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Governor’s San Pablo Casino Deal Fulfills Hopes of GOP Operatives By RICHARD BRENNEMAN

Friday August 20, 2004

Gov. Arnold Schwarzenegger’s award of exclusive Bay Area casino gaming rights to Casino San Pablo gives a multi-million-dollar plum to a project launched by a three-time GOP contender for the Philadelphia mayoralty and backed by the GOP operative who stage-managed the “Brooks Brothers Riot” during the 2000 Florida presidential recount.  

The Republican governor’s move lobbed a political grenade at the hopes of the would-be developers of two East Bay tribal casinos, while handing the plum to Casino San Pablo. 

The deal gives the Bay Area casino monopoly to the Lytton Pomo Indian band, whose plans were backed by Republican financier Samuel P. Katz, a three-time failed candidate for mayor of Philadelphia, and Roger Stone, a tribal casino lobbyist identified by the Florida Election Commission as the GOP “dirty tricks” operative who stage-managed the irate Republican mobs during the 2000 ballot recount in Florida. 

Katz, whose unsuccessful mayoral run last November was backed by $800,000 in GOP funds, spearheaded the effort to turn the land into a tribal casino, with Stone as one of his participants, according to the April 19 Village Voice. 

The Philadelphia Republican successfully fought back a federal lawsuit filed by Bay Area card clubs in Sacramento federal court in an attempt to block his plans.  

Stone’s history as a Republican operative goes back to the Nixon era, when as a teenager he infiltrated the campaign of Democratic presidential candidate George McGovern on behalf of the Committee to Re-Elect the President, according to the Jan. 25 edition of the New York Times. 

Stone also worked behind the scenes in the Rev. Al Sharpton’s abortive run for the 2004 Democratic presidential nomination, reports the Times. 

Sonoma Entertainment Partners, L.P., bought the San Pablo card club in October, 2000, from Ladbroke U.S.A., a casino operating arm of the Hilton Group. Ladbroke had been unable to turn a profit on the East Bay Club. 

A check with the Pennsylvania secretary of state’s office shows that Sonoma Entertainment is owned by Sonoma Amusement Management Inc., an Elkins Park, Ill., corporation formed in 1996 with Sam Katz as president. 

Katz’s partnership struck a deal with the Lytton Band of the Pomos to transform the site into a full-scale tribal casino, and the Lyttons brought in yet another tribe to run the casino with the help of the Maloofs, an Arab-American family which also happens to own the National Basketball Association’s Sacramento Kings and The Palms, a trendy 50-story Las Vegas casino. 

The second tribal group is the Wintun band of the Rumseys, which already runs the highly successful Cache Creek Casino Resort in western Yolo County.  

The Katz Group has ended their active involvement in the project and will be paid off over the next few years, according to several published accounts. 

After his latest mayoral loss, Katz was found liable in an embezzlement lawsuit brought by partners in an ice skating rink venture and has vanished from the Philadelphia political scene, according to a reporter at the Philadelphia Inquirer. 

If the California Legislature approves the governor’s deal with the Lytton Band of the Pomo tribe and hands them exclusive rights to gambling machines within 35 miles of San Pablo, plans for two Richmond area casinos—one on Point Molate in Richmond and the other in unincorporated North Richmond—would be vaporized, along with any hopes of a Canadian firm for a “racino” at Golden Gate Fields. 

Under terms announced Thursday, the Lytton casino would make mitigation payments to the City of San Pablo and Contra Costa County and pay CalTrans to mitigate all traffic impacts. 

The massive casino, slated to be the largest west of the Mississippi, would house 5,000 slot machines—two-thirds more than the largest Las Vegas casino—and is expected to pay the state $200 million annually once it’s up and running, Schwarzenegger’s office reported. 

The deal would also kill hopes for a casino resort on Treasure Island in San Francisco Bay, a racino—gambling industry-speak for slot machines at race tracks—at the Bay Meadows on the Peninsula, and the expansion of a Pacheco cardroom, the California Grand Casino, into a full-scale casino. 

The racinos and the Pacheco casino hinged on approval of Propositions 68 and 70 on the November ballot, which would authorize expansion of slots to tracks and selected card clubs unless every one of the state’s 62 casino-operating tribes signed pacts within 90 days of passage—with the concurrence of federal agencies and the courts—agreeing to turn over 25 percent of their gambling revenues to the state. 

Four similar deals were announced with other tribal bands. 

Schwarzenegger opposes both November ballot measures, and current polling shows voters leaning heavily against them. 

The governor’s plan, first leaked to the Los Angeles Times Tuesday, stunned area lawmakers and city officials.  

“It first came up in the press today,” said one legislative aide Tuesday. “There was nothing shared with the legislature, and there’re 11 days left in the session.” 

“We knew there had been thought of expanding the San Pablo casino, but we had absolutely no idea this was coming,” said Assemblymember Loni Hancock. “It’s being rushed through at the last minute.” 

Hancock, whose district includes the sites of the proposed San Pablo, Richmond and Albany casinos, makes no secret of her distaste for gambling as an economic strategy to fill the coffers of needy government. 

