Nevada Eyes Expanding Gambling In California

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Gambling analysts are beginning to consider whether Nevada will suffer if California turns to Indian gambling to help plug its budget deficit.

With moves to expand California gambling gaining momentum, University of Nevada, Las Vegas professor Bill Thompson said Nevada political leaders should tell California Gov. Arnold Schwarzenegger the economies of the two states are linked.

"Our relationship is symbiotic, not exploitative," said Thompson, who studies the casino industry at UNLV. "It's good for both of us."

Thompson said money California gamblers spend in the Silver State is spent buying goods and services from the Golden State.

California is facing a deficit that Schwarzenegger's staff estimates at $24 billion.

Preliminary documents filed Wednesday could put an initiative before California voters asking whether horse tracks and card clubs should be allowed to offer Las Vegas-style gambling.

That filing with the California secretary of state's office came less than a week after 10 of 94 California Indian tribes that have or want to expand casinos said they were willing to negotiate terms for new gambling opportunities.

Wall Street analysts said that increasing competition from gambling halls in California would probably hurt casinos in Reno, Laughlin and downtown Las Vegas. Analysts say the impact on Las Vegas Strip megaresorts might be less because they have a base of conventioneers and destination tourists.

Bear Stearns analyst John Mulkey, who met recently in California with tribal and political leaders, said Schwarzenegger could propose new compacts allowing unlimited slots if tribes share roughly 15 percent of slot revenues with the state.

Indian tribes are not subject to state law, and the state cannot directly tax tribal gambling hall revenues. Mulkey said several Northern California tribes might favor rewriting casino revenue compacts while Southern California tribes in more competitive jurisdictions might balk.

The federal Bureau of Indian Affairs also could block any new compact, he said.

Joe Greff, gaming analyst at Fulcrum Global Partners, noted that some California tribes were trying to form a consensus, while others were lobbying for individual interests.

Mulkey said Schwarzenegger could propose non-tribal gambling as leverage against tribes.

The gambling analyst said that while Schwarzenegger might not push for destination resort gambling outside Indian reservations, he might not oppose a ballot initiative to allow slot machines at some racetracks and card clubs.