Time for Peace Pipe, Shapiro Says

California racing leaders look ahead after voters approve massive gaming expansion.

Now that voters in California have decisively approved a massive increase in Indian gaming for four large Southern California tribes, the chairman of the California Horse Racing Board said it is time for the tribal casinos to help out his ailing industry with financial mitigation.

Richard Shapiro, the board's chairman, also said the industry should put an end to ballot-box clashes with the powerful tribes, which poured more than $100 million into a campaign to convince the electorate that the state's share of expanded gaming revenue would help alleviate a general fund deficit of $14.5 billion.

"I would hope that the massive increase in revenues these tribes will receive from these compacts will make them more willing to work with racing to benefit racing," Shapiro said. "At the same time, many now feel that with the compacts approved, the tribes have no incentive to work with racing. We'll have to see which way they go."

Shapiro was reacting to the results of California's Feb. 5 propositions that will add up to 17,000 slot machines to the four inland tribal casinos that each operate 2,000 machines. With full results tabulated, voters approved each of the four measures by 56%-44%.

It was a grim blow for the company that owns Bay Meadows and Hollywood Park, Stockbridge Real Estate Fund, which had pumped in nearly $6 million to defeat the compacts. Terry Fancher, Stockbridge's real estate fund manager, did not return telephone messages seeking comment on what the vote could mean to the future of his tracks.

Bay Meadows opened for the 74th year Feb. 6 but the 70-day meet is expected to be the final one for the track, which is scheduled to be demolished for a development project later this year.

Jack Liebau, the president of Bay Meadows, could not be reached for comment. But speaking on the effect the election had on the track's future, he told Daily Racing Form: "If the vote had gone the other way and we could see a light at the end of the tunnel, then our plans might have changed. But that's not the case."

Stockbridge carried the fight for racing in cooperation with two tribes that have less favorable operating agreements with the state and a large labor union. They collected the signatures that put the measures on the ballot after Gov. Arnold Schwarzenegger made the agreements with the tribes and they were ratified by the state legislature.

While the anti-forces raised more than $28 million, they could not come close to matching the fundraising prowess of the Pechanga Band of Luiseno Indians and the Morongo Band of Mission Indians in Riverside County, the Agua Caliente Band of Cahuilla Indians in Palm Springs, and the Sycuan Band of the Kumeyaay Nation near San Diego.

Shapiro noted that most in the racing industry had seen enough of the tribes' political clout in an earlier initiative effort to curtail their monopoly over Las Vegas-style gaming in California. That effort, Proposition 68, was a disaster.

"Racing cannot compete economically with the tribes, who have far too many financial resources and can outspend us any day of the week," Shapiro said.

As a result, the other racing associations in the state and the California Thoroughbred Breeders' Association took no position this time. The Thoroughbred Owners of California, involved in discussions with several tribes, urged its membership to vote in favor of the compacts.

 "As Californians we saw that the state is in a dire financial state," said TOC president Drew Couto. "We just saw this as the right thing to do."

In a letter to its membership sent before the vote, the TOC said a "no" vote would not help tracks get any closer to gaining slot machines, which would require a constitutional amendment opposed by a large majority of the voters in the state.

"Consequently, we do not feel that opposing these compacts, the will of our governor, and/or the collective judgment of the legislature is a prudent and wise decision for those who have a long-term commitment to the success of California racing," the letter said.

"While others may question the sincerity of the tribes with whom TOC has chosen to work, TOC leadership believes that these tribes do in fact share a legitimate and valid desire to work with our industry – and owners in particular – in exploring means to help one another."

Shapiro agrees with the TOC approach. He said the industry should not oppose future expansion of gambling in the state.

"Why not find a way to say, 'Let them have what they want so that we can get what we need,' whether that's Instant Racing (video wagering games) or subsidies," Shapiro said. "Here we had a governor and legislature that passed these deals and supported them publicly. We're up against a powerful lobby and we're not going to win this fight. I just believe we're better off making alliances.

"A number of people in the (racing) industry agree and they've been working in that direction. So we'll see what happens. I know that at the same time, a lot people think that mitigation will never happen, that the tribes have no incentive to work with us. They say, 'Richard, you've been smoking that peace pipe for too long.' "

Schwarzenegger bet that voters would approve the deals. The budget he proposed in January assumed almost a half-billion dollars in new revenue from the casino-operating tribes. The state's legislative analyst puts the general fund take at a minimum of $131 million annually. The compacts are in effect until 2030.

Those opposed argued the deals unfairly consolidate casino wealth in the hands of a few tribes in California while doing little to help dozens of others that remain in poverty in the state. They also worry the agreements will further hurt racetracks and ignore workers' rights.

The deals gained in polls in recent weeks as Schwarzenegger began campaigning heavily for them.