State, Cherokees reach accord on gambling

jfrank@newsobserver.comNovember 29, 2011 

  • New terms of the gambling compact

    A revenue-sharing agreement that gives the state a portion of the revenues from new table games

    A provision to direct the state's gambling revenues to school districts

    A prohibition on advertising that encourages underage gambling

    A requirement to continue gambling addiction programs

    A line giving the Cherokee tribe exclusivity rights west of Interstate 26

— Gov. Bev Perdue and the state's Cherokee Indians signed a landmark compact Monday to sanction Las Vegas-style card games at the tribe's western North Carolina casino and direct a portion of the revenues toward schools.

The 30-year compact came after months of negotiations and opens the possibility of resort casinos after years in which state lawmakers have moved to limit gambling.

Perdue's office pitched the agreement as a way to send millions of new dollars to school districts at a time when budget cuts are eliminating teachers - and touted the potential economic impacts for the local economy, citing the tribe's projection that the dealer games, such as poker and blackjack, would add nearly 400 jobs to the local economy.

"My top priorities are strengthening our schools and creating jobs, and this agreement does both," Perdue said in a statement.

The governor called on the legislature to quickly approve a law enabling the deal. But within hours of the signing announcement, leading lawmakers urged caution on the agreement, suggesting they needed more time to consider the terms.

Legislative leaders declined to bring up the compact Monday night before the Senate's expected adjournment of its three-day session after 12 a.m. today. To get the compact approved before the next February session, Perdue will need to call lawmakers to Raleigh for a special session.

House Speaker Thom Tillis had said the compact was not likely to get a vote in this week's mini-session - generating a rebuke from the governor's office. "We are very surprised that they failed to take action and left those jobs on the table," said Kevin McLaughlin, Perdue's deputy chief of staff and a negotiator of the compact.

The legislature doesn't need to approve the specific terms of the deal, but lawmakers would need to vote to tweak state law to allow the dealer card games at the tribe's Harrah's Cherokee Casino, an hour west of Asheville.

'There is a lot at stake'

The tribe currently offers video poker and video slots but projects that the Las Vegas table games would bring more visitors and revenues.

"There is a lot at stake here," said Bill Brooks, president of the N.C. Family Policy Council, a conservative group opposed to the compact. "They are going beyond the gambling that is already approved in North Carolina."

The accord is the product of 15 years of discussion about permitting table games, but came together after a frenzied week of final negotiations. The governor's office worked through the Thanksgiving holiday to cement the terms with the Eastern Band of the Cherokee Indians. Perdue and Principal Chief Michell Hicks signed it early Monday.

The U.S. Department of Interior must give final approval.

The casino generates about $380 million in economic benefits and attracts 3.6 million annual visitors to the region, according to a tribe-sponsored UNC-Chapel Hill study. Gaming revenues reached $368 million in 2010.

"By being more attractive - which the agreement will do - they are hoping their revenues and profits will increase," said Steve Appold, a Kenan Institute of Private Enterprise researcher who worked on the study.

Appold said a likely next step for Harrah's is the creation of a destination resort more focused on the larger experience to "attract a larger crowd to stay there longer."

Based on the terms of the agreement, the state would receive a percentage of the money from table games, beginning with 4 percent in the first year and then increasing 1 percentage point every five years until it reaches 8 percent, where it would hold for 10 years.

The state currently receives no revenue from existing casino games under the 1994 compact signed by then-Gov. Jim Hunt.

The terms are a compromise: The governor's office wanted 7 percent to 10 percent of the new revenues while the tribe suggested close to 4 percent, according to the governor's office.

The money would go straight to the state's education department and not count as state revenues appropriated by the legislature, the agreement states.

The language includes no guarantees that the gambling money won't lead to fewer state dollars for education in state budget.

Exclusive rights

As part of the deal, the tribe is to receive exclusive rights to table gaming west of Interstate 26, which would serve as protection from a potential competitor if a future governor or legislature allows more gambling.

The exclusivity provision was a sticking point in the negotiations. The tribe originally wanted statewide rights but agreed to move the line west to Interstate 95 and eventually Interstate 26 as the discussions progressed. The agreement leaves room for other tribes in North Carolina that are seeking federal recognition.

Frank: 919-829-4698

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