North Carolina weighing more gambling at Cherokee casino

By Emery P. Dalesio
Raleigh, North Carolina (AP) July 2011

During the last frantic week of this year’s legislative session, a little-known proposal suddenly surfaced to open the door to poker, blackjack and other table games at the Cherokee Indian casino in western North Carolina.

“It came out of nowhere,” said Sen. Tom Apodaca, a mountain-district Republican from Hendersonville who manages the Senate’s timing and priorities.

Gov. Beverly Perdue’s office was asking for action at the moment back-door deals are the norm and lawmakers fatigued by the long hours were juggling the more than 300 bills considered in that mid-June week.

The proposal was never presented in writing, but discussions are under way to let the Cherokee casino rise a rung on the gaming ladder by allowing contests featuring human dealers instead of the current offering of video machines.

The Legislature returns to Raleigh later this month, and lawmakers could then consider an issue that involves jobs, vice and a lawsuit. It also could challenge the governor’s authority.

“I do think it’s something we should visit,” Apodaca said. “Is it better to use machines or is it better to use people with jobs?”

Such an effort can expect a fight with social conservatives determined to keep gambling from spreading to the rest of the state, said Bill Brooks, of the North Carolina Family Policy Council. If the Cherokee casino gets approval to play Las Vegas-style table games, lawmakers will “be making the decision today whether North Carolina has casinos all over the state tomorrow,” he said.

The Eastern Band of Cherokee Indians are the state’s only federally recognized tribe, a distinction that gives them the exclusive right to operate a casino under federal law.

The tribe has long wanted to expand casino revenues by offering live-dealer card games. Talks between the Cherokee and former Gov. Mike Easley fell apart in 2006. The tribe said then that live games of poker, craps and blackjack could add 430 jobs and a payroll of more than $15 million.

Perdue’s office would not explain what problem the legislation was supposed to address, or what prompted the need for last-minute action last month.

“The expansion that the Cherokee proposed could create hundreds of jobs in western North Carolina,” spokeswoman Chris Mackey said. To allow an expansion of gaming, “the General Assembly would have to act to clarify the law.”

All games involving the human element are on the table as Harrah’s Cherokee Casino and Hotel looks to expand, said the tribe’s attorney general, Annette Tarnawsky.

“I think the tribe is always looking to expand its offerings, and that would be something that would need to be negotiated with the state,” she said in an interview. “What the language was trying to do was an attempt to clarify the governor’s authority to negotiate all Class III gaming, which would include table games.”

Class III gambling is defined by the Indian Gaming Regulatory Act as everything beyond traditional Indian social games and small-time games like bingo allowed under state law. 

The Cherokee casino is now in the midst of a $650 million expansion that aims to snag free-spending Asian gamblers and others from far away. Additions include a third hotel tower with VIP rooms for high-rollers, a 3,000-seat event center booking acts like ZZ Top and rapper Tone Loc, and a doubling of the gaming floor to allow room for poker tables, whenever they’re added.

The casino has also borrowed heavily for expansion. Borrowing and other income not tied to operations rose from $39 million in 2008 to $215 million in 2010, according to a new report exploring the casino complex’s impact.

At the same time, the Cherokees’ cash cow that is casino gambling took a hit during the recession, said the report by a trio of businesses professors at University of North Carolina at Chapel Hill.

Gaming revenue that started out at $128 million in September 1998 climbed to $449 million in 2008, then fell 16 percent to about $378 million in 2010, the report said. Compared to gambling, everything else at the resort is small potatoes. Income from food, hotel and retail sales amounted to $13 million in the year ending in September 2010, the report said.

The tribe was unable to provide financial statements last week, Tarnawsky said.

As he counted Republicans who might support or oppose giving Perdue clearer authority to negotiate expanded gambling, House Majority Leader Paul Stam, R-Wake, said he was told the late rush had to do with a court case challenging the governor’s role.

Stam said he did not know specifics about the case, but a lawsuit before the state Court of Appeals brought by gambling interests is challenging a 2001 law in which the General Assembly gave governors authority to negotiate gambling rights. Fayetteville-based McCracken and Amick Inc. contends the General Assembly, not the governor, has the power to negotiate with the Cherokee.

The case has not been scheduled for a hearing by the appeals court.

Since former Gov. Jim Hunt first negotiated a gaming compact with the Cherokee in 1994, he and his successor Mike Easley amended the agreement three times. Future deals would violate the state constitution’s separation of government powers “unless their terms and conditions are subject to modification and approval by the General Assembly,” the company’s lawyers said in a court filing.

The same company lost a lawsuit in 2009 that alleged that allowing video gambling only in Cherokee was illegal and unfair. State law that took effect four years ago made video poker machines illegal anywhere else in North Carolina.