October 6, 1996 in Nation/World

Playing The Odds Area Tribes Cashing In As Legal Fight Over Slot Machines Languishes In Court System

By The Spokesman-Review
 

The illegal gambling devices arrive in the dark, concealed in trucks bound for Indian lands in Eastern Washington.

Almost 2,000 slot machines have been smuggled to two reservations near Spokane during the past three years.

Slots are illegal in Washington, but the noisy, one-armed bandits guzzle money around the clock at make-shift casinos on land belonging to the Spokane and Colville tribes.

The Las Vegas-style gambling thrives in a temporary legal limbo that makes it impossible for the state to stop it, and hard for the federal government to object.

All the state can do is try to intercept the devices before they get to the reservations, then try to figure out who to prosecute in a shadowy web of companies involved in “the gray market” of used slot machines.

Meanwhile, the casinos expand without scrutiny or restraint, and the two neighboring tribes rake in money as fast as they can while the party lasts.

Industry experts speculate slot machines on the two reservations swallow about $100,000 a day, or more than $36 million a year. Some suspect the take is at least twice that much.

The tribes refuse to disclose their profits, and the state isn’t allowed to see the books. The federal government has minimal oversight and calls its records confidential.

What is clear is that the Spokanes had enough money last year to dump $833,000 into an unsuccessful state initiative that would have made slots legal on reservations.

But the local tribes are spending nothing on this year’s tribal gambling measure, Initiative 671, which would limit them to just 25 percent as many slot machines as they already have.

Instead, the Spokanes are using their windfall to create a destination resort at the confluence of the Columbia and Spokane rivers near Fort Spokane.

Tribal councilman John Kieffer won’t discuss the gaming revenues, but notes the tribe is paying for the Two Rivers Resort and Casino without bank loans or outside investors.

The Spokanes just spent $3.2 million on a new marina at the resort. “Let’s just say,” Kieffer says, grinning, “we weren’t worried about the check bouncing.”

Indian gaming is the fastest growing sector of the nation’s $40 billion gambling industry. And the gadget leading the craze is the slot machine.

Slots now produce about two-thirds of all casino profits and are surfacing in places they were never seen before.

Three North Idaho tribes have gone ahead with slotlike video pull-tabs while wrangling over their legality continues.

The Coeur d’Alene Tribe reported a $3.1 million profit from its casino last year and dished out $300 Christmas bonuses to every tribal member.

The Kalispell Tribe in northeast Washington wants to offer slots within five miles of downtown Spokane at its proposed $17 million casino in Airway Heights.

Hans Kloss, president of Bally Gaming Inc., one of the nation’s biggest gambling-machine manufacturers, calls the slot “a very fast money-eating device.”

Washington Lt. Gov. Joel Pritchard calls it “the heroin of gambling.”

Jeanne Benson, a Spokane coordinator for Gamblers Anonymous, says she’s already seen the side-effects of the slot invasion.

“It used to be that the people who came to the meetings were hooked on cards, bingo or horse racing,” she says. “Now it’s about 50 percent slots, and 50 percent everything else.”

A poor man’s Caesar’s Palace

On a Friday afternoon, hundreds of people cram inside the smoky, low-ceilinged Mill Bay Casino amid a din of falling coins and clanking, musical slot machines.

There is blackjack and roulette, but the tables are almost empty at this bustling casino on Colville land near Lake Chelan.

The people came to play 450 slot machines with names like Midas Touch, Homerun and Jackpot in a sprawl of attached, portable buildings. A handy cash machine awaits the gambler who runs out of money.

An hour’s drive away, the Colvilles run another new casino in a handsome, cedar-sided building near the Grand Coulee Dam.

The casino manager and two employees explain that they aren’t allowed to answer questions about profits from their 160-slot casino.

Thirty miles upriver, another 400 slot machines percolate with cash at the Spokanes’ Two Rivers Casino.

The metal building looks like a machine shop, but inside it’s a modern, mirrored, boisterous casino - a poor man’s Caesar’s Palace without the nylons and cocktails.

Sprinkled across the reservation are slot-machine pit stops such as The West End Snack ‘N Chat or Pappy’s Korner grocery, where during a recent lunch hour, a woman rocked her infant on a stool with one hand and cranked a slot handle with the other.

