The number of gambling machines allowed in tribal casinos — currently about 28,000 — has been set over the years in prolonged and sometimes controversial negotiations.
But if the latest deal is approved, the slot-style machines would multiply based on supply and demand — not bargaining.
Compacts negotiated with the state and 27 of 29 Indian tribes would raise the cap by roughly 10 percent, then allow it to rise further under the right conditions.
In theory, the cap could double over a decade or so. In practice, market forces won’t let that happen, tribal leaders say.
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“This market is not growing that fast,” said W. Ron Allen, chairman of the Washington Indian Gaming Association executive committee.
The long, steep climb of tribal gambling profits since casinos started opening in the 1990s did level off last year, holding steady at $2.2 billion.
The growth, though, has been nearly enough to max out the cap of roughly 28,000 machines set in 2007 tribal compacts signed by then-Gov. Chris Gregoire. The state Gambling Commission estimates tribes are using about 27,000 machines.
The Gambling Commission says a shift to market-based increases will avoid time-consuming negotiations.
But for those who have long wanted state government to get a cut of casino revenue, the shift seems to remove a source of leverage.
“In my opinion, this is probably the last shot we’ll ever get” to secure revenue sharing, Sen. Mike Hewitt said.
Hewitt, R-Walla Walla, is one of four state lawmakers who can vote Feb. 13 along with five Gambling Commission members on whether to forward the compacts to Democratic Gov. Jay Inslee. Hewitt opposes letting machines expand “in perpetuity” without revenue sharing.
The commission says the move doesn’t necessarily mean an end to negotiations. Tribes might want to update the kinds of machines allowed in casinos, said Amy Hunter, who leads the commission’s communications and legal division.
“I think technology will likely bring the tribes back to the table,” Hunter said.
State negotiators didn’t come away empty handed. Hunter said they secured full recovery of state costs for regulating the casinos. The current fee arrangement falls short of covering all costs.
The Puyallup and Muckleshoot tribes are not involved in the current compact negotiations but could benefit from the outcome.
HOW IT WOULD WORK
If approved by the commission, Inslee and tribal and federal officials, the latest compacts with tribes would increase the statewide cap by 2,700 machines immediately.
The limit would go up by another 1,350 statewide if the Cowlitz Indian Tribe in southwest Washington moves forward with a planned casino that is embroiled in the courts.
The Cowlitz tribe would use many of the machines allowed under the new quotas, but Allen said it might take years for the rest of the machines to be absorbed by the fewer than 10 tribes that are expanding or considering expansion.
Allen named the Nisqually Indian Tribe, which operates Red Wind Casino, and Squaxin Island Tribe, which runs Little Creek Casino Resort, among those interested in building or expanding hotels. Adding machines provides more casino revenue to be leveraged for hotel projects, he said.
In any year that tribes come close to maxing out their new cap, the limit could rise again by another 1,350 statewide. The Gambling Commission would have to review the market and verify there are fewer than 500 unused machines for lease before that happened.
Another increase of 1,350 could happen any year a casino opens, such as the Cowlitz tribe’s facility.
The only limit on the number of increases over the years would be existing caps on what individual tribes can own and lease, which would keep the statewide number of machines from ever going past 90,000.
But other constraints could keep the number far smaller. Many small tribes in far-flung parts of the state aren’t likely to open a casino any time soon. And tribal leaders say there isn’t enough demand for a major expansion.
“I think it can only go so big anyway, and then the market is full,” said Mel Tonasket, vice chaiman of the Confederated Tribes of the Colville Reservation.
For nontribal businesses, which can have card rooms but not slot-style machines, the proposed expansion is tough to watch.
“It’s hard for us to sit back and watch an expansion of gambling which if we wanted, would take a 60 percent vote of the Legislature to get,” said Dolores Chiechi, executive director of the Recreational Gaming Association that represents card rooms in the state.
The state constitution allows gambling to be authorized only by supermajorities of lawmakers or voters, and Chiechi said there’s not enough support in the Legislature for her group to resume its push for machines in card rooms this year.