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Racing scandal impacts Coeur d'Alene casino

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NEW YORK - Coeur d'Alene tribal and casino officials are crying foul as New
York racing officials drag them into a widening international horse betting
scandal.

The New York Racing Association, which manages three of thoroughbred
racing's most prominent tracks, announced Jan. 25 that it would end its
betting and broadcasting arrangement with the Coeur d'Alene Casino in
Worley, Idaho as of Jan. 31, along with five other rebate off-track betting
companies from the Caribbean to Australia. The Coeur d'Alene Casino joins
ten "rebate shops," including one at the Tonkawa Casino in Tonkawa, Okla.,
that have lost betting signals in the aftermath of a federal money
laundering and illegal gambling indictment of a New York-based gambling
group with alleged ties to the Gambino organized crime family.

The 88-count indictment on Jan. 13 sent a shockwave through an already
battered horse racing industry, and many of its components have been
rushing to address some of the abuses alleged in the scandal. But spokesmen
for the Coeur d'Alene and Tonkawa tribal casinos say they have been
unfairly trampled in the stampede.

None of the rebate shops have been charged with wrongdoing. They argue they
perform a legitimate service in reducing the "take-out," expense deductions
from the betting pool, for high-volume gamblers. But race industry leaders
say the shops need to show more transparency to prevent infiltration by
organized crime such as the Jan. 13 indictment alleged.

Bob Bostwick, communications director for the Coeur d'Alene Casino, replied
that it considers itself a leader in running a clean telephone betting
operation. He said it required notarized identification of all its patrons.
"We feel we set an example of how things ought to be done."

Bostwick said the casino was "having some talks" with the NYRA, explaining
its security controls. "We feel this will work out OK," he said. "We're in
great shape, primarily because we take care of our business here."

The NYRA suspension caught the Coeur d'Alene by surprise. "It was kind of
hurtful," said Bostwick. "We always felt we were a shining example of
successful Indian gaming."

Casino Chief Executive David Matheson, who has an impressive resume as
tribal chair, senior official at the BIA and published author, was
attending the Western Indian Gaming Conference in Palm Springs, Calif. and
was unavailable for comment.

The NYRA and several other large racetracks had cut off signals to the
Tonkawa race book in the week after the indictment, which briefly mentioned
the casino as a conduit for the gambling group. The indictment also said
that two Brooklyn-based members of the group had visited the Tonkawa
territory in the fall of 2000 and held a conversation about illegal
gambling. (It did not accuse the Tonkawas of any criminal act.) The
indictment made no mention of Coeur d'Alene.

The race book at Coeur d'Alene has drawn previous scrutiny, however. Cloyce
V. "Chuck" Choney, commissioner of the National Indian Gaming Commission,
told Indian Country Today that auditors from the NIGC regional office in
Portland, Ore., had raised questions about its large volume of telephone
betting as early as 2001 and had found a paper trail to the Tonkawa Casino
that involved the New York betting group. Based on current information,
however, the Coeur d'Alene spokesman denied any involvement with either.

Choney added that the questions at both casinos involved an operation in
their race books that he said were not directly supervised by the tribes or
apparently by the casino managers themselves.

About four years ago, moreover, the Meadowlands harness racing track in New
Jersey cut off its signal to Coeur d'Alene in a dispute about another
rebate betting syndicate, Players Services Group. The dispute apparently
involved business competition rather than illegal activity, but it revealed
the rapid growth of rebate betting. The Daily Racing Form reported that the
race betting handle at Coeur d'Alene in 2002 was $55 million, citing the
Idaho Racing Commission, and that $40 million of it came from clients of
the Players Services Group.

A spokesman for the Tonkawa Casino suggested that NYRA had reacted too
harshly to the indictment because the Association itself was operating
under an independent monitor as part of a deferred prosecution agreement.
(A federal investigation last year prosecuted a number of NYRA employees
for tax evasion. The Association operates the Aqueduct, Belmont and
Saratoga thoroughbred tracks under a state contract that expires Dec. 31,
2007 and very possibly might not be renewed.)

NYRA President and Chief Executive Officer Charles Hayward alluded to the
outside control in announcing suspension of the rebate shop contracts.
"Working in cooperation with our federal monitor," he said, "NYRA has made
great strides in improving the transparency of our operations and ensuring
that we employ best business practices at all times. We feel that those who
wish to do business with us should be held to those same high standards. In
other words, unless we know who you are and that your business practices
are legal and in the best interests of the sport of horseracing, we are not
going to do business with you."

He said the NYRA would revise its simulcasting contracts to require "a new
set of disclosures, background information and information sharing.

"Entities that are unwilling or unable to meet these higher standards will
not be permitted to resume betting into the NYRA pari-mutuel pools," the
announcement said.

John Sullivan, a lawyer for the simulcast provider Las Vegas Dissemination
Corporation, and designated spokesman for the Tonkawa Casino, told ICT that
negotiations were underway to comply with these conditions. He also noted
that some of the largest tracks of the winter season were still providing
signals.

The NYRA suspensions appear to hit the largest rebate operations affecting
North American racing. In addition to the two Indian casinos, they include:
Euro Off-Track, on the Isle of Man; International Racing Group, Inc., on
Curacao; Lakes Region Greyhound Park in New Hampshire; Racing and Gaming
Services on St. Kitts in the West Indies; Excelsior Casino in Aruba;
Capital Sports of Canberra, Australia and Darwin All Sports of Australia.
Hayward said these sites bet about $300 million on the three NYRA
racetracks last year, about 10 percent of their total handle.

The scandal, which included at least one charge of thoroughbred race
tampering, has blown up just as several tribes have begun to diversify into
the racetrack and "racino" business. It has not slowed down one of the
biggest deals. The same day that NYRA shut off Coeur d'Alene, the Mohegan
Tribal Gaming Authority closed on its $280 million purchase of the Pocono
Downs harness race track in central Pennsylvania. The Mohegans already run
a state-of-the-art race book at their Mohegan Sun casino in Connecticut and
will take over a small chain of off-track betting parlors in Pennsylvania
as part of their purchase.

Robert Soper, a Mohegan tribal member who is designated to become president
of Pocono Downs, told ICT that in addition to building a new $175 million
slot facility with up to 3,000 machines, the Mohegans would invest in
substantial improvements in the "back stretch" quarters for horses and
horsemen.