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September 21, 2014

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Proposed casino managers detail relationship with tribe

The people who will be involved in managing a proposed casino in San Pablo, Calif. -- a project that could become one of the nation's largest casinos -- were approached individually and were not part of a bid process that other tribes have used to attract potential investors and managers, according to a partner involved in the deal.

The Lytton Band of Pomo Indians, whose small Casino San Pablo card room would be transformed into a megacasino with 4,000 slot machines under an agreement reached with California Gov. Arnold Schwarzenegger, has signed on a management group that includes the Rumsey Band of Wintun Indians, Palms resort owner George Maloof, former Las Vegas casino manager Jerry Turk and the Pala Band of Mission Indians, who own the Pala hotel-casino near San Diego managed by Turk.

The Rumsey tribe owns and manages the Cache Creek casino near Sacramento and had a preexisting relationship with the Lytton tribe that stems back to at least 2000, when an act of Congress authorized the federal government to take the San Pablo card club into trust for the Lytton tribe, Turk said Thursday.

Turk said the Rumsey tribe later approached him to become involved in managing the San Pablo casino. Turk said he and the Rumsey tribe had mutual contacts. After working on the project for at least a year, Turk said he suggested bringing Maloof into the management company "because it was turning out to be a very large property." The Rumsey tribe was familiar with the Maloof family, who live in Sacramento and own the Sacramento Kings basketball team. Turk said he knows Maloof from his days in Las Vegas, where he managed the Fitzgeralds casino.

While the arrangement with multiple partners isn't common it is something Turk did before when he brought in slot maker Anchor Gaming as a management partner in the Pala casino. Anchor, acquired by competitor International Game Technology in 2002, later sold its stake in Pala's management company to Turk.

Some tribes haven't been successful forming their own casino management companies in part because they haven't invited in other casino partners, Turk said.

"This is not to individually maximize profitability but to bring together the best management group possible," he said.

Plans call for a casino with 4,000 slot machines, 150 to 200 table games, seven restaurants and a 21,000 square-foot events center. The casino wouldn't be built for at least a year and is expected to open in the first quarter of 2007.

By contrast, the MGM Grand has about 2,900 slots and the Foxwoods casino in Connecticut -- billed as the nation's largest -- has well over 6,000 slots.

A hotel isn't part of the tribe's plans because the card room site, the tribe's official reservation, can't accommodate it, Turk said.

The casino would compete with properties in Las Vegas as well as Reno, which is largely fed by tourists from Northern California, he said.

"It will have the same kinds of slot machines as Las Vegas and Reno, though the casino can't have craps or roulette."

The agreement with the governor would give the Lytton tribe the exclusive right to operate a casino within a 35-mile radius if certain conditions are met. In exchange, the tribe would give the state 25 percent of its winnings from slot machines and card games.

The management group will receive 25 percent of the San Pablo casino's net profit over the seven-year contract.

Turk said he doesn't have any particular concerns about potential competition from other proposed casinos in the San Francisco Bay Area. Two other Indian tribes have proposed casinos near Richmond in the East Bay.

During a press conference Thursday, California officials said Schwarzenegger would not support those casinos because they are proposed for urban areas. The San Pablo casino, the first urban casino given the green light in California, is different, officials said. The governor was obligated to negotiate with the Lytton tribe because the tribe had already obtained land for its casino through an act of Congress, they said.

"The governor does not favor urban gaming but he certainly was going to comply with his federal obligation," said Daniel Kolkey, the state's chief tribal negotiator. "We believe he had a lemon and made it into lemonade."

The agreement with the Lytton tribe is among five reached with Indian tribes that will set in motion plans to build more casinos in California.

The Lytton tribal compact contains provisions similar to those found in Nevada casino regulations and is intended as a model for future tribal compacts in California, according to Turk and state officials.

Those provisions include measures requiring the casino to post problem gambling brochures and educate employees about gambling addiction as well as the right of the state to determine suitability of key employees.

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