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Place your bets on the future of gambling in Arizona.

It's a quiet crowd on this warm Friday night at Tucson Greyhound Park. Just one lonely soul stands at the rail as the mechanical rabbit throws sparks as it spins around the track to start the fourth race of the evening.

Kip Keefer, the racetrack's general manager, guesses that maybe 550 people have passed through the turnstile. Many have called it quits by the time the final race rolls around 11:30 p.m.

Just 20 minutes down the interstate, at the Tohono O'odham's new Desert Diamond Casino, the night is just getting started. A concert has wrapped up in the complex's 2,000-seat performance hall. The tables at the bars that ring the building are full. And down in the pit in the center of the casino, the machines jingle and jangle as they swallow fresh paychecks.

The evening reveals a simple truth: if the choice is between sizing up greyhounds and slipping dollars into a slot, you can bet the casual gambler is gonna pick the slots. Figuring out if you've got three cherries in a row is a hell of a lot easier than comparing the records of eight different dogs in 16 different races.

While they have rebounded slightly in recent years by simulcasting races around the country and establishing off-track betting in local taverns, Arizona's tracks are withering in the face of competition from tribal casinos. One industry spokeswoman complains that if the Legislature approves Gov. Jane Dee Hull's new proposal to allow tribal casinos to expand their operations to include more slot machines and introduce blackjack tables, the tracks "might as well roll up the sidewalks."

But the racing industry isn't going down without a fight. Lobbyists are working lawmakers to slow the expansion of tribal gaming and allow slots at the tracks. The smart money says voters will decide the future of gambling at the ballot box this November.


EARLIER THIS MONTH, GOV. Hull said she would seek a special session to deal with gaming issues, perhaps as soon as next week. The announcement came about a month after Hull told the press she had negotiated new gaming compacts with the Arizona Indian Gaming Association, a 17-tribe coalition including the Tucson-area Tohono O'odham and Pascua Yaqui nations.

The current gaming compacts, signed in 1993 after an acrimonious negotiation between the tribes and then-Gov. J. Fife Symington, are set to begin expiring in 2003.

Since signing the compacts, the tribes have developed increasingly sophisticated gaming operations, such as the Ak-Chin tribe's recent partnership with Harrah's Casinos in a resort south of Phoenix. Last year, the Tohono O'odham nation opened the new Desert Diamond casino off Interstate 10 just north of Green Valley, while the Pasqua Yaqui tribe opened a new Casino del Sol off West Valencia Road.

While the total statewide take for tribal casinos is not public record, press reports estimate that tribes gross more than $800 million annually. Even after expenses, that's a lot of money for tribes that face serious poverty on the reservation, so it's no wonder Tohono O'odham Chairman Edward Manuel calls the impact of the gaming revenue "very positive."

"We've never had this kind of revenue to address our needs," says Manuel. Although he doesn't reveal the precise amount that gaming brings to the tribe, he says the Tohono O'odham netted about $50 million after expenses in the first year of operation and has seen an increase every year since.

Those gaming proceeds go a long way on the impoverished Tohono reservation, which covers 2.8 million acres--an area bigger than the state of Connecticut--stretching from the Tucson metro area to the Mexican border. Manuel says gambling revenues have funded the creation of a fire department and pay two-thirds of the tribe's law-enforcement budget. The nation has been able to launch a Head Start program for kids and build a community college near Sells. A $14 million nursing home will soon open and a $11.2 million clinic is being designed for the west end of the reservation.

In addition, the casinos have provided much-needed jobs to many tribal members. Statewide, Indian gaming directly employs more than 9,200 people, according to a 2001 study by the UA Udall Center for Studies in Public Policy, which puts the casinos on the same level as the mining sector.

But the legal status of tribal casinos has been threatened since a federal judge ruled last year that the Arizona Legislature had improperly extended authority to the governor to sign gaming compacts when the agreements were reached in 1993.

The judge's decision was prompted by a lawsuit filed by the racetrack industry, which took legal action after hearing rumblings that Hull had been in secret negotiations with the tribes to extend the state's gaming compacts.

In those closed-door meetings, Hull had spent more than two years hammering out a deal with the tribes. Although she has yet to unveil the legislation, Hull did summarize the agreement last month.

The proposal would reduce the number of Native American casinos allowed in Arizona from 38 to 29. The Tohono O'odham would get one more casino near Tucson, but there would be no more casinos allowed in the Phoenix metro area.

Although the number of permissible machines statewide would continue to be capped at 14,675, Hull's proposed compact would undoubtedly increase the number of slot machines operating in Arizona. In the Tucson and Phoenix metro area, the number of machines allowed per casino would nearly double, rising from the current limit of 500 to 998. Rural tribes that don't have a viable customer base would be able to transfer their slot machine allocation to tribes operating profitable casinos, with tribes negotiating the details of those agreements.

The tribal casinos would also be allowed to add up to 75 blackjack tables per casino.

The agreement calls for tribes to share revenue on a sliding scale. From each tribe, the state will get 1 percent of all gross gaming revenue under $25 million; 3 percent between $25 million and $75 million; 6 percent between $75 million and $100 million; and 8 percent in excess of $100 million. The payment, which the governor's staff estimates will total more than $1 billion over the next decade, will be used primarily to cover state costs for education and social programs on reservations and to pay state cost of regulation.

The agreement also calls for tribes to allow the state Department of Gaming to disclose the total aggregate gaming revenue, although the details of each tribe's take will remain confidential.

The legal gambling age would be increased to 21, with an agreement that no advertising would be geared toward minors.

Racetrack industry representatives complain that such an expansion would kill their operations.

"We just can't stay in business competing with those kinds of numbers," say Amy Rezzonico, spokesperson for the Arizona Racetrack Alliance.


