Schwarzenegger OKs gambling expansion

/ Source: The Associated Press

In a landmark expansion of gambling operations in California, Gov. Arnold Schwarzenegger announced agreements with five Indian tribes to add thousands of new slot machines statewide and create one of the world's largest casinos in the heart of the Bay Area.

In exchange for his support, Schwarzenegger got tribal leaders to agree to share up to 25 percent of their new gambling profits with the state, which is estimated to bring in at least $200 million annually for cash-strapped California.

Although administration officials said Thursday the governor has never supported gambling expansion, they said federal law forced the state to negotiate gambling compacts with the tribes and the process helped the state win unprecedented concessions that will soften the effects of the new casinos.

In a statement, Schwarzenegger said he was "very pleased with the financial contribution these tribes have agreed to make to our state." He said the deals also included protections for "patrons, workers, the environment and local communities."

The legislature must approve the agreements. While most observers expect that to happen quickly, similar tribal gambling agreements proposed by the administration in June took weeks of politicking and lobbying to gain final approval.

One of the five deals involves the Lytton Band of Pomo Indians, who will be allowed to develop a six- to eight-story casino with up to 5,000 slot machines in the Bay Area city of San Pablo.

What will be California's first urban casino will also be bigger than even the largest casino in Las Vegas, the MGM Grand, which has 3,200 slot machines. State officials said the tribe's initial plans call for installing only 4,000 of the allotted slots.

The San Pablo casino is expected to generate more than $600 million in annual profits.

Dan Kolkey, the governor's lead negotiator on Indian casinos, said the 25 percent profit sharing was "unprecedented" among tribal gambling agreements nationwide because it includes both a share from slot machines and some card games.

Kolkey also said the state won environmental protections from the Lyttons that would require the tribes to pay for transportation improvements to accommodate expected traffic congestion caused by the new facility.

Cheryl Schmit, director of the Stand Up California, a nonprofit group that has fought the growth of tribal gambling, said the Lytton project could damage the region.

"The change will be significant and it will change the character and quality of life," Schmit said, adding that while she criticized the change, the "governor's compact ... makes the best of a bad situation."

The Lytton deal is by far the largest of the compacts announced Thursday.

Also agreeing to similar compacts to either build or expand casinos are the Coyote Valley Band of Pomo Indians near Ukiah; the Buena Vista Band of Me Wuk Indians in Ione; Fort Mojave Indian Tribe located near Needles; and the Ewiiaapaayp band of Kumeyaay Indians of east San Diego County.