Vegas may want in on action in California Indian casinos

Angie Wagner

Thursday, Sept. 30, 1999 | 10:01 a.m.

Now that a Nevada company has decided to help develop an Indian casino in California, experts predict other major casino companies won't want to be left out of the lucrative gambling market in the nation's most populous state.

"I would have to believe that a lot of companies are taking a look at their options," Alan Feldman, spokesman for Mirage Resorts Inc. said Wednesday, noting that Mirage head Steve Wynn indicated just last week he was interested in looking into California's tribal casinos.

The Pala Band of Mission Indians, a San Diego County tribe with 867 members, and Anchor Gaming of Las Vegas announced Tuesday they were joining forces to build a $90 million casino, the first investment by the Nevada gambling industry in California's growing tribal casinos.

The venture signifies a potential change in strategy by Las Vegas casinos, who waged a costly battle with California tribes over a ballot initiative designed to legalize gambling at tribal casinos, which had been operating illegally. Nevada gambling interests, fearing the spread of Indian gambling would cut into their state's business, threw millions of dollars behind efforts to scuttle it.

Proposition 5 passed, but was overturned by the California Supreme Court.

California Gov. Gray Davis and the state's gambling tribes have since reached an agreement slightly more restrictive than Proposition 5 that is expected to resolve questions about the legality of tribal gambling in California, meaning Nevada gambling interests would be free to invest in the casinos.

The agreement is subject to voter approval in March. Without that approval, the Anchor deal and any others involving Nevada companies will not be able to proceed.

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.

"Certainly we think California is a great opportunity," said Geoff Sage, chief financial officer for Anchor Gaming. "I'm not sure if it's a trend, but I'd be surprised if Las Vegas casinos don't follow."

Jason Ader, a gambling analyst with Bear, Stearns & Co., said he wouldn't be surprised either if more gambling companies try to manage Indian casinos.

"I think you'll see other casino companies look good and hard at California and whether it makes sense for them.

Harrah's Entertainment Inc. already operates three casinos on Indian reservations in Arizona, North Carolina and Kansas.

"The Indian casinos were a great opportunity to expand the Harrah's brand name," said Ralph Berry, vice president of communications for the company.

Berry said Harrah's hasn't looked into the California market yet.

Despite the potential for Nevada companies to make money in the California gambling market, some Nevadans remain fearful that legalized gambling in that state will take away business from this gambling mecca.

"I don't think they're going to desert Nevada," Nevada Gaming Commission Chairman Brian Sandoval said of the Nevada companies. "Certainly, as publicly traded companies, they have to do what's in the best interest of their company. My hope would be that they remain committed to Nevada as they have been."

Doug Elmets, spokesman for the Pala Band, said even if more casino companies get on board, it won't affect Las Vegas.

"Indian gaming is a niche market, and Nevada and New Jersey will continue to be the center of gaming in the country. ... I don't believe that this means Nevada is coming to California. Las Vegas and Nevada in general is a unique entertainment experience."

The casino Anchor Gaming and the tribe plan would have more than 1,500 gaming machines and more than 40 table games when it opens in early 2001. By comparison, the new Paris-Las Vegas, the latest in a series of megaresorts to open here, has 2,100 machines and 80 to 90 table games.

Bill Thompson, a professor of public administration and gambling expert at the University of Nevada, Las Vegas, believes delving into Indian casinos will actually help Las Vegas.

"If you have some nice resorts, people could be gambling for the first time in California. We can try to develop new players in California," he said. "Going to one resort and going to Las Vegas are two different things."