Indian gaming seen as uphill fight by industry

Thursday, Oct. 8, 1998 | 11:36 a.m.

Casino industry leaders acknowledged Wednesday they may be fighting a losing battle to stop California's much-feared Indian gaming initiative.

"We could lose it, absolutely, given the fact that many people in the industry are sticking their heads in the sand," said Mike Sloan, general counsel of Circus Circus Enterprises. "In any campaign, when somebody out-spends you 3-1, it's hard to win."

Financial reports released in California this week show the tribes pushing Proposition Five, the California Indian Self-Reliance Initiative, have raised $42.7 million to $15.5 million by a coalition of Nevada casinos and California special interest groups.

Recent polls show California voters favor the initiative, the most expensive in that state's history, by double digits.

If the ballot question passes Nov. 3, it would allow more than 100 California tribes to launch Las Vegas-style gambling operations, which eventually could cost Nevada casinos as much as $700 million in revenues a year.

That would come while the industry is experiencing massive growth in Las Vegas, where 20,000 more rooms are expected to be built in the next 3-4 years. The Bellagio super-resort is set to open on the Strip next week.

"People in Nevada better think about the long-term effects this could have," said Sloan, who has been the industry's point man in the fight. "There's going to be a significant shift in the economics of the state if it passes."

Those hardest hit will be the smaller casinos that don't have themes to attract tourists from California, Sloan said. Most of those properties, including many in Reno already facing tough times, have failed to contribute to the campaign against the initiative.

"There are companies who want a free ride and aren't willing to join in this effort," Sloan said. "They're basically only looking out for themselves."

Mirage Resorts Inc., which owns the Bellagio, has joined Circus Circus and Hilton Gaming as the major financial backers of the campaign against Proposition Five. But beyond those three gaming giants, contributions from the industry have been light.

"To some extent this has never been an industry that has had one mind on anything," Mirage Vice President Alan Feldman said. "You've got different points of view."

Feldman described gaming's chances of defeating the initiative as "extraordinarily slim."

"I think this has been an effort of swimming up stream," he said. "The Indian casino companies have been skillfully disingenuous in presenting their case. They're pulling all of the heart strings, and it's been very effective."

Jim Mulhall, vice president of governmental relations for the Nevada Resort Association, said the industry has a "mountain of money" to climb over if it's going to prevail next month.

"It's definitely an uphill battle," he said.

Feldman believes Proposition Five is legally flawed and could be overturned in court if the voters approve it.

But even if it is declared unconstitutional, he said, a favorable showing at the polls would give the tribes ammunition to persuade California lawmakers to pass legislation similar to the initiative.

A coalition of Hollywood entertainment companies, labor unions, law enforcement officials and other special interests have joined forces in California to fight Proposition Five. But most of the funding for the campaign has come from Nevada's casino industry.

Even though the tribes have outspent the industry, the strategy of allowing the casinos to bankroll the fight has backfired, charged one prominent gaming critic.

"The more money they spend, the more it works against them," said the Rev. Tom Grey, executive director of the National Coalition Against Legalized Gambling.

California voters, Grey said, have a hard time understanding the message that full-scale Indian gambling is bad for their state, when they're told that Nevada casinos are paying for that message.

Grey, based in Illinois, has been an unusual industry ally in the battle, but he said this week that he's pulling out of the fight.

"They've (the casino industry) polluted the water," Grey said. "We're staying on the sidelines."

Grey said his nationwide grassroots organization, which has successfully fought back efforts to legalize gambling in other states, could have made a difference if the casino industry had not been so blatant about funding the campaign against the initiative.

"This campaign was designed to fail," Grey said. "If you've ever seen someone who's got a self-inflicted wound, this is what we called in Vietnam a sucking chest wound.

"If they lose California," he added, "that's a tremendous hit."