The Arizona Racetrack Alliance, a coalition of the seven remaining tracks in the state, is flexing its political muscle to fight the proposed compacts in the Arizona Legislature.

The tracks scored a big win with their federal lawsuit last year. As a result of the ruling, Hull's proposed compacts will have to be approved by lawmakers. The racing industry hopes to kill that effort, forcing the tribes to gather enough signatures to put their proposal on the ballot, where it will face an alternative proposal from the tracks.

The racing industry has a powerful ally in Senate President Randall Gnant. The Scottsdale Republican has introduced the alternative proposal, which asks voters to allow up to 1,000 slot machines at Tucson Greyhound Park, Phoenix Greyhound Park and Turf Paradise, the horse track in Phoenix. Tucson's Rillito Downs, Yavapai Downs in Prescott Valley and Apache Greyhound Park would get up to 600 machines, while Yuma Greyhound Park would get up to 350.

The tracks would cut the state in for a piece of the action, up to 30 percent daily, with an estimated annual take of $100 to $200 million.

Although the tribal casinos would get the authority to transfer slot machines from rural to urban tribes, they would remain prohibited from offering blackjack games and would be forced to share between 4 percent and 12 percent of their revenues, depending on size of tribes and their casino operations. Gaming industry representatives estimate the take for taxpayers would total $300 million annually.

"It brings in a couple hundred million bucks to the treasury and we're in a period right now, frankly, where we need that money," say Gnant. "I suppose we could continue to rank 52nd in every major category, but how the hell can we expect people to come to the state and want to set up businesses here?"

Gnant calls Hull's proposal "woefully inadequate, because it provides no additional revenues for the state to meet its shortfall. The small amount of revenue that does come in goes right back in to being invested on the reservations."

He says the proposal will also revive the racing industry. "There are 6,000 families that make their living from the tracks," Gnant says.

With about 150 employees, according to general manager Keefer, Tucson Greyhound Park remains one of the top three private employers in the tiny city of South Tucson.

Like other tracks in Arizona, Tucson Greyhound Park has been hit hard by the casino competition. Keefer says the "handle," or the total amount bet at racetrack windows, had been declining even before the casinos opened. After hitting a high of nearly $43.4 million in 1989, it had dwindled to about $34.8 million in 1993, when the tribal compacts were signed.

By 1995, the handle had fallen off to about $24.5 million as the slots had lured away casual gamblers.

Keefer admits the tracks shoulder some of the blame for declining numbers, saying the tracks failed to reach out to a new generation after the "golden years" of the 1950s and '60s. But he argues that the opening of tribal casinos posed a new threat to the struggling industry.

"If our decline was a small smoldering blaze, Native American casino gaming was the accelerant that made it a rapid inferno," says Keefer.

The track has improved its numbers in recent years, bringing the handle up to more than $38.1 million last year, according to Keefer. The increase was the result of broadcasting its races to tracks across the globe--people are now betting their rubles on Tucson's races in Moscow--and by allowing gamblers to bet on races from other tracks. That has meant a significant investment in technology and longer hours of operation; the track used to open for five or six hours at 6 p.m., but now the action begins at 10:30 a.m., six days a week. While the handle may have climbed back up, the expenses have increased considerably and the track takes a smaller percentage on the off-track bets.

It's a familiar pattern that has repeated itself whenever new casinos open near racetracks in the United States. Racetracks have continued to thrive in the face of similar competition only in states such as Iowa, Rhode Island and West Virginia, where they're allowed to run slot machines.

If Gnant's proposal can pass the Legislature, it will go to the ballot rather than the governor's desk, leaving the final decision in the hands of the voters.

Tribal officials argue that competition from the racetracks would hurt their operations, especially if more tracks opened.

"There's going to be a lot of competition because there's really no limit as far as gaming at the racetracks and they can bring in more racetracks and set them up," says Manuel.

Rezzonico says the concerns are unfounded because Gnant's proposal limits the number of tracks that could have slot machines to eight statewide.

"Just by sheer numbers alone, if those urban areas were allowed 14,000 slot machines and in the two racetracks in Maricopa County there are 2,000 slot machines, how is that going to devastate the Indian community?" she asks.


IF THE LEGISLATURE fails to act on Gnant's proposal, the racetracks intend to launch an initiative campaign to gather the necessary 101,762 valid signatures from registered voters, along with a comfortable cushion, by July 4.

The tracks' best hope is to use their political juice to torpedo Hull's compacts in the Legislature, forcing the tribal alliance to start its own initiative campaign.

A third proposal is in the works by a group called Yes for Arizona, a political committee representing the Colorado River Indian Tribes, who were unhappy with the compacts negotiated with the governor. Most political insiders dismiss the political viability of that effort. Representatives from the Colorado River Indian Tribes did not respond to repeated requests for comment.

While there's still plenty of time before the election, recent polls generally favor the tribal proposal. A January poll by Phoenix PBS affiliate KAET found that two out of three voters support tribal gaming, although nearly 60 percent also thought the state should receive a share of the proceeds. A similar poll in April 2001 found similar support for Indian gaming, with only 31 percent supporting the notion of allowing tracks to run slots.

But sometimes the underdog ends up with an upset. Voters can certainly expect plenty of persuasive ads between now and election day. The tribes' political action committee, Arizonans for Fair Gaming and Indian Self-Reliance, has already begun running television ads to urge people to support the governor's proposal, even though lawmakers have yet to see the formal legislation.

"They run a lot of commercials that say, 'The racetrack industry is trying to put us out of business and they don't like our competition,' " Keefer says. "Well, that's a joke. They're the Goliath and we're the little guy with the slingshot. Nobody's going to put them out of business. They're generating hundreds of millions of dollars in proceeds. All we're saying is let us have an opportunity to have some competitive products."

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