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Chris Jones

Tribe's Deal With Caesars May Die

25 August 2004

Caesars Entertainment, with its signature toga doubling as an ill-fitting bridal gown, has apparently been ditched at the altar by the Pauma Band of Mission Indians.

Leaders of the Southern California tribe were close to finalizing the group's September 2003 agreement with Park Place Entertainment (now Caesars Entertainment) that would have resulted in a $250 million Caesars-themed hotel-casino on tribal lands in north San Diego County.

However, the tribe on Tuesday reversed course and said it is now accepting new proposals from interested gaming companies through Sept. 4.

Tribal Chairman Chris Devers did not return phone calls Tuesday, but insiders suggest the abrupt turnaround stems from competitive concerns related to Harrah's Entertainment's July bid to purchase Caesars for $9.4 billion.

Harrah's two years ago opened a 58,000-square-foot casino near the Pauma site on land controlled by the Rincon San LuiseƱo Band of Mission Indians. A $165 million expansion is now under way there, and insiders have widely questioned whether Harrah's or the Rincon tribe would welcome a competing Pauma casino in such close proximity.

Caesars spokesman Robert Stewart said Tuesday his company still hopes to reach a final accord with the tribe, though he conceded the pending merger would "create some potential issues that we're talking over."

Harrah's spokesman Gary Thompson said Tuesday he was unaware of the Pauma tribe's new request and referred questions to Caesars representatives.

Pauma's decision to court other bids could reopen the door for Las Vegas-based gaming companies Station Casinos and Hard Rock Hotel, which both pushed hard to land a Pauma contract last year.

Station Casinos is already benefiting from the successful Thunder Valley casino it opened last summer near Sacramento, Calif., in conjunction with the United Auburn Indian Community. It has several other tribal deals in the works, but Vice President Lesley Pittman on Tuesday declined to comment on Station's interest in reviving talks related to the Pauma site.

"We're always looking at new opportunities that arise, either in the local Southern Nevada market or with potential tribal gaming partnerships," Pittman said.

But Hard Rock bosses were more direct. President Kevin Kelley said Tuesday a copy of the latest Pauma proposal was on his desk and added he personally conveyed an interest to Devers when they spoke last week.

"We're going to get our nose under the tent here, if you will, and see what we can do," Kelley said.

While Caesars maintains its deal with the tribe is not dead, Kelley said his talks with Devers suggested tribal leaders are protecting their members' interests by seeking other partners.

"I think that they have to do what they think is right for their constituency," Kelley said. "That's probably what their constituency has asked them to do: `Let's go out and see who else is out there if this (Caesars) thing should drag on any further.' "

Kelley said it's too soon to discuss whether Hard Rock's latest proposal would be similar to last year's, which called for a $300 million to $350 million Hard Rock-themed resort. He added he's confident his company's brand would compete effectively with area casinos.

Last week's changes to California's state gaming compacts with five Indian tribes could aid existing casino operators and curb others' interest in undeveloped sites such as Pauma's, one local gaming executive said Tuesday.

"When (tribal casinos) were limited to 2,000 slots, you could be fairly certain people would drive farther up the road to go to another casino if the first one they stopped at was too busy," the source said. "But without that limit, it may be harder to convince someone to drive on up the road."

California Gov. Arnold Schwarzenegger on Thursday reached agreements with five tribes that would allow an unlimited number of slot machines in selected areas. The state previously limited casinos to 2,000 such machines per location.