Attack ads distort deal Gregoire rejected on casinos

The images are sinister: Gov. Christine Gregoire kills a deal that would have given Washington a $140 million-a-year share in profits from Indian casinos. A forklift stacks bundles of tribal cash onto a truck for her re-election campaign.

In one of the most sustained attacks of the gubernatorial race, the Republican Governors Association has spent millions of dollars on ads tossing around terms like "payoff" and "quid pro quo" to accuse Gregoire of nixing the revenue-sharing deal because of her cozy relationship with tribes.

That's a cartoonish distortion of what occurred in 2005 when Gregoire rejected a proposed deal with the Spokane Tribe of Indians that would have given Washington, for the first time, a share of casino cash — a common practice in other states.

At the time, the idea was widely panned by both Republicans and Democrats, who feared the trade-off for casino money would be a virtually uncontrolled explosion in gambling.

Until this election season, few claimed it would have been a great deal.

Nevertheless, there are plenty of critics of the agreement Gregoire subsequently reached with the Spokanes and other tribes. That deal eliminated revenue sharing yet authorized more than 8,000 new electronic slot machines statewide. It was part of the largest expansion of tribal gambling in more than a decade.

Republican challenger Dino Rossi says he'd be a tougher negotiator, suggesting he'd demand a share of casino profits for the state. But he has avoided specifics on how much further expansion of gambling he'd authorize in exchange.

Gregoire says she is no fan of gambling and argues she cut the best deal she could with the tribes, which are guaranteed the right to run casinos under federal law. She called the $140 million figure in the ads "totally fictitious."

Fueled by casino wealth, Washington's Indian tribes have become increasingly important political patrons for Gregoire and the state Democratic Party, contributing more than $1 million since 2003, according to the state Public Disclosure Commission (PDC).

Rossi has said the tribes "laundered" that money to Gregoire's campaign. But those contributions were legal and are not under any PDC investigation.

Here are some key questions and answers to sort out the charges and countercharges:

Q: What was that revenue-sharing deal that Gregoire killed?

A: In 2005, the Washington State Gambling Commission reached a tentative deal with the Spokanes aimed at ending years of legal disputes over the tribe's casinos, which were running slot machines the state deemed illegal. (Other tribes previously signed agreements, called compacts, which regulate casino operations.)

The Spokane compact would have authorized 7,500 electronic slot machines, with up to 4,000 at any single casino — double what the state then allowed for most other tribes. The deal also could have paved the way for off-reservation casinos by waiving the governor's veto authority.

In exchange, the state would have received a cut of the Spokanes' take, starting at 3 percent on the first $30 million of the casinos' net revenue. It would have risen to a maximum of 35 percent on revenues of more than $210 million.

Q: Did Gregoire originally support revenue sharing?

A: Yes. In an October 2005 letter, Gregoire asked the gambling commission to revise the Spokane deal, citing concerns over the large number of electronic slot machines and off-reservation casinos.

However, Gregoire wrote that she was "especially pleased that the proposal includes provisions for revenue sharing ... ."

Before a meeting with other tribal leaders, her staff prepared talking points that suggested the money could go to "projects of mutual importance to the state and tribes," including roads, culverts and Puget Sound cleanup.

Q: Why did the governor change her mind?

A: The Spokane proposal drew loud protests from across the state, including from other tribes who argued their casino profits were already put to good use funding tribal clinics and other services.

Other critics, including Republican lawmakers, worried the deal would lead to a huge expansion in gambling if other tribes got similar agreements. There also was blowback against the notion that the state should share in casino profits.

"I did not hear one peep from anybody saying we should have gone for it," Gregoire said in an interview.

Norm Maleng, the late King County prosecutor and a Republican, wrote in a Seattle Times op-ed piece that the state could not regulate gambling impartially "when it has a vested economic interest in gambling expansion."

State Sen. Jim Honeyford, R-Sunnyside, warned that revenue sharing would give tribes too much power. "If you think those groups have leverage now, just wait until they're providing the funding for the services you get," he said in a 2005 news release.

