Nevada bracing for the impact

Brendan Riley

Monday, Sept. 20, 1999 | 10:55 a.m.

CARSON CITY -- Nevada political and casino industry leaders say California's rapid move to expand Indian gambling spells big trouble for this casino-dependent state.

Under compacts signed Sept. 10 by many tribes and California Gov. Gray Davis, the number of Indian slots will double to at least 43,000, and Nevada-style, high-limit blackjack will be allowed. The state's voters will have final say next March.

"Anytime you can double what you've already had, with very little expenditure on your part, your profits are going to be higher," Gov. Kenny Guinn says of the looming increases in numbers of slots.

"So the tribes will soon be able to get into the expanded authority that they have in terms of table games," Guinn added in an interview. "Once they do, that certainly starts having a dramatic effect on the state of Nevada."

The Republican governor said the potential for the quick expansion, subject to California voter approval, shows the need for Nevada to have a plan for government growth that's not heavily dependent on casino-related taxes. Such levies, combined with sales taxes, account for two-thirds of the revenue needed to run Nevada government operations.

During the 1999 Nevada legislative session, budget experts figured legal challenges to Indian gambling would mean a delay of at least a few years in expansion in California.

"I think our window just shrunk substantially," Guinn said.

Nevada hotel-casinos pumped millions of dollars into an unsuccessful 1998 California campaign against Indian gambling. They were outspent 2-to-1 in a nearly $100 million campaign, and Proposition 5 passed anyway. It was declared unconstitutional last month by the California Supreme Court.

The immediate response was a negotiation between the tribes and Davis that resulted in the new compacts and the March 2000 ballot question on whether to amend California's constitution to permit Indian gambling.

This time, it's not certain whether the Nevada casinos will dump more money into a campaign against the latest question.

"We're going to have to evaluate the latest constitutional amendment and the compact reached by the California governor and the tribes and look at all our possible positions -- sobered by the unlimited resources of the tribes and California voters' overwhelming sympathy with the tribes' position," said Jim Mulhall of the powerful Nevada Resort Association.

"Legalized tribal gaming is now a reality in California, with the compacts and the eventual passage of the constitutional amendment," he adds.

"It presents a potentially new and much greater competitive threat to Nevada, and all of the creativity and the investment that made Las Vegas the destination capital of the world will have to be brought to bear to maintain our dominant position."

"We need to be very aware that there is a strong wolf at the door," says Mulhall, whose association represents most major hotel-casinos in Nevada. "We're going to have to redouble our efforts."

"Twenty-five to 30 percent of our customers come from California," Mulhall says. "So Nevada policy-makers have to adjust to the fact that Nevada gaming is no longer a monopoly in the far West."

If there was a "window" of three or four years before Nevada felt a big impact from the Indian resorts, the possibility of Indian slots doubling in the same time frame means "they're slamming the window shut in a very brief time," he adds.

Leaders of at least 57 of California's 107 tribes have signed 20-year compacts with Davis, ensuring them a monopoly on slots and Nevada-style, house-banked games.

The California compacts allow each tribe to have 350 slots. Some could acquire slot rights given up by non-gambling tribes, and wind up with as many as 2,000 slots -- the number found in many major Las Vegas resorts.

Under a revenue-sharing arrangement, each tribe that decides not to open casinos would get $1.1 million a year. A system of fees and taxes would generate about $100 million a year, with part of the money covering the state's regulatory costs and funding gambling addiction programs.