House panel OKs two new casinos

03/30/2005

Tribal-state plan approved 12-11 on party-line vote

BY PATRICK SWEENEY
Pioneer Press

A House committee approved two new state-sanctioned casinos Tuesday night, boosting the momentum the gambling plans have built in the Republican-controlled House.

On a 12-11 vote, the Regulated Industries Committee approved Gov. Tim Pawlenty’s proposed casino partnership between the state and at least three Minnesota Indian tribes.

All the votes for the plan were cast by Republicans; all the votes against it came from Democrats.

The second gaming plan, approved on a voice vote, calls for a casino at Canterbury Park racetrack in Shakopee. That plan is scheduled to be considered today in a Senate committee, where the response will be much less friendly. The Senate’s Agriculture, Veterans and Gaming Committee is expected to defeat the Canterbury casino, either today or in a later vote.

Pawlenty and his Republican allies in the House are counting on at least $200 million in gambling revenue to balance Minnesota’s budget.

Senate Majority Leader Dean Johnson, DFL-Willmar, said last week that the Democratic-Farmer-Labor majority in the Senate would not rely on gambling proceeds.

Pawlenty’s proposed partnership between the state and the Leech Lake, White Earth and Red Lake tribes from northern Minnesota would give the state a $200 million licensing fee and an estimated $143 million a year. The Canterbury plan would give the state a $100 million licensing fee and projected annual revenue of about $103 million.

Both plans rely on the Minnesota Lottery to own the slot machines. That’s a mechanism Pawlenty and his chief of staff, Dan McElroy, believe would allow the casinos to get around a ban in the state Constitution on any lottery other than the one operated by the state. Some courts in other states have ruled slot machines are mini-lotteries.

On another party-line vote, Republicans on the Regulated Industries Committee defeated an amendment that would have allowed Minnesota voters to decide the fate of Pawlenty’s casino plan as an amendment to the Constitution.

In a news conference and in testimony before the House committee, several members of the Leech Lake and White Earth tribes said they opposed Pawlenty’s proposal and worried that failure of the proposed casino could plunge the tribes into debt.

“They will have a way to come to our land and say, ‘You have a bill, we want to collect,’ “ said White Earth tribal member Lori Gelligs. “We’re putting every penny into it, where the state isn’t.” Archie LaRose, the secretary-treasurer of the Leech Lake tribe, said Leech Lake officials supporting the Pawlenty plan “forgot who elected them.”

But Erma Vizenor, chair of the White Earth tribe, said none of the three tribes’ assets or revenues from reservation casinos would back the estimated $550 million the tribes would borrow to build a casino and hotel and pay the licensing fee.

“None of our reservation assets are at risk,” Vizenor said.

Valerie Red-Horse, the three tribes’ financial consultant, gave the committee a feasibility study that was lawmakers’ — and McElroy’s — first detailed look at the financial assumptions the three tribes have relied on.

The study said a casino at Canterbury would provide “formidable competition” for the state-tribal casino. Rep. Joe Atkins, DFL-Inver Grove Heights, argued the financial assumptions were too optimistic, and that the state might eventually have to bail out the tribal casino.

McElroy, who represented Pawlenty in negotiations with the three tribes, said he based his conclusion that the casino would be profitable on the experiences of government-operated casinos in other states and in Canada.

He said he did not receive the feasibility study until Monday morning.

But McElroy defended his estimates about the casino’s chances of success. “The proposition that a well-managed casino in an under-served metropolitan area doesn’t make money simply doesn’t make sense,” he said.