08/19/2004 11:00PM

California racing absorbs another blow


California Gov. Arnold Schwarzenegger made a lot of campaign promises during last year's special election. The biggest was to close the state's huge $14 billion budget deficit.

It was an open door for California businesses to step through and commit what they could do for the state. Of course, if you did something for the state, the state would do something in return.

In the area of gambling, it was an opening for the racing industry to grab a foothold on the slot machines that are now a monopoly for the Indian tribes. Well, guess who's winning the battles and is well on their way to winning the war?

This week another nail was hammered into the coffin when Gov. Schwarzenegger announced formal agreements on five new Indian casino compacts. That's expected to generate another $200 million for the state of California.

Since June, Indian tribal gaming interests have signed on to pay the state of California $1 billion in a lump sum for transportation. Their yearly collections, with the new deals in place, will reach $350 million a year, according to the governor's accounting office. And the number may grow. The governor has new deals with only 10 of the 57 Indian tribes that are doing gambling business in California.

Those hard numbers will make it nearly impossible for the horse racing industry to win a special referendum this November. The referendum would force the Indian tribes to pay 25 percent of revenues to the state or see the state's racetracks and card clubs get 30,000 slot machines.

It must be aggravating to California racing leaders to see a state like Pennsylvania ram through legislation to help its horse racing industry. Pennsylvania will eventually have 61,000 slot machines at its racetracks and various locations. The scary part is by the end of this decade, the daily purses at Philadelphia Park could rival, or surpass, those offered at Del Mar, Hollywood, and Santa Anita.

Here in Las Vegas, optimism abounds over the new deals. The biggest of the five proposed casinos is with the Lytton Band of Pomo Indians. George Maloof, owner of the Palms, and Jerry Turk, former owner of Fitzgeralds downtown, will develop and manage the $450 million project.

The Bay Area casino will be located only 20 miles from San Francisco and 14 miles from downtown Oakland. With the magnitude of the project and its location, analysts suspect it will be wildly successful and have a negative impact on northern Nevada gaming.

An early proposal from Maloof and Turk calls for a 450,000 square foot entertainment complex, including a 200,000 square foot casino, a 150,000 square foot events center, and a 100,000 square foot administrative area. The Lytton Band would be allowed to have a maximum of 5,000 slot machines, of which up to 25 percent of profits from the slots and table games would be paid to the state. The deal has been compared to two Connecticut tribes, Foxwoods and Mohegan Sun, which have facilities that are second to none.

The Lytton Band also received an exclusivity agreement that prohibits any another casino from opening within a 35-mile radius. The casino is expected to open during 2007.

Richard Eng is the turf editor for the Las Vegas Review-Journal and host of the Race Day Las Vegas Wrap Up radio show.