Q: What was the final deal Gregoire worked out with the tribes?

A: After the Spokane deal fell apart, Gregoire's office swooped in to rewrite the deal.

Last February, a new agreement was reached. It dropped revenue sharing and cut the number of electronic slot machines to 4,000, with no more than 1,500 under one roof. It also eliminated the earlier provision waiving the governor's veto authority over off-reservation casinos.

A few months later, Gregoire reached a similar deal with 27 other Washington tribes.

That agreement authorized 8,000 new electronic slot machines, pushing the statewide total to more than 25,000. Each tribe's allotment of machines grew from 675 to 975.

Betting limits were raised from $5 to $20 on the electronic slot machines. For the first time, machines were allowed to accept cash instead of paper tickets, and operate with a single button push. And casinos were now allowed to operate 24 hours a day.

Q: Did the state really lose $140 million by not taking the revenue-sharing deal?

A: It's not that simple. The $140 million figure, cited in the anti-Gregoire ads, assumes other tribes would have signed deals similar to the original Spokane compact.

But the other tribes never agreed to that, and were under no obligation to share casino money with the state.

Still, Washington's tribal casinos are now a $1.4-billion-a-year industry, so if Gregoire had fought for a revenue-sharing deal, there is little doubt it would have brought in tens or hundreds of millions.

Q: Don't other states get a lot of money from tribal casinos?

A: Yes. Washington now ranks as the sixth-largest tribal casino market in the country, according to the Indian Gaming Industry Report, an annual analysis by Alan Meister, an economist with the consulting firm Analysis Group.

Yet Washington is one of just a handful of states with large Indian casino operations that doesn't demand a cut of the revenue. California received $280 million last year, Connecticut $420 million, Oklahoma more than $70 million.

Q: Could Gregoire have cut a better deal?

A: Gregoire's former chief of staff, Tom Fitzsimmons, who negotiated the compacts, says the governor did the best she could. Tribes came in asking for more than 1,300 slot machines, far more than the 975 they ultimately agreed to, he said.

Fitzsimmons said the state long ago had promised tribes they'd be allowed to gradually expand their casinos. "We are on a curve that is inevitable and best approached from a slowing it down to its absolute minimum," he said.

But critics complain that Gregoire caved in on gambling expansion while demanding little in return.

"If you don't like gambling, you can say 'No, you've got enough machines,' " said former gambling commissioner and former Democratic state Sen. Janice Niemi, who voted against the compacts. "She gave them more machines, and they're making more money. The state should have got some revenue."

Q: How much money have tribes given Gregoire and the Democrats?

A: More than $1 million over the last five years.

That includes more than $80,000 in direct contributions to Gregoire's 2004 and 2008 campaigns.

During that period, tribes poured more than $700,000 into the state Democratic Party's "soft money" account. That money cannot legally be spent directly in support of an individual candidate, but it certainly benefits Gregoire at the top of the party's statewide ticket.

Tribes have also contributed $250,000 to the Harry Truman Fund and Roosevelt Fund, dedicated to protecting the Democrats' majorities in the Legislature. The tribes also contribute much smaller amounts to Republican candidates.

The bulk of the money has come from tribes running the lucrative casinos near Interstate 5 — the Puyallups, Tulalips and Muckleshoots.

Ron Allen, chairman of the Washington Indian Gaming Association, said tribes have long admired Gregoire because she "understands the unique challenges that tribal governments in our communities have."

Q: What would Dino Rossi do?

A: Rossi, Gregoire's Republican challenger, says the state should try to get a cut of casino revenue from the tribes.

"I was not a supporter of the expansion of gambling," Rossi said. "But I don't think you can put toothpaste back in the tube. We might as well make the best of it."

However, Rossi has not said what he'd offer the tribes in return. Because tribal casinos cannot be taxed, states have to make trade-offs with tribes to get revenue. That usually means more casinos and further promises of exclusive gambling rights.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com