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Rolling the dice on gambling revenue
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Sen. Dick Day, a strong proponent of expanded gambling in the state, is skeptical of Gov. Pawlenty's proposal for a casino to be run jointly by the state and Indian tribes. (MPR file photo)
For more than a year now, Gov. Tim Pawlenty has been laying the groundwork for creating new state gambling revenues. In his budget address Tuesday, he gave his clearest indication yet about the direction he's chosen. But the gambling debate straddles many political fault lines and cuts across party loyalties, making it a tricky issue to negotiate.

St. Paul, Minn. — Gov. Pawlenty's plan, in a nutshell, would create a state partnership with interested Indian tribes to own and operate a new Twin Cities casino. The state would get a $200 million upfront licensing fee, and more than $100 million a year once the facility was up and running. The tribes would have access to the lucrative metropolitan market.

The future of the governor's plan is murky, at best, since the politics of gambling among the tribes, and among state lawmakers, is complicated.

The chairman of one of the tribes said Pawlenty dropped a big obstacle in the plan's path by calling on the partner tribes to come up with $200 million to get it started.

A majority of lawmakers may favor new gambling opportunities -- but if they can't agree on which opportunities, then gridlock could preserve the status quo.

"If we had access to that kind of money, we certainly wouldn't be pitching a casino in the metro area," George Goggleye, chairman of the Leech Lake Band of Ojibwe, said Wednesday.

The White Earth and Red Lake Bands -- the other likely partners in a state-tribal casino -- also couldn't afford it, Goggleye said.

Pawlenty's chief of staff, Dan McElroy, said the $200 million figure is "an estimate and certainly subject to being discussed."

At the Capitol, legislators are lining up on different sides of the gambling issue in unpredictable ways. For example, Sen. Sandy Pappas, DFL-St. Paul, supports Pawlenty's plan. She says as gambling proposals run, his is the most palatable.

"I made a decision a couple of years ago that I thought that expansion was probably inevitable, and that when it did happen, I wanted it to be the best possible proposal," Pappas says.

Pappas is the chief Senate sponsor of a bill that mirrors the governor's outline. Since the bill helps the state hold the line on taxes, it could attract GOP support. Since it also benefits Native American tribes struggling with poverty, it could win DFL votes, too.

But the calculus is never so simple. Republican Senate Minority Leader Dick Day has long been an unabashed supporter of new casino revenues. Yet, he says his colleagues are unlikely to support the governor's plan because it contains too many unknowns.

"Nobody has a site; they have no plan; they don't know how they would get the money to build it," Day says. "How long would it take to build it? Would the federal government, the Department of Interior that has to regulate this, would they even let them?"

Day has been a chief advocate for installing slot machines at the Canterbury Downs racetrack in Shakopee. Day said the chances of the Legislature passing the state-tribal casino plan are slim unless Canterbury Park racetrack or another going up in Anoka County house it.

"There are very few of our caucus members who would endorse it unless it was teamed with racino," Day says. And he argues such a "racino" could come online and produce revenue much more quickly than the governor's state-tribal partnership.

All of this leads to a legislative irony. A majority of lawmakers may favor new gambling opportunities -- but if they can't agree on which opportunities, then Day says gridlock could preserve the status quo. Pawlenty, in his budget address, had a warning for lawmakers who object to his use of casino revenue.

"This is our budget. We've got $200 million. It's no different than if we've got $200 million from something else. If the Legislature wants to mess with it, they've got to fill the hole. It's their problem," Pawlenty said.

That reality may, in the end, be the most persuasive argument for lining up legislative support. Republican House Speaker Steve Sviggum supports both the racino plan and the governor's tribal partnership -- and he notes that the governor has actually left the door open for both.

However, with a much reduced majority following last fall's elections, Sviggum says he's not sure he can pass a gambling bill at the moment. But time, the speaker says, is on his side.

"As you get to February, March, and April and people see what their choices are, and their choices are fair gaming versus monies for education, monies for nursing home increases, higher education -- I think the Legislature overwhelmingly will be supporting the gaming proposal," says Sviggum.

The governor's gambling plan isn't just dividing lawmakers. It's split Native American interests, as well. The plan is most appealing to the White Earth, Red Lake and Leech Lake tribes, whose remote northern locations have largely left them on the gambling sidelines. Those three tribes have been in discussions with the governor for some time on a joint gambling operation. But because of the financial commitment the governor would require up front, it's unclear whether they'll continue to be interested.

Meantime, the head of the Upper Sioux Community near Granite Falls is speaking out against the state-tribal casino proposal. Helen Blue-Redner says having the state open a Twin Cities casino to help northern Minnesota tribes improve their economic status, it could set a dangerous precedent. Blue-Redner says if the plan goes forward, other impoverished minority groups may ask for the same consideration.

Adding to the complexity is the opposition from tribes with more lucrative facilities near the Twin Cities metro area. They worry that a new metropolitan casino would curb their revenues.

Pawlenty is propositioning those tribes as well. He says in return for a portion of their current take, he'd guarantee them some sort of territorial exclusivity for their casinos, along with other enticements. John McCarthy of the Minnesota Indian Gaming Association says the tribes he represents aren't interested.

"The tribes are referring to that as the protection plan. That's like paying the local mob off so that somebody doesn't move into your backyard. No, the tribes aren't falling for that," says McCarthy.

McCarthy accuses Pawlenty of attempting to divide Indian interests in order to slip a gambling expansion plan through. If it divides lawmakers as well, it may have the opposite effect.

(The Associated Press contributed to this report)

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