Idea of gambling at Queen Mary still alive - Saturday 12th of March 2005

Voters rejected it. City officials downplay it. Business leaders doubt it.

And yet, the idea that gaming could somehow save the Queen Mary continues to surface.

Can the power of poker save the city's historic ship?

p>Observers say it's possible, but with several big catches.

"I just don't believe the citizens of Long Beach are ready for gambling on the Queen Mary," said Randy Gordon, president and CEO of the Long Beach Area Chamber of Commerce.

Still, the idea pops up in the fine print of loan agreements, in lawsuit arguments, in City Hall correspondence, and in letters to the editor. With the ship's operator, Queen's Seaport Development Inc., filing for Chapter 11 bankruptcy protection on March 15 amid a rent dispute with the city, the gaming issue continues to simmer.

"The idea that there is an instant fix is ludicrous," said Barney Ng, a Northern California mortgage banker who has loaned nearly $25 million to keep the ship afloat in a deal that includes casino rights. "But there is the possibility of an instant fix, and that is gaming."

Without the political will, Ng said, it's a moot issue.

Even if Long Beach voters were to approve, the state has a moratorium on new card clubs until 2010. The Police Department has public safety concerns and the rent/bankruptcy issues are complicated enough without including gaming, City Manager Jerry Miller said.

"I really have a hard time taking it seriously when we have so many critical issues in front of us," he said.

And yet, the idea does not seem to go away.

 

Casino vote

The Queen Mary did not feature organized gaming during its sea-going years. But the idea has surfaced many times since the city bought the ship in 1967.

In 1992, The Walt Disney Co. was about to abandon the ship's lease, and the Queen Mary's future here appeared in doubt.

A city-hired consultant said gaming was the only venture that could turn a profit for the ship and surrounding 55 acres.

The City Council then put the issue to voters. Proposition J asked if games such as draw poker, low-ball poker and panguingue (pan) should be allowed on or near the ship.

Nearly 54 percent voted no.

After QSDI's CEO and President Joseph Prevratil took over the ship's lease in 1993, the issue resurfaced. In 1995, Prevratil aid he would support gaming on the ship if it became legal. But the casino idea didn't end there.

 

Still interested

In March 2001, Ng obtained an option agreement from Prevratil to build on 3 acres of the Queen Mary site. The deal included "exclusive rights to conduct 'gaming' activities, if and to the extent gaming activities become legal' in Long Beach.

Ng of Lafayette, Calif., is no stranger to casino development. In 2001, he redeveloped a Reno, Nev., hotel-casino into the Siena Hotel Spa Casino. Ng later loaned QSDI $24.5 million to spark further development there.

Details of Ng's option agreement surfaced in a 2003 lawsuit.

In that action, Indonesian investor Adrian Waworuntu sued Prevratil and a Las Vegas company that owns 24 percent of QSDI. Waworuntu claimed that he was sold casino rights without knowing that Ng already had first crack. Defendants in the suit say they never discussed a casino with Waworuntu.

And just last year, after the Press-Telegram asked readers their thoughts on Queen Mary gaming in an unscientific survey, Prevratil raised the issue again. In a July 2004 letter obtained by the newspaper through a public records request, Prevratil forwarded readers' mostly positive comments to Miller. In the letter, Prevratil said the concept might curry favor if revenue was used for more police officers.

Miller urged Prevratil first to resolve the outstanding rent issues that led to QSDI's bankruptcy filing.

"Until that time," Miller wrote, "the issue of gaming and other purely speculative matters should remain off the table."

Prevratil declined comment for this story, citing advice from his bankruptcy attorney.

QSDI, which holds the Queen Mary lease through 2061, filed for Chapter 11 protection after the city demanded $3.4 million in past rent. The company claims it kept the money as legal rent credits under its lease, saying it doesn't have $3.4 million to pay.

Audited financial records show that QSDI and its nonprofit arm lost nearly $4 million from 2002 through 2003. Bankruptcy experts say the case could take up to a year to resolve.

 

Poker crazy

But would gaming float at the polls if residents were asked again?

I. Nelson Rose, a Whittier Law School professor who studies the gaming industry, said it's not that far-fetched. Typically, card club measures start off with two-thirds opposition, he said.

"Fifty-four percent is really close," Rose said of the 1992 vote.

Rose said it would be unlikely for an Indian tribe to win approval to run a Las Vegas-style casino on the ship.

State law, therefore, would only allow a card club where players bet against each other, not the house. Those games are limited primarily to forms of poker. Voters would still have to approve the measure.

A card club could be profitable, Rose said, because there are few nearby competitors. The closest one is the Hawaiian Gardens Casino and the nearest Indian casino in Temecula.

Still, Rose said, there are some challenges to the Queen Mary site, including the port's Byzantine road system and the lack of nearby development. "That's probably the downside," he said.

But Ng sees plenty of upside.

 

Built-in theme

While card clubs don't offer the profits of Las Vegas-style casinos with slot machines, craps tables and roulette wheels, they make money. In 2003-04, the state's 94 card clubs reported $600 million in gross revenue, according to the California Gambling Control Commission.

Since 1998, the state has enforced a moratorium on new card club licenses through Jan. 1, 2010.

Ng checked off a list of gaming positives: The ship is not near a school, a residential area or a church. There is only one way in and one way out.

Ng said he has not pressed the issue with city officials, but thinks that gaming could allow Long Beachto showcase the Queen Mary.

"I'm sensitive to the fact (that) if you don't want gaming, I'm not going to push it," he said.

City Manager Miller said he wants to settle the city's rent issue with QSDI first. Even then, he said, Police Chief Anthony Batts has expressed his opposition to gaming on the ship from a public safety perspective.

Gordon said there would be obvious economic benefits from a casino, including jobs. But gaming is ripe with other issues that may make it inappropriate for the polls.

"There are so many other controversial issues going on in the city right now ??? I think that would really not go over well at this point."

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