Pauma tribe, Hard Rock scrap casino-resort plans - Friday 12th of August 2005

Gamblers who were looking forward to a Hard Rock Casino coming to San Diego County will have to settle for something else.

Paumas tribal chairman confirmed this week what other sources have been hinting for some time: The North County tribe and Hard Rock are scrapping the $250 million resort-casino development agreement they announced in February.

Graphic: Casino Pauma

"We just couldnt come to terms on the deal," said tribal Chairman Chris Devers. "Were looking for a partner that we can come to terms with and put everything together."

Devers said the two sides parted ways about two months ago.

He said Pauma, which has 1,050 slots in a temporary casino opened in 2001, is negotiating with another potential partner he would not identify.

Hard Rock executives and corporate representatives declined comment. The hotel-casino is known in Las Vegas for amenities catering to young adults.

Whatever the reasons for the fallout with Hard Rock, this is Paumas second high-profile divorce. A partnership with Caesars Palace, announced in 2003, crumbled last year when Caesars merged with Harrahs, operators of a resort-casino on the nearby Rincon reservation.

Paumas setbacks also underscore something noteworthy that hasnt happened in San Diego County. Despite the fears expressed by some, there has been no large surge in casino growth in the 14 months since Pauma and three other local tribes signed new state gambling compacts allowing them unlimited numbers of slot machines.

Pala Casino has added 250 slots to its previous inventory of 2,000. Viejas has installed about the same number and is planning to build a new wing for 250 more to bring its total to 2,500.

Viejas and the other new-compact tribe, the Ewiiaapaayp band, are still consulting with federal regulators for an unprecedented project in which Ewiiaapaayp would build and operate a casino on the Viejas reservation.

Viejas top business executive, Frank Riolo, said critics worried that the new compacts would open the floodgates for a tsunami of casino expansions.

"My response was always, Were going to go slow, look at the market and build as the market can absorb, " he said yesterday. "We were executing that compact for a long-range purpose, not a short-range purpose."

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Pauma did boost its previous inventory of 850 slots by 200 about five months ago, but it is turning into a potentially costly move. County officials contend that the 7,200-square-foot addition violated Paumas new compact, which requires detailed environmental studies and mitigation agreements with the county for any significant casino expansions.

County Counsel John Sansone sent a letter last month to Gov. Arnold Schwarzenegger, urging him to intervene and force Pauma to comply with the compact terms.

Schwarzenegger spokesman Vince Sollitto said the governor has notified the county that he is "investigating the matter" and "is in contact with the tribe." Sollitto declined further elaboration.

Even with 1,050 slots, Paumas casino is the smallest of four within a 20-mile radius in the North County.

Pala Casino managing partner Jerome Turk said his casino, the largest of the four, has no room to add any more slots, and no expansion is planned anytime soon.

"When these compacts were changed, everybody spoke about the properties putting in thousands of gaming devices," Turk said. "The number of devices you put in are dictated by the market.

"The market here in San Diego and Southern California clearly continues to grow – I think we can all agree on that," he said. "But I just dont see an explosion of growth (occurring)."

The countys tribal liaison, Chantal Saipe, said that in addition to the environmental reviews and county negotiations, the new compacts contain another disincentive for massive growth: higher payments to the state.

For the first 500 slots over the prior limit of 2,000, tribes must pay licensing fees of $12,000 per machine. The fees increase, in 500-machine increments, up to $25,000 apiece for slots in excess of 4,500.

"Its quite expensive for the tribes to go beyond the 2,000 cap. I think thats a factor," Saipe said. Nevertheless, she said, the region is bound to see more casino growth as time goes on.

"They have to keep improving their amenities to stay competitive," she said. "So its inevitable that changes will occur."

The worlds two largest casinos, operated by tribes in Connecticut, have about 6,000 slots apiece.

Devers said Pauma hasnt decided how big it wants to build with its next partner, whoever that turns out to be.

"Anything large-scale that youre talking about, you have to look at the financing," he said. "You cant look at it as bigger is always better."

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