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With recession, financial market freeze, tribe walks away from casino deal

EL CAJON, Calif. – Recession and the credit freeze has convinced a California tribe to halt an expansion to their casino operations, informing Gov. Arnold Schwarzenegger that it will forgo on a negotiated compact that would have more than doubled the number of its current slot machines.

The Sycuan Band of Kumeyaay Indians is the latest southern California tribe stung by the recently acknowledged national recession. Over the past six months more than 450 Indian gaming jobs were lost at two of the region’s biggest Indian gaming venues – the Morongo and Pechanga casinos.

“At present, access to capital markets has essentially frozen, and the problems that have devastated the economies the world over also have severely impacted the gaming industry, both national and local,” wrote Sycuan Chairman Daniel Tucker in a Dec. 4 letter to the governor.

The 2006 agreement, an amendment to its 1999 compact, would have allowed the tribe to operate up to 5,000 slot machines up from 2,000 in return for annual payouts of $20 million and 15 percent of profits from the additional machines through 2030. In addition an off reservation casino of up to 1,600 acres was included in the deal.

H.D. Palmer, the deputy director of external affairs at the California Department of Finance did not immediately return inquiries for clarification on how the lacking $20 million and other revenue from the revised compact was expected to impact California’s $11.2 billion budget deficit. But Palmer told Indian Country Today in July that the state had projected its current and next year’s revenue quantity with the assumption of that revenue: $6 million this fiscal year and $33.6 million for the next fiscal year.

The 2006 amendment had not been ratified by the tribe’s general council and therefore its terms, including the payments to the state did not go into effect.

“At Sycuan we are doing everything we can to avoid having to lay off our valued employees, and are continuing to restructure operations so as to mitigate the impacts of an extremely challenging economic environment. In these circumstances even the modest expansion would not be possible at this time,” Tucker wrote in the letter to the governor.