California Tribe Eyes Casino, Schwarzenegger to Review

LOS ANGELES-A band of California Indians announced a last-minute deal with former-Gov. Gray Davis that would allow the tribe to build a new casino featuring 350 slot machines in exchange for 5 percent of gambling revenue.

But the deal will face tough scrutiny from Gov. Arnold Schwarzenegger, who wants billions from tribal gambling interests in order to address the state's budget shortfall, said Karen Hanretty, a Schwarzenegger spokeswoman .

Tribal casinos have built an industry with as much as $6 billion in annual revenue in California based on their monopoly on slot machine gambling in the state.

The Fort Mojave tribe agreed to pay the state 5 percent of revenue from a casino to be built near Needles, on the border with Nevada and Arizona, both sides said.

The tribe said that was the most it could offer the state. California's legislature must ratify the deal when it reconvenes next year and Schwarzenegger would have to sign the pact for it to take effect.

"I don't think we could give the state much more than we are giving," tribal attorney Rob Rosette said on a conference call, announcing the deal.

The tribe, which negotiates with the state as a sovereign entity, said it could take two or three years to clear regulatory hurdles and build the casino after the compact was ratified.

Schwarzenegger, elected on Oct. 7, will be much more aggressive than Davis on seeking concessions from tribes, and he will review any compacts signed by Davis in his last days in office, Hanretty said.

"[Governor] Schwarzenegger made very clear throughout the campaign that when he takes office he wants everything to be on the table," she said.

"Any compact that Gov. Davis signs while in office, Gov. Schwarzenegger will want to review to make sure the state of California receives its fare share of gaming revenue."

The 5 percent revenue contribution was much lower than what tribes in other states paid, she said. Tribes in Connecticut pay 25 percent of revenue, for example.

"If we can reach a similar agreement as has been reached in other states, California would receive anywhere from $1.25 billion to $2 billion," she said.

Hanretty said tribes with casinos would be best served by renegotiating 20-year compacts in order to expand, a proposal some major tribes have already rejected.

The Fort Mojave tribe would also need an agreement between California and federal regulators allowing the tribe to operate a casino from its reservation, which would be a first for California.

The tribe's reservation extends into Needles and near Interstate 40, but it agreed to build the casino outside of town, farther away from the highway-and schools and churches in Needles.

The Fort Mojave tribe already has two casinos about 15 miles away, one each in Arizona and the Laughlin, Nevada area.

Gambling in California has drawn business away from some Nevada border casinos, although Las Vegas has flourished with its wide variety of entertainment beyond gambling at its megaresorts, owned by the likes of Park Place Entertainment Corp. and MGM Mirage.