaller tribes, $2.6 million, and the Morongo Band of Mission Indians, $2.5 million.

And, even these donations were relatively small compared to the amounts donated by tribes looking to pass Proposition 70, which is being pushed by some tribes that want to cap state contributions at 8.84 percent and want to build Las Vegas-styled casinos.

Leading contributors to this cause were the: San Manuel Band of Mission Indians, $10 million, and the Agua Caliente Band of Cahuilla Indians, $8.7 million.

Schwarzenegger, who opposes both propositions, has established a group called the California Recovery Team and established a fund of $250,000.

On the offensive

While the union postponed any strike action until Oct. 1, Dennis Gomes, president of the Atlantic City Tropicana went on the offensive Sunday challenging Local 54 to "bargain around the clock."

"We challenge you to stop telling everyone that Tropicana is Local 54’s target. This is a direct attack on our employees — your members," Gomes wrote in an open letter to Local 54 President Robert McDevitt.

Although bargaining sessions are being held with all Atlantic City casinos, except the Borgata whose contract runs to 2007, the union reportedly has eyed the Tropicana as its principal focus for a three-year contract. The Tropicana, owned by Aztar Corp. (AZR), is scheduled to open its new expansion area in October.

Gomes’ missive continued, "We challenge you to give the Tropicana’s employees who are members of Local 54 the right to be heard about their future."

More layoffs

Reacting to the recent Michigan legislation that increases the gaming tax from 18 percent to 24 percent, the MGM Grand Detroit Casino announced it will layoff off 150 workers.

The layoffs follow the recent announcement by Greektown Casino that it was eliminating 182 positions at its Detroit casino.

The tax rate increase resulted from the state legislature, at the prodding of the governor, to find additional revenue to help meet budgetary needs. It was expected that the tax hike would raise an additional $50 million for fiscal 2005.

In announcing the layoffs, Bob Berg, spokesman for MGM Grand said, "The 33 percent tax increase is the only reason for the layoffs. When costs suddenly go up, something has to go. The layoffs are in all areas of the casino operation."

A new look

There’ll be a new look at the Little Brown Jug harness race in Delaware, Ohio, this week. When the horses enter the post parade, Hall of Fame harness driver John Campbell will be sporting an orange and black logo from Youbet.com (UBET).

The logo breaks the tradition of having harness drivers wear the colors that they registered in their name at the beginning of their career, as opposed to thoroughbred racing when the jockeys wear the colors of the horse’s owner.

Campbell, a role model for many in the Standardbred racing sport, says he is making the move in order to "be more involved with sponsors who are serious about harness racing."

Youbet.com is the largest Internet provider of racing content in the country.

Contract extensions

Scientific Games Corporation (SGMS) announced it has received contract extensions from two of its customers.

The Vermont Lottery Commission agreed to extend its contract for online lottery services for four years. The value of the extension was given as $12.3 million.

In the other action, the South Dakota Lottery extended its online lottery contract for three years at a value estimated to be $8 million.

The company added that it South Dakota had agreed to upgrade its entire retailer network to a newer, faster technology.

THE INSIDER: GTECH Holdings Corp. (GTK) will report its quarterly earnings on Tuesday, Sept. 21, at 5:30 a.m. PDT.

Analysts at Merrill Lynch have raised their ratings on the shares of MGM MIRAGE Inc. (MGG) from neutral to buy.

The state of Connecticut received $36.7 million as its share of slots revenue from the state’s two Indian casinos, Foxwoods Resort Casino and Mohegan Sun.

Proceeds from the recent initial public offering made by WPT Enterprises Inc., (WPTE), also known as the World Poker Tour, reached $36.8 million after the underwriter exercised its over-allotment option to acquire an additional 600,000 common shares at $8 per share.

The Meskwaki tribe has negotiated a new gaming compact with the Iowa Department of Inspections and Appeals for its casino in Tama, Iowa.

MI Developments Inc. (MIM) has withdrawn its offer to acquire all the shares it does not already own in Magna Entertainment Corp. (MECA).

Analyst William Lerner of Prudential Equity Group has cut his forecast of fourth quarter earnings to $0.33 per share from his previous forecast of $0.38 at Multimedia Games Inc. (MGAM).

Caesars Entertainment Inc. (CZR) has agreed to develop and manage a casino for the Big Sandy Band of Western Mono Indians on land near Fresno, Calif.

No major gaming companies are among the three finalists for a harness racing license for a track to be located in the western part of Pennsylvania.

Isle of Capri Casinos Inc. (ISLE) and Midwest Gaming and Entertainment LLC have extended their bids for the 10th and final gaming license to be awarded by the state of Illinois.

The 22 Indian casinos operating in Arizona reported $1.35 billion in revenues for the last fiscal year, according to state officials. The state’s share amounted to $38 million.