Vote May Raise Stakes For Indians' Casinos -- Spokane Tribe Bets On Slot Machines - Legal Or Not

CHEWELAH, Stevens County - In this corner of a state that long has outlawed slot machines, the one-armed bandits spin, flash and ring, $1 tokens raining freely when a jackpot's hit.

Here, the Spokane Tribe lost patience with state law.

Under the protection of a federal court order, the tribe has held off the federal government and scoffed at the state. And every day, people come from down the road and across the border to try their luck at more than 600 tribal slot machines packed into two casinos, a bingo hall and gas stations.

The Spokane Tribe is hoping Washington voters will help protect their legally precarious investment.

The tribe is at the center of Initiative 651, the proposal to legalize slot machines on reservations statewide.

Tribal attorneys wrote the initiative. The tribe has invested $750,000, according to Public Disclosure Commission records, well over half the money raised for the campaign.

Legalizing slots "would give the tribes, and also myself, long-term ability to develop the industry," says R.L. "Buzz" Gutierrez, owner of a private casino on tribal property who helped shape I-651.

Tribes throughout the state support the legalization of slots. Most have negotiated with the state, waited and negotiated again. Only the Spokanes and the Colville Tribe to the west - which has slots at three locations - have begun operating them against the state's wishes.

And only the Spokanes, who've joined forces with the Puyallup and Shoalwater Bay tribes, have become so politically involved in changing the law. Several other tribes, some saying they felt railroaded by the tribes proposing I-651, have joined forces against it.

Focus is on slots

A look at the proliferation of slot machines on the Spokane reservation gives an idea of the role slots might play at tribal casinos throughout the state, and helps explain why the tribe so strongly wants to make slots legal.

Two miles south of the only stop light in Chewelah, population 2,322, passing motorists are met by bright neon signs promising all the fortunes of "Nevada Style Gambling."

Unlike the tribal casinos in Western Washington, which offer only table games, the focus here is almost exclusively on electronic gambling.

Real slot machines. Smooth tokens, spinning wheels, the firm resistance of the lever.

On Highway 395, passers-by get their pick of gambling.

The tribally owned and operated bingo hall now also advertises as a casino. On a recent weeknight, the bingo tables sat empty. Several dozen customers in the building shuffled among the nickel, quarter and $1 slot machines, fingers stained gray from the tokens.

Next door sits the Double-Eagle Casino, owned and run by Gutierrez. Though small, it's a full-tilt, finished casino, offering table games - blackjack, poker and roulette - video poker and 224 slot machines.

And for folks really just passing through, there's the Cadillac City Truck Stop, where slot machines offer a quick spin between pumping gas and grabbing potato chips.

"This is known as small-town, out-of-the-way excitement in life," says Heidi Hunt, 48, who stopped at Cadillac City while heading home to nearby Valley.

A remote attraction

An hour's drive west, at the sweeping confluence of the Spokane and Columbia rivers, the tribe runs the Two Rivers Casino, a makeshift - yet flagship - business packed with 400 slot machines.

It's the one-armed bandits, tribal leaders say, that make casinos possible in this remote corner of the state, where new industry is scarce.

The beauty and recreational offerings of the wilderness bring some tourists. But not many.

Only slot machines will draw the crowds, leaders say. On weekends, the two casinos pack in as many as 300 or 400 people, who come from Spokane, Idaho, Canada and Western Washington.

And only slot machines offer the profit margins that make running casinos here possible, leaders say. Throughout the industry, whether in Las Vegas or on tribal casinos in other states, slots routinely account for 70 to 80 percent of a casino's revenue.

Spokane tribal leaders won't say how much they've made in the two years they've operated slots. Since they're operating without a legal state compact, they don't have to report to the state or any other agency.

But John Kieffer, tribal vice chairman, gives some sense of the reward.

Since 1992, the tribe has purchased more than 600 used slot machines, at a minimum of $2,000 each, doubled the size of the Two Rivers casino, and placed slots in privately owned businesses across the reservation.

The tribe has funneled 10 percent of revenues to social programs, enough to guarantee costs for three years, Kieffer says.

The other 90 percent goes to paying expenses and investing in future operations. They've paid $1 million for a 100-slip marina adjacent to the Two Rivers Casino, installed a 35-unit RV park and invested more than a half-million dollars in landscaping for bigger, better plans. The tribe expects one day to have a destination resort, complete with hotel and 36-hole golf course, next to Two Rivers.

Five years of legal wars

For the Spokane Tribe, I-651 is just the latest step in five years of legal battling over the future of tribal gaming.

Soon after the passage of the 1988 federal Indian Gaming Regulatory Act, which legalized casinos on tribal lands, talks between the tribe and state began to break down over the types of games and size of casinos allowed in the state.

"The state refuses to acknowledge it's butt-naked on gambling policy," says Scott Crowell, the tribe's attorney. "The motivation for this initiative is to bring Olympia's total defiance of federal law to closure."

The tribe took the state to court in 1991 for failing to negotiate in good faith. At the same time, the federal government went to court to stop the tribe from running electronic "Pick Six" games, and video pull-tab machines.

When the tribe started running slots in 1994, the federal government sued again.

A federal appeals court has said the tribe can run slots until it rules on the slot-machine issue.

In the meantime, the state seized a truckload of slots heading for the reservation. The tribe took the state to court again.

The court cases are pending, and a combined, compromise agreement is being sought through the mediation of U.S. District Court Judge Barbara Rothstein in Seattle.

Behind the tribe's challenge to state policy stands Gutierrez, a tough-talking, onetime tribal chairman whose privately owned casino is believed to be the only such operation on tribal land anywhere in the United States.

Gutierrez's ownership, coupled with his involvement with tribe gambling policy, has raised eyebrows.

He served as head of the tribe's gambling commission, until complaints were made about a potential conflict of interest.

Now he's the tribe's paid gambling consultant, lobbying and negotiating on its behalf.

Win or lose, tribe prepared

If I-651 fails, the tribe's battle for slots will likely continue, at least in the courts. But if the initiative passes, the tribe is poised to capitalize on the economic security - and development capital from potential investors - that a full-scale, legal slot operation would bring.

Standing on the dusty gravel parking lot which fronts the metal siding of the Two Rivers Casino, Kieffer looks at its lone "casino" sign.

The first order of business if the initiative passes, he says, will be putting up a false building front - more sturdy, with blinking lights and bright signs. A front that would give the building crowded full of slot machines the look of a big-time casino.

Seattle Times staff reporter Jim Simon contributed to this report.