Casino, racino plans advance

03/19/2005

Pat Doyle, Star Tribune
March 19, 2005

Moving Minnesota toward a major increase in gambling, Gov. Tim Pawlenty’s plan for a tribal-state casino in the metro area cleared a key House committee Friday, as did a proposal to put slot machines at the Canterbury Park racetrack—a so-called “racino.”

During debate on the tribal-state bill, the House Gaming Division rejected an amendment requiring that a referendum be held in the community where the casino would be located.

Approval of both plans came on divided voice votes after the committee heard testimony from Indian leaders (pro and con), and from Canterbury officials and gambling foes.

Republican proponents of both casino bills defeated amendments proposed by DFLers on the committee. The bills now will go to the House Committee on Regulated Industries. Prospects for companion measures in the DFL-controlled Senate are uncertain.

Leaders of the Leech Lake, White Earth and Red Lake Chippewa bands—who want to run a Twin Cities casino in partnership with the state—testified that their northern Minnesota tribes remain poor despite tribal casinos located in the region.

In response to questions about how they would spend their profits from a metro casino, the leaders said they opposed distributing profit-sharing checks known as “per capita” to individual tribal members and would spend profits instead on tribal housing, education and other programs.

“We have an agreement,” said White Earth tribal Chairwoman Erma Vizenor. “There will not be per capita.”

Vizenor said her band joined the partnership with the state for a metro casino because it has more than 20,000 members on and off its reservation—too many to serve adequately with proceeds from the band’s Shooting Star Casino in Mahnomen.

George Goggleye, chairman of the Leech Lake band, said that many homes on his reservation have three generations of families living in them. He said he expects cuts in federal funding to the reservation, which would make it increasingly difficult to provide services.

A state-tribal casino in the Twin Cities would provide a one-time $200 million payment to the state and about $164 million a year afterward, according to Pawlenty, who proposed the venture.

The bands would split roughly the same amount of yearly revenue but pay expenses—including debt to build the casino—out of their share.

Rep. Joe Atkins, DFL-Inver Grove Heights, questioned how the three bands would be able to afford financing costs and still make a decent profit. He said the Legislature lacks financial data to make an informed decision.

“I don’t want to be in a position where we have to bail these people out in four years,” Atkins said.

Valerie Red-Horse, an investment banker for the bands, testified that they could borrow at rates low enough to make the project work. She said the bands also would save money by paying interest but not principal on bonds for the first few years of operation.

Atkins said expenses for debt service and the cost of running the casino could exceed revenues if interest rates are higher than the most favorable estimates.

But Dan McElroy, Pawlenty’s chief of staff, said Atkins’ concerns were based on cost estimates associated with Canterbury Park and not lower ones associated with casinos that are similar to the one proposed by the three bands and the governor.

Others criticized the idea of using gambling money to fund state government. “We’ve sunk to the level where we’re going to fund K-12 and higher education with gambling money,” said Rep. Tom Huntley, DFL-Duluth.

Brian Rusche, representing the Joint Religious Legislative Coalition, said: “If we go down this path of state authorized casino, I don’t know how the state can pick one or two and ... stop from there.”

The tribal-state casino bill’s sponsors include Rep. Andy Westerberg, R-Blaine, and House Speaker Steve Sviggum, R-Kenyon. “I’m opposed to the expansion of gambling, but the fact is it’s happening,” said Westerberg, chairman of the committee.

Under the plan for the racino at Canterbury Park in Shakopee, Canterbury would provide a one-time fee of $100 million and an estimated $100 million a year in new revenue after the casino is fully operating.