Arizona tracks in fight over tribal slots deal

Scott Thomsen

Tuesday, Jan. 22, 2002 | 9:44 a.m.

PHOENIX -- For more than two years, Gov. Jane Hull has been trying to negotiate a new set of agreements for Indian casino operations that would allow tribes to put unused slot machines into play and give the state a cut of the money they bring in.

Fearing the increased competition would run them out of business, Arizona's horse and dog tracks filed and won a lawsuit last year challenging the governor's ability to sign gaming compacts with the tribes.

But Hull and the tribes have not given up and that's setting the stage for a protracted political fight.

The governor is asking the Legislature to make legal changes that would clear the way for new compacts. The tribes are prepared to run a ballot initiative if state lawmakers don't come through.

"We have a common vision that would ensure that Indian gaming remains limited, well regulated and accounts for state interests, including revenue sharing with the state," Hull said.

Track operators haven't said how they will respond, but no one expects them to walk away after fighting the state in court.

"We are obviously concerned about the impact of Gov. Hull's comments about the racing industry," Jeff Sandquist, a spokesman for the state's race tracks, said. "The governor appears to have made decisions that would greatly affect the future of our industry without consulting us."

The stakes are high for everyone involved.

While the tribes won't say exactly how much money casinos have pumped into reservation economies, it is clear that gambling has been their biggest economic force.

The tribes have been running newspaper and television ads to show off what that money has meant -- new schools, fire departments, police officers, health programs and thousands of jobs.

"This is really the only effective revenue stream they've ever had," said David LaSarte, executive director of the Arizona Indian Gaming Association, which represents the 15 tribes that operate casinos. "They need to be able to continue it and improve it to bring themselves up to the rest of society. From the tribes' perspective, this is the most important issue they'll face in the next 20 years."

For the state, changes in gaming operations could create a new source of revenue while continuing government oversight and limiting gambling to the Indian reservations.

Under the original gaming compacts that will begin to expire next year, Arizona capped the number of slot machines that could be used and divided them among the state's 21 tribes.

Some tribes, such as the Navajos, have decided not to participate in gaming. Others, such as the Hualapai Indians who live at the bottom of the Grand Canyon, are so isolated they aren't able to use their allotted machines.

One of Hull's proposals would allow tribes that don't use their allotted slots to let other tribes operate the slots under management agreements. The state would then collect a percentage of the profits from the exchanged slots -- new revenue at a time when lawmakers are being forced to cut millions from the state budget.

Those proposals weren't greeted favorably by track owners, who had a monopoly on legalized gambling in Arizona before the lottery and casinos came along.

To the track owners, putting unused slot machines into play amounts to an expansion of the Indian casinos that have been cutting into their profits.

While trying to hold the line on Indian gaming, the track operators have prepared a fallback position in which they would argue for slot machines at the tracks.

But Hull and other state officials don't want gaming to expand beyond the reservations.

Those competing interests are at the center of a bruising battle that lies ahead as legislators sort out what the compacts might require and how they would be approved in light of the judge's ruling in the tracks' suit.

At least two proposals are developing.

Sen. Scott Bundgaard, R-Phoenix, is offering a plan that would allow Hull to negotiate new compacts with the tribes then have the Legislature ratify the agreements.

"The court has said the Legislature should have an active role and this would satisfy the court's ruling," Bundgaard said. "The governor can negotiate it, but the Legislature has veto authority. It's much better to have a check and balance in this."

Another proposal being put together by several members of the House may include a requirement that the tribes publicly disclose how much the casinos make.

"Hopefully, we can come up with a solution where the dog tracks, horse tracks can survive," Rep. Victor Soltero, D-Tucson, said. "There's room for both types of gaming."

The tribes would like to resolve the matter soon.

"It's frustrating because tribes have had so little for so long," LaSarte said. "After finally getting something that works, you've got a special interest holding you hostage on something they want."

If they can't find a solution at the Legislature, the tribes are prepared to circulate petitions to place an initiative on the fall ballot that would ask voters to OK a new set of compacts.

LaSarte said the tribes are confident they can win at the voting booth. "We know we have public support for continuing gaming on tribal lands."