Elk Grove referendum puts California tribes, card rooms face to face

The Wilton Rancheria Indian tribe wants to build a $400 million casino-hotel complex off Highway 99. An Emeryville company called Knighted Ventures LLC, which has close ties to the owner of two Sacramento-area card rooms, has launched a voter referendum that could kill the project, The Fresno Bee said. 

Besides thwarting the casino, the referendum could derail plans for a nearby shopping mall that the city has been desperate to see built since Elk Grove became a city in 2000. The likelihood of a referendum has city officials and tribal leaders fuming.

The casino “is an opportunity for our tribe to provide self-governance, self-sufficiency, self-determination, job opportunities, to provide housing and medical benefits,” said tribal Chairman Raymond Hitchcock.

Compared to the card rooms, “I think that’s a far greater cause,” he added. “They’re out for themselves.”

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Card rooms, however, see themselves as the little guys trying to halt a powerful nemesis

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“Certainly it’s a big project and it will have a big impact,” said Kyle Kirkland, a Fresno card room owner and president of the industry’s trade group, the California Gaming Association. “It’s sort of irresponsible if you don’t use whatever tools you have to try to challenge it.”

Blocking a tribal casino would represent a rare win for the card rooms. Although they’ve been around since the late 1930s, they’ve been left in the dust since California voters passed Proposition 1A in 2000, allowing tribes to operate Las Vegas-style casinos. The tribes have built a $7 billion-a-year business, while Kirkland said the state’s 72 card rooms generate about $800 million in annual gambling revenue.

Legally speaking, the tribes hold most of the chips. They have a monopoly on slot machines, and they alone are allowed to act as “the house” or “the bank” – that is, take a financial stake in their games. By contrast, the card rooms operate under a complicated set of betting restrictions that forces them to work with third-party companies, such as Knighted Ventures, to handle the actual betting at their card tables.

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The tribes are frequently pushing in the courts and the Legislature for tighter rules on wagering at the card clubs

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Just last summer, the state issued a stricter policy that starting next year could force card rooms to call a two-minute halt to the card playing once every hour under some circumstances.

“It’s difficult when you’re at a significant disadvantage,” said John Mikacich of the Limelight Card Room on Alhambra Boulevard in Sacramento.

Mikacich, whose family has been in the card room business since the 1950s, said the Limelight employs 75 workers and does a “sustainable” business. He wouldn’t comment specifically on the referendum battle but wonders about the fairness of another tribal competitor in Elk Grove.

When Indian casinos were legalized in California, he said, the idea was they’d be built in more remote, rural areas – not the fringes of booming suburbs.

“I respect the tribe for trying to create an economic opportunity for themselves, but I think it’s important to create boundaries for where casinos can go,” he said.

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There’s another wrinkle in the wagering rules – the card rooms must periodically offer every player at the table the chance to play the banker role

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It sounds arcane, but it’s become a serious issue. The tribes have argued for years that the card clubs don’t bother rotating the banker role around the tables.

“We’ve had people observing what they do, and it’s just a sham,” said Steve Stallings, chairman of the California Nations Gaming Association. Stallings’ tribe, the Rincon Band of Luiseño Indians, owns a major casino resort near San Diego.

Tribes have lobbied the Legislature and gone to court to try to tighten the rules, with mixed results. Earlier this year, they did persuade state regulators to issue a new policy. The Bureau of Gambling Control, an arm of the attorney general’s office, announced in June that a card table must shut down for two minutes if the banker role doesn’t rotate at least once every hour.

Card rooms said the new rule, set to take effect sometime in 2017, will make it even harder for them to compete against the tribes.

“The customer’s going to see it. It adds costs, it’s disruptive,” said Kirkland of the California Gaming Association. “It’s like, every time you see a movie, we’re going to make you take an intermission.” He added that “it’s very draining to have these regulatory battles.”

All of which helps explain why the referendum in Elk Grove matters so much to the card rooms. After years of playing defense, the card clubs are taking the fight to the Indian tribes for a change.

Read more here: http://www.fresnobee.com/news/local/article121638607.html#storylink=cpy