The Lil’ Chiefs Casino, a large shed-like structure in muddy gravel near Ford, boasts this slogan: “Come as a stranger. Leave as a winner.”

“One gal came in and hit for $7,000,” says Greg Abrahamson, manager of the 100-slot casino. He says he hands out $100,000 in winnings every month.

How much does the casino make in profit? “They might be mad at me for talking to you,” he says of his tribal leaders.

The leaders prefer to talk about the benefits their people receive from the casino business.

They portray gaming as the last economic hope for impoverished people whose federal help is dwindling.

The casinos provide more than 500 jobs for each of the two tribes, they say.

The Spokanes note the casino profits help them buy more land, and that 10 percent of all casino profits are funneled into 15 new social programs.

Joe Pakootas, Colville tribal chairman, says the new casino cash helps wean the tribe off its valuable forests.

“We can save timber dollars for other things, or save our timber now,” he says.

No end in sight

Kieffer and Pakootas both say their tribal gaming books are examined by the federal government.

No way, says Assistant State Attorney General John McCoy.

“There is no federal auditing, no regulation of the Spokane or Colville tribes. Period,” McCoy says.

The National Indian Gaming Commission regulates bingo and other less lucrative tribal gambling, but only receives annual “independent audits” paid for by the tribes.

The federal Indian gaming laws need to be revised to provide more oversight of slot casinos, says Bill Eadington, director of the gambling institute at the University of Nevada Las Vegas.

“Without (thorough) external review, the threat is always there for theft, skimming and internal corruption,” he says. “That is true for all casinos, not just Indian casinos.”

From McCoy’s vantage point, the slot-casinos in Eastern Washington are simply illegal. But the state attorney also admits there is no end in sight to the standoff.

Federal authorities tried to stop the Spokanes’ slot operations two years ago, then sank into the legal quicksand surrounding Indian gambling.

The Spokane tribe has long challenged the state’s contention that tribes must negotiate gambling agreements with the governor before opening a casino. The tribe also says the state can’t tell them what kind of gambling they can offer.

The state allows tribes to offer bingo, blackjack and other games also offered by some clubs and charities. But slot machines have always been forbidden.

When the Spokanes started running slots in 1994, federal authorities ordered them to stop and a U.S. District Court judge agreed the devices were illegal.

But the tribe appealed to the U.S. 9th Circuit Court of Appeals, which ruled the slot-casinos could continue until the court decides if they are legal.

The temporary court protection, in effect, was extended to the Colvilles, which, like the Spokanes, lack a formal gaming agreement with the state.

The Spokanes’ case is not expected to be resolved any time soon. It still hasn’t been scheduled to be heard by the three-judge panel in San Francisco.

“It’s very frustrating being the law enforcement agency in the state charged with enforcing gambling laws and regulations,” says Carrie Tellefson of the state Gambling Commission.

“The citizens look at us and say, ‘Gosh these are illegal devices. Why aren’t you doing your job?’ We get those questions all the time. … Our hands are tied.”

Kieffer says he knows state agents secretly visit the Spokanes’ casinos even though they can’t regulate them.

“You can spot them,” Kieffer says, grinning, “as soon as they step inside the place.”

, DataTimes ILLUSTRATION: Color Photo Graphic: Illegal slot machines

MEMO: This sidebar appeared with the story: Initiative facts The Spokane and Colville tribes are not backing Initiative 671. Both tribes already operate far more slot machines than the initiative allows, and with far less scrutiny. If approved by 60 percent of voters in November, it will: Require that all tribes operating casinos sign modified gaming agreements with the state. Limit tribes to one casino and 295 slot machines during the first year of the agreement. Require that 15 percent of all casino profits go to county and state public programs.

This sidebar appeared with the story: Initiative facts The Spokane and Colville tribes are not backing Initiative 671. Both tribes already operate far more slot machines than the initiative allows, and with far less scrutiny. If approved by 60 percent of voters in November, it will: Require that all tribes operating casinos sign modified gaming agreements with the state. Limit tribes to one casino and 295 slot machines during the first year of the agreement. Require that 15 percent of all casino profits go to county and state public programs.


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