Nevada company and Indian tribe to open casino

Ben Fox

Wednesday, Sept. 29, 1999 | 9:18 a.m.

SAN DIEGO - An Indian tribe is joining forces with a Las Vegas gambling company to build a $90 million casino, the first investment by the Nevada gambling industry in California's growing tribal casinos.

The deal was announced Tuesday between the Pala Band of Mission Indians and Anchor Gaming. It follows an agreement between Gov. Gray Davis and the state's gambling tribes that is expected to resolve questions about the legality of tribal gambling in California and pave the way for Nevada gambling interests to invest here.

"Nevada (casinos and manufacturers) are going to look at California as a very lucrative market," said Bill Eadington, an economics professor at the University of Nevada, Reno.

Until now, Nevada casinos and slot machine manufacturers have been barred by their state from getting involved with California's tribal casinos because the tribes had not signed an agreement with the governor and were in violation of federal law.

The agreement signed this month between Davis and some 60 tribes goes to the ballot in March, and is expected to pass. Voters overwhelmingly approved a similar measure last fall that would have changed the state statutes, but it was struck down as unconstitutional by the state Supreme Court.

The Davis agreement, which the Pala tribe signed, would allow the tribes to keep their slot machines - with a statewide cap on the number of machines - and would amend the state Constitution to legalize such gambling.

Nevada casinos opposed the previous measure out of fear that it would cut into their business, but were expected to invest in California's tribal casinos if they were legalized.

The Pala tribe is best known for breaking ranks and joining forces with Nevada casinos in opposing that measure and for signing a gambling compact with then-Gov. Pete Wilson in 1998 that was considered too restrictive by most of the state's gambling tribes.

The tribes criticized the non-gambling Pala tribe for signing a deal that was supposed to serve as precedent for other tribes that already had casinos and would have limited the types and amount of gambling they could have. The Davis compact, if approved, will take the place of Wilson's Pala compact.

The Pala tribe, whose San Diego County reservation is 15 miles north of Escondido, will build its casino on 50 acres with the financial and technical assistance of Anchor Gaming and a separate investment group, said Doug Elmets, a spokesman for the tribe.

The casino would have more than 1,500 gaming machines and more than 40 table games when it opens in early 2001, Elmets said. The tribe's goal is to break ground on the 150,000 square foot project in six months and complete construction before March of 2001, he said.

"This gives the Pala the opportunity to take gambling to the next level in California," he said.

Anchor, a company that manufactures slot machines and operates two Colorado casinos and a New Mexico racetrack, provides the Pala tribe with both capital and experience in the growing California gambling industry, Elmets said.

San Diego County is already a major center of Indian gaming with three other Indian casinos that are among the largest in the state. All three have announced expansions.

The Viejas Band of Kumeyaay Indians, which runs a casino in the San Diego County town of Alpine, has been approached by Nevada-based gaming investors as has "every other tribe in the state," said Nikki Symington, a spokeswoman for the tribe.

For tribes that don't have their own casinos, such as the Pala, such joint ventures make sense, Symington added.

"The tribes are going to have to look for investors who know the industry," she said.

Anchor Gaming, which trades on the Nasdaq stock market, manufactures and sells casinos games throughout the world. The company's president and chief executive officer, Michael Rumbolz, is former chairman of the Nevada Gaming Control Board.

Anchor and the investment group, led by Jerome H. Turk, a gambling industry consultant from Las Vegas, will have a minority stake in the Pala venture in compliance with federal regulations, Elmets said.