Golden State Gaming Sees Massive Growth

Could California soon eclipse Nevada as the nation's gaming capital?

As unlikely as that sounds, a surge in casino development up and down the Golden State, and recent pacts signed by Gov. Arnold Schwarzenegger allowing five Indian tribes to expand their gaming operations in exchange for tax revenue, are making it a possibility.

In addition, two initiatives on the November ballot would, if passed, stimulate yet more gaming growth. Proposition 70, backed by the Agua Caliente Band of Cahulla Indians, who own two casinos in the Palm Springs area, would give the cash-strapped state 8.8 percent of Indian gaming revenues in exchange for lifting the current 2,000-slot-machines-per-tribe limit. Proposition 68 would pave the way for non-Indian gaming in California by allowing the owners of horse racetracks and card rooms to add slot machines.

"If California gaming continues to grow as it has, it will surpass Las Vegas in the near future in terms of revenue," said David Schwartz, coordinator of the Gaming Studies Research Center at the University of Nevada-Las Vegas. "The state government is becoming an active proponent of gaming, plus the state has a massive population base to draw on. The potential is huge."

Gaming analyst David Forst, managing director of Key McDonald in Los Angeles, also believes that casino development will continue to snowball throughout the state. "Casinos are doing extremely well in California," he said. "Those near Palm Springs and San Diego, as well as Thunder Valley and Cache Creek near Sacramento, are very popular. There is big demand, and there will be increased pressure to legalize non-Indian gaming in the state."

Considered the most significant and controversial implication of the new gaming pacts with the five tribes is that it could usher in something California does not yet have: a casino property within a major urban area.

One of the pacts, with the Lytton Band of Pomo Indians, allows for the development of a $450 million casino and entertainment venue along Interstate 80 in San Pablo, a San Francisco suburb.

However, the massive plan, which would create a casino larger than any in Las Vegas, has sparked such public outcry over potential traffic and other problems that the governor has put a temporary halt to the deal.

Still, proposals for Indian casinos are under way elsewhere in California. Among the largest and most controversial is for a casino property with 300 hotel rooms, entertainment venues and 2,000 slot machines to be built on a 360-acre site just outside Santa Rosa. The property would be owned by the Graton Rancheria tribe and managed by Las Vegas-based Station Casinos.

Another project calls for a