Gaming opponents cheer Schwarzenegger win

Wednesday, Oct. 8, 2003 | 11:26 a.m.

The election of actor Arnold Schwarzenegger to the office of governor of California has created an opportunity for gambling opponents nationwide, a leading opponent of the industry said.

The Rev. Tom Grey, founder of the National Coalition Against Legalized Gambling, today said Schwarzenegger's stance on Indian casinos in California and his celebrity status could turn the expansion of gambling into a national issue.

The clout of tribal gaming was a central issue in the election campaign that came to a close Tuesday when voters recalled Gov. Gray Davis and Schwarzenegger emerged as the winner of the race to replace him, capturing about half of the more than 3 million votes cast.

"It raises the ante on what's happening with Indian gambling," Grey said today. "It wouldn't take much for Schwarzenegger to give George Bush a call and begin talking about a moratorium on expansion" of Indian casinos nationwide.

Grey said that with a political backlash on Indian gaming in California and Connecticut, where the congressional delegation has discussed limiting expansion, "it's a pretty good daily double on both sides of the country."

But representatives of Las Vegas-based casino companies that have interests in California say Schwarzenegger has yet to fully explain how he'll work with tribal casinos. And, an analyst who follows the industry said today that Schwarzenegger's election could be a good thing for Nevada properties if growth in California does slow.

"We think it's too early to determine exactly what Schwarzenegger's position will be on tribal gaming," said Gary Thompson, a spokesman for Harrah's Entertainment Inc., which operates Harrah's Rincon, a tribal casino about 30 miles north of San Diego.

"He's made some comments that have been somewhat alarming, but we think he'll probably adopt a more realistic attitude over time," Thompson said. "He's fairly well grounded and we're optimistic that his stance toward tribal gaming will moderate as he grows to learn more about the industry and the issues."

Thompson said Grey is "out of step with what the country feels toward the gaming industry" and he doesn't feel the election of Schwarzenegger would lead to any new push against the industry.

A spokesman for Park Place Entertainment Corp., which operates a stable of casinos in Las Vegas including Caesars Palace, said the company is anxious to move forward on a pending management deal with the Pauma-Yuima Band of Mission Indians for a Caesars-branded casino in northern San Diego County.

"The economic benefits of the Caesars Pauma project transcends any political considerations that may exist," said Park Place spokesman Robert Stewart. "The benefits to the tribe, the community and the state are enormous and we are anxious to move forward with the project."

Lesley Pittman, a spokeswoman for Station Casinos Inc., which has a management contract with the United Auburn Tribe for a casino near Sacramento, said her company is looking forward to working with the new administration and is aware of Schwarzenegger's desire to review state agreements with tribes.

"We're looking forward to working with the new administration through our tribal partners," Pittman said.

Although casino industry leaders say Schwarzenegger's stance on tribal casinos hasn't been fully articulated, it's clear that he wants the state to benefit more financially from casinos.

"He's on record as saying he would want to raise between $1 billion and $2 billion from California's Indian casinos, but he hasn't fully articulated his views on how he wants to do that," said Marc Falcone, a gaming analyst with Deutsche Bank Securities, New York.

Falcone characterized Schwarzenegger's election as "a setback" to the gaming industry, but not a complete negative.

"I think it's premature to say that the California casino industry isn't going to grow anymore," Falcone said. "(California Lt. Gov. Cruz) Bustamante would have been a clear positive for the industry to expand the number of machines allowed."

Bustamante finished second behind Schwarzenegger with an estimated 31 percent of the vote.

Falcone said if Schwarzenegger does move toward limiting Indian casino growth in California, it could bode well for Nevada cities that have been affected by the explosive growth there.

"It could help places like Reno and Laughlin," Falcone said. "There wouldn't be a whole lot of impact on Las Vegas, but some of the smaller communities that have been affected by Indian casinos would benefit if growth slows in California."2