Oregon Initiatives Could Open Door to Non-Tribal Gaming

Oregon Initiatives Could Open Door to Non-Tribal Gaming

Lynn Armitage
10/25/12

The race to watch in Oregon may not be between people. Instead, voters, especially in the American Indian community, are training their eyes on a ballot initiative that would allow private, nontribal gaming—two measures that could sink the tribes, Native leaders say.

If voters approve the two state ballot initiatives known as measures 82 and 83, Indian gaming could get hit with enough stiff competition to cause serious damage, those opposed say. Those in favor feel that opening more casinos will attract more gamers, and their dollars, rather than spread existing business out among more venues.

The first proposal, Measure 82, is the real game-changer, an amendment to the state constitution to allow nontribal casinos statewide. Tribal leaders say it could open a floodgate of competition from private interests that could threaten the very livelihood of Oregon tribes operating the state’s nine casinos.

“Someone has referred to it as an arms race,” said Michael Rondeau, chief executive officer of the Cow Creek Band of Umpqua Indians, which runs the Seven Feathers Casino Resort in Canyonville, Oregon. “The proliferation of gaming in our state will mark a sunset to the whole ability of it to be a profitable market.”

He added that private casinos could affect a good two thirds of the revenue for his tribe’s 1,512 members, and possibly force layoffs of up to 600 employees.

Measure 82 does carry some restrictions. Each non-tribal casino would require voter approval throughout the state and in the city where it would be built. In addition, private casinos would have to be located at least 60 miles away from the nearest tribal-owned casino. That’s still too close, said John McCafferty, resort operations officer for Seven Feathers.

“Our two big markets are Eugene and Medford, and they are both over 60 miles from us,” he said. “If these measures are passed, in a few years it could essentially wipe us out.”

The companion initiative, Measure 83, would authorize a specific casino, the Grange, to be built at the old Multnomah Kennel Club in Wood Village, 12 miles east of Portland. The proposed $300 million, 130,000-square-foot entertainment complex would become the largest casino in the state. Residents of Wood Village will also vote on a city measure on whether to allow the casino’s construction.

The Grange would be 75 miles from Spirit Mountain Casino, which is owned by the Confederated Tribes of Grand Ronde. Those tribes say say they will take a huge economic hit if these measures are passed. According to spokesman Justin Martin, the Grand Ronde stands to lose between 32 percent and 37 percent of revenues if the Grange is developed, which would erode vital tribal programs such as health, education and housing.

In July an economic analysis by the nonpartisan Legislative Revenue Office determined that The Grange would probably cost state and local governments money, and likely shrink the Oregon economy. So far, opponents have spent almost $1 million to fight both measures, which includes $100,000 from the Cow Creek Umpqua tribe.

Both are backed by Clairvest Group Inc., a private equity firm based in Toronto, Canada; Great Canadian Gaming Inc., which runs more than a dozen casinos and race tracks in British Columbia and Washington; and two Lake Oswego businessmen who have already tried this several times before and failed. The last attempt in 2010 was defeated by 68 percent of voters, reports the Portland Tribune.

“I think the tribes were a little surprised that after having been defeated so soundly, that they are coming back again,” said Rondeau. He sees it as nothing more than a money grab by foreign investors. “We all know that the profits are going to be sucked out of Oregon and into Canada.”

There are strong arguments both for and against. Oregon Gov. John Kitzhaber is staunchly opposed to both measures, arguing that their passage would renege on a deal made with nine tribes in the state. Under this agreement, the tribes promised to operate only one casino each, on the condition that there would be no competition from private casinos.

“He strongly opposes breaking our promise with tribal governments,” said Tim Raphael, the governor’s spokesman. “They kept their end of the bargain. It’s wrong to break our agreement.”

Stacey Dycus, campaign manager for a campaign called “Yes on Measures 82 & 83,” said the compacts don’t promise exclusivity, and they contain a clause that says private casinos could be added. Dycus said it’s not up to the legislature to decide. Her campaign has spent more than $3 million to drive home the message to voters that private casinos would create more jobs in Oregon and that 25 percent of adjusted gross revenues will benefit schools, parks and police.

Sounds great, say opponents, until you consider that the Oregon Lottery, which would also take a hit, returns 65 percent of its revenues to the state. What’s more, private casinos would severely cut into the profits of tribal casinos and the ability to pay for their own critical social programs. Surrounding communities could suffer too. The Cow Creek Umpquas, for example, contributed more than $221 million in economic activity to Douglas County in 2010, based on a recent study by ECONorthwest, an economic consulting group.

Wayne Shammel, general counsel for the Cow Creek Umpquas, said, “Our community needs to understand that a threat to us is also a threat to them.”

One of the major concerns if these measures pass, even among non-Natives, is that it would lead to a proliferation of gaming operations in Oregon, and all the attendant problems with it.

“We don’t believe Oregonians are clamoring for more gambling options, and when they’ve been asked, they’ve said no,” Martin said. “But once you get rid of that hurdle in the Constitution, there’s nothing to keep the next wealthy businessman or foreign investor or Donald Trump from coming into Oregon and opening another casino.”

But Dycus argues that there are still plenty of potential gambling profits to go around. He said it’s no different than successful hybrids of private and tribal gaming in 22 other states.

“We have 66 flights a week from Portland to Las Vegas,” she said. “That’s almost $200 million in gaming going outside the state. We think we can grow the market by keeping Oregonians here to game. We believe we can partner and co-market with tribes to make Oregon more of a destination for gaming than it currently is.”

Shammel sees a sea change in the way gaming operates in the state.

“It will be a modern Indian drama to see the shake-out of the gaming industry over the next ten to twenty years,” she said. “What will be the final act in the story of the new buffalo?”

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