“The governor is talking about expanding casino gambling and the lottery. Is gambling his vision of the future of California?” she asked. “We used to be known as a land of opportunity and vision. 

“I see the governor attempting to solve the budget crisis at the costs of low income people in desperate straits,” Hancock said. 

Schwarzenegger’s plan took state Assembly leaders by surprise, said Hancock. “There’s been an enormous flurry of activity around here” since word of the plan leaked Tuesday morning, she said. 

Asked about the announcement, Richmond City Councilmember Tom Butt said, “Obviously, people are very concerned around here.” He said  

Berkeley developer James Levine had offered Richmond a package of economic incentives if he could negotiate a compact to build a casino at Point Molate. In addition to a $50 million purchase price for the city-owned site, the agreement held out the promise of $10 million to $20 million a year in tribal fees paid to the city in lieu of taxes that would otherwise be lost on sovereign Indian land. 

The Richmond Chevron refinery raised a counter-offer last Friday, offering $34 million for the land for use as a buffer to protect its refinery. Chevron already owns the land surrounding the site. 

While a coalition of environmental groups urged Richmond City Councilmembers to give consideration to the refinery’s offer, both the Chevron and Levine proposals called for extending the Bay Trail through the area and barring development from all but the currently developed portion of the site. 

Reached after the leak of Schwarzenegger’s preliminary deal with the Lyttons, refinery spokesperson Dean O’Hair said the $34 million offer still stands. “We’ve made an offer, and regardless of what happens, the offer is genuine,” he said. “It will protect Point Molate as open space and public land for generations to come.” 

The proposed San Pablo casino even became an issue in last November’s Philadelphia mayoral contest, when supporters of incumbent Democrat John Street demanded that Katz reveal his fellow investors in the San Pablo casino venture. 

The 9.53-acre San Pablo site only obtained official recognition as a Lytton reservation on June 29, when Aurene M. Martin, principal deputy assistant secretary for Indian affairs, issued the official proclamation. 

Legislation initiating the declaration was sponsored by Rep. George Miller, who inserted it as a rider into a budget bill on the final day of the 2000 Congressional session. 

Nevada Democratic Sen. Harry S. Reid, sponsor of the initial federal legislation authorizing Indian gambling legislation, led the fight to reverse the Miller amendment in the 2001 Congress, charging that his law never intended for tribes to be allowed to run casinos on land that was out of their historic areas. 

Sen. Diane Feinstein opposed the measure in the Senate, where it was strongly supported by Pennsylvania Republican Senators Rick Santorum and Arlen Specter. 

Reid withdrew his opposition in October 2001, reportedly under pressure from Senate leaders eager to pass a funding bill for the Interior Department, according to stories in the Las Vegas Review-Journal. 

News of the compact between the Lyttons and the Wintuns first broke in the Sacramento Business Journal on Oct. 17 of last year, where a spokesman for both groups was quoted as saying that the tribes hoped to start dealing with then- governor-elect Schwarzenegger soon after he was installed in office. 

Several published accounts have the Katz consortium phasing out its investments over the next few years, with the former mayoral candidate and GOP operative Stone taking healthy profits. 

Stone has emerged as one of the nation’s leading lobbyists for casino-seeking tribes, according to the Washingtonian and other publications—although his activities to block a New York tribal casino on behalf of casino mogul Donald Trump cost Trump and his allies $250,000 in fines. 

Stone’s Ikon Company paid an additional $100,000 fine in that case, according to Indian Country Today, a website that reports on Native American affairs. 

Throughout California, Native American groups have been staking out land for casino sites. Many of the groups had been disbanded by the federal Bureau of Indian Affairs (BIA) in past decades when the agency operated under a policy of trying to integrate Native Americans into mainstream culture. 

Many of the California tribes seeking casinos were disestablished during those years, and other recognized tribes have been seeking casino sites far from their present reservations. 

The Scotts Valley band of Pomos, the group seeking a casino in North Richmond, is based in Lakeport in Lake County, and the Guidiville band, which seeks a casino at Point Molate, is located in Talmadge, near Ukiah in Mendocino County. 

Despite the substantial Republican backing for the Lytton’s successful move for federal recognition of the Casino San Pablo site as a reservation, several key national GOP leaders are on the record as opposed to “reservation shopping.” 

In a June 10. 2003, letter to Secretary of the Interior Gale Norton, House Speaker Dennis Hastert, Majority Leader Tom Delay and the House majority and chief deputy whips complained about “reservation shopping,” that is, “recent attempts of certain Indian tribes to develop off-reservation casino sites. We strongly believe that these attempts run counter to Congressional intent and pose a serious threat to the current regulatory scheme that governs Indian gaming.” 

The Ione Band of the Miwoks Wednesday joined the environmentalist-led Coalition to Protect Point Molate, land the Miwoks regard as their ancestral territory. 

“The Miwok arose from Mt. Diablo (Olumbuulye) when the sun first rose in the east and migrated to the area now known as Point Molate. It is both a place of spiritual as well as historical significance for our tribe,” Villa said.