Betting on casinos hasn't paid off for governor so far; Efforts to fill state coffers with casino revenues have stalled

Star Tribune
May 31, 2005,
Pat Doyle; Staff Writer

It began with a threat and turned into an alliance that crumbled in the face of a diverse, determined and well-organized opposition.

Gov. Tim Pawlenty's effort to use casinos to solve state budget problems was a central drama of the regular legislative session, and the effort's failure thus far was a major reason the regular session produced no overall budget solution. Pawlenty's casino plan ran headlong into Indian tribes protecting their interests, liberal DFLers and conservative Republicans. His latest idea - creating two casinos at Canterbury Park race track - stalled in the final days of the regular legislative session amid fears that the plan would eventually spawn a third state-sponsored casino, in Anoka County.

The governor banked heavily on an Indian partnership that was more fragile than it appeared in public pronouncements.

Then he added Canterbury to the deal despite signals that most of his Indian partners didn't want to do business with the track.

"It was never one of our options," Leech Lake tribal chairman George Goggleye said last week.

Pawlenty's press secretary, Brian McClung, said Friday that a casino plan involving the state and one Indian tribe could still emerge from the special legislative session now underway. McClung said Pawlenty knew all along that any plans for a state-sponsored casino would be controversial.

But some gambling opponents said the governor didn't anticipate the degree of formidable opposition he'd face on several fronts.

"I think there was an underestimation of the overall resistance," said Annette Meeks, a longtime Republican Party activist and a top official of the Center of the American Experiment, a conservative think tank critical of gambling expansion.

From threat to alliance

The push to use casino money to help balance the budget began in earnest last fall, when Pawlenty demanded that tribes pay the state $350 million or risk losing their casino monopoly. To underscore the message, chief of staff Dan McElroy met representatives of Harrah's, MGM Grand and Mandalay Bay in Las Vegas and pronounced them "very interested in Minnesota." Pawlenty launched a series of radio ads before the November election on behalf of Republican candidates for the Minnesota House of Representatives that called for Indian tribal casinos to share some of their profits with the state.

The tribes resisted the pressure. Melanie Benjamin, chief executive of the Mille Lacs band of Ojibwe, owners of Grand Casinos Mille Lacs and Hinckley, withdrew an earlier offer to be a partner with the state in a gambling deal. She said the governor "poisoned the water" for negotiations and called the House ads "a political smear campaign."

The governor then tried a new approach. Instead of asking tribes to share their existing casino profits, he forged a deal with the Leech Lake, White Earth and Red Lake Chippewa to become partners in a single new Twin Cities casino. The poor northern tribes would share future profits in exchange for building the facility and paying the state $200 million in licensing fees.

But including tribes in the casino deal didn't sway many DFL legislators, who sided with Indian causes and also benefited from the bulk of campaign contributions from wealthier tribes seeking to protect their gambling monopoly. A bill sponsored by Sen. Sandy Pappas, DFL-St. Paul, was rejected 10-4 in a Senate committee.

The proposal was also in trouble in the House. The GOP had lost seats in the election and there was substantial opposition among Republicans still in the House. "The conservative pushback on this was significant," Meeks said. For Republican legislators, "having ministers call you and tell you that this is a really bad idea ... that is a powerful pushback."

The opponents included Citizens Against Gambling Expansion, a bipartisan group run by Meeks' husband, Jack, long a prominent Republican. It has received much of its funding from tribal governments that oppose additional casinos as threats to existing tribal gambling operations.

Meanwhile, Rep. Ron Erhardt, R-Edina, and Rep. Phil Krinkie, R-Lino Lakes, opposed the plan because they regarded gambling as a bad way to raise revenue for government. The proposal languished in the House Taxes Committee, chaired by Krinkie.

The alliance divides

Seeking a better strategy, Pawlenty switched gears yet again in April and proposed a joint venture between the state, tribes and Canterbury Park for two casinos at the track. A casino plan by Canterbury had passed the House in 2003.

The new plan was announced days after Leech Lake said it opposed any alliance with the track. Soon, Red Lake hinted that it, too, might not join.

"We said we would have a council meeting and decide," said Red Lake tribal treasurer Darrell Seki Sr. "I didn't support it."

Leech Lake and Red Lake tribal officials said they didn't want to set a precedent for opening up casino gambling to non-Indian businesses. They also objected to joining the state and Canterbury in casinos that would challenge nearby Mystic Lake Casino, owned by the Shakopee Mdewakanton Dakota in Prior Lake.

"It was encroaching on the Mdewakanton's territory," said Judy Roy, secretary of the Red Lake Nation, last week. "There was a line we wouldn't cross."

The tribes had other reasons to respect the Shakopee Mdewakanton. In recent years they have given Leech Lake a $1.5 million grant for reservation projects and a $41 million loan to consolidate debts, and given Red Lake a $500,000 grant for a school.

And in the intrigue of tribal politics, there was speculation that tribes with large casinos in or near the Twin Cities were helping Leech Lake dissidents opposed to a casino deal with the state. Leech Lake tribal investigators reported that a member of one protest group on the reservation "did state that they had received financial support from the Mystic Lake Casino as well as Mille Lacs Reservation."

The protester, Deborah Geving, said last week that the report was false. She said the Mdewakanton declined her request for money and that she never approached Mille Lacs.

After Red Lake followed Leech Lake's lead, White Earth was the only band participating in the deal with the state and Canterbury.

Supporters of the governor's latest proposal tried to send it to a panel friendlier than the Taxes Committee. But 14 Republicans joined the majority in voting to send it to Krinkie's committee. Rep. Ray Vandeveer, R-Forest Lake, had joined Krinkie and Erhardt in voting against a Canterbury casino in 2003, but was undecided about the latest casino proposal.

Some of Vandeveer's constituents worried that casinos at Canterbury would lead to a casino some day at a harness track in Anoka County. Vandeveer said he wanted assurances that a casino wouldn't be built in Anoka County. The governor's office tried to assure casino opponents that the bill would prohibit casinos beyond the two proposed for Canterbury, but some were not convinced. The governor's office pulled the bill.

"We're confident that a majority of the legislators are coming to realize that this is bad public policy for the state of Minnesota," said Stanley Crooks, chairman of the Shakopee Mdewakanton.

But a proposal for a single state-sponsored casino at Canterbury - one without tribal partners - was introduced in the special session. And McClung said the governor hasn't given up on a plan for a deal that includes the White Earth nation as a partner.