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California Casino Challenge Withdrawn

26 May 2005

CALIFORNIA – As reported by the Contra Costa Times: "Horseracing track owners on Wednesday withdrew a legal challenge to a deal that Gov. Arnold Schwarzenegger inked last year with five Indian casino tribes, clearing the way for the state to sell an estimated $1 billion in bonds for transportation construction projects.

"The revised compacts the governor signed with the tribes granted them more slot machines in exchange for a share of their slot revenue. The bonds, tied to that revenue, had been blocked by the lawsuit, which claimed that an 'urgency' vote on the compacts violated the state constitution.

"…Their attorney in the lawsuit, Steven Mayer, said only that the tracks dropped it 'to enable the parties to see if there's a way of resolving the issues' outside court. The suit could be reignited if negotiations falter, he said.

"The move comes amid a recent series of discussions between racetracks and some Indian tribes over a partnership that could help the tracks survive and muffle a long-simmering feud. The talks mark a shift in strategy for the tracks, which have struggled to compete against a vast growth of tribal gaming in California.

"…Last November, track owners and card clubs launched a major attack on the Indian slot machine monopoly with Prop. 68. The measure, which failed at the polls, would have required tribes with casinos to pay 25 percent of slot revenue to the state or lose their monopoly…"

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