CITY BEAT

A state lottery would close the door even tighter on casinos.

| October 23, 2002
HALF-PREGNANT Tennessee is taking considerable pains to become half-pregnant. This is what will happen if the lottery amendment passes on November 5th and the General Assembly subsequently approves a state lottery for college scholarships. The state will officially be in the business of promoting, administering, and profiting from gambling. At the same time, it will more adamantly than ever oppose the form of gambling that has had a much greater impact on Tennesseans, especially Memphians -- casinos. The main reason the proposed lottery amendment takes up so much space on the ballot, right below the governor’s race in the left-hand column, is to erect legal blockades in front of anyone with ideas about a lottery being a gateway to casinos, particularly Indian casinos like the ones run by the Choctaws in Neshoba County, Mississippi. Gamblers being forward-looking sorts, there was a little buzz during Tunica’s tenth anniversary celebration last week about the chances of an Indian casino in Memphis if the lottery amendment passes. The reasoning went something like this. Casinos quietly entered Mississippi through the back door while the governor and everyone else were diverted by a lottery issue that never went anywhere. Once established, riverboat or dockside gambling soon evolved into something high and dry and many times larger than anyone envisioned. Memphis will, in a couple of years, likely be looking for a major tenant for The Pyramid after the Grizzlies and, possibly, the University of Memphis leave for the new downtown arena. Pyramid debt service looks more and more like a $3 million a year albatross. The Pinch District, always an underperformer, will be more forlorn than ever. The Pyramid’s neighbor, Mud Island River Park, is also underused and would be an interesting site for a casino. Memphis and Shelby County residents spend $300-$400 million a year in Tunica, which even at the low end is more than the estimated $243 million that all Tennesseans together spend on lottery tickets in other states like Georgia and Kentucky. If lotteries in neighboring states are a leak, casinos are a flood. Deed Mud Island or The Pyramid to the Chickasaw Indians and set them up under provisions of the Federal Indian Gaming Regulatory Act, just like their brethren the Choctaws in Mississippi or the Pequot in Connecticut. Suddenly casinos are 30 minutes closer to Memphis. What’s wrong with that scenario? “No way” it can happen, says lottery proponent Sen. Steve Cohen. “No Indians, and no Tigers, Bears, or Orioles either.” But the question is hardly off the wall. The Tennessee Attorney General’s office addressed the state lottery and the Indian Gaming Regulatory Act in two opinions in early 2001. “Because Senate Joint Resolution 01 expressly states that it does not authorize games of chance associated with casinos, it would not be a gateway to Indian casino gambling in Tennessee,” the opinion said. “The state would not be required to negotiate with an Indian tribe about casino gambling, nor could the tribe sue the state without its consent to force the negotiation.” End of story? Probably, but perhaps not. One of the interesting things about the proposed constitutional amendment is how it breaks down one gambling barrier while erecting another one. Quoting from the AG’s opinion: “Currently, the Tennessee Constitution, Article XI, section 5, flatly prohibits the General Assembly from authorizing lotteries. The constitutional provision does not, however, prohibit all types of gambling. Except for lotteries, there is nothing in the state constitution prohibiting gambling, and the regulation of all types of gambling, other than lotteries, is a matter for determination by the General Assembly.” As the opinion notes, Tennessee law already provides for pari-mutuel betting. In fact, 15 years ago, Memphians approved a horseracing referendum for a pari-mutuel track that was never built. The legal rule of thumb is that bonafide Indian tribes can engage, on their sovereign lands, in whatever forms of gambling are allowed in the rest of a state. But in addition to the ban on casinos in the amendment, there are strong doubts whether the Indian Gaming Regulatory Act (IGRA) applies to Tennessee. “To this office’s knowledge, there is no Indian tribe which holds Indian land in Tennessee,” the AG’s opinion said. “Thus, at this point, IGRA does not apply.” In other states, however, tribal claims have suddenly been made when casinos are on the horizon. An incomplete Internet roster of “Native-American Associations” in Tennessee has 89 listings, with a caveat that some are probably defunct or fake. For several years, Native Americans have held an annual powwow at Halle Stadium in Memphis. Lottery proponents, who don’t wish to complicate their long-sought amendment with any more controversy than necessary, are taking no chances. So the word “casino” is added to the amendment and, voters willing, to the state constitution, but in a negative sense. And in a year or two the state of Tennessee could be promoting instant scratch-and-cash tickets while busting the criminals who operate gas station pinball machines or video poker. Mississippi casino interests profess to be somewhat bored by the whole thing. “We don’t have an official position,” said John Osborne, president of the Mississippi Gaming Association and general manager of Hollywood Casino in Tunica. “Most people believe the residents of Tennessee need to make that determination.” Casinos and a lottery coexist in New Jersey, he noted. One school of thought holds that lotteries take players from casinos, but Osborne views Tunica as a destination resort offering amenities and gambling experiences “you really can’t get at a gas station.” The association, he said, is not lobbying or contributing to either side in the Tennessee referendum.

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