A Looming Federal Decision Could Transform Tribal Gaming in Oregon. The Lottery Has Its Fingers Crossed.

Any day now, the federal government will decide whether to allow the Coquille Indian Tribe to open another casino, this one in Medford.

That possibility has opposition—from another Oregon tribe as well as Gov. Kate Brown and the Oregon Lottery—all of whom have a lot to lose if the feds greenlight the Coquille's proposal.

"It would change the face of tribal gaming in Oregon forever," says Michael Rondeau, chairman of the Cow Creek Band of Umpqua Tribe of Indians, the tribe that stands to lose the most from federal approval of a new casino. "Every tribe would be looking at the very edge of the envelope and pushing it. You'd see casinos up and down I-5."

Currently, Oregon's nine recognized tribes operate nine casinos. Since 1988, the state of Oregon and the tribes, which are sovereign nations, have operated under an informal policy that limits tribes to one on-reservation casino each. (The Coquille say they made no such pact.)

That means Oregon has far fewer casinos than other states with tribal gambling. Washington has 35 tribal casinos; California, 69; and Oklahoma, the most prolific, has 143.

But if the federal Bureau of Indian Affairs approves the Coquille's plan, opponents say that would set a new precedent by allowing a tribe to operate a second casino and also allowing it to operate that casino on land newly brought into trust.

Gov. Brown opposes such a change. That's in part because the governor and the Oregon Lottery she oversees have their own plans for expanding gambling.
The Oregon Lottery's strategic plan captures the state's conflicted relationship with tribal gambling. Documents show the agency ranks "close proximity tribal gaming" a major threat and "tribal partnerships" a major opportunity.

Oregon's oldest tribal casino is Cow Creek's Seven Feathers casino, located in Canyonville, 27 miles south of Roseburg. Because of its location adjacent to I-5, industry sources say it's among Oregon's highest-grossing casinos, behind the Confederated Tribes of Grand Ronde's Spirit Mountain Casino.

In 2012, the Coquille, who already operate a casino called the Mill, in North Bend, applied to federal officials to build a second casino on land near I-5 they'd bought in South Medford.

This presented a problem for the Cow Creek tribe, which currently owns the only Oregon casino on I-5. The proposed Coquille location is 70 miles south of Seven Feathers.

For the past six years, Brown and her predecessors have opposed the Coquille's proposal, as have U.S. Sen. Ron Wyden (D-Ore.) and U.S. Rep. Peter DeFazio (D-Ore.).

Brown invoked the traditional Oregon rationale for opposing the expansion of tribal casinos.

"State support for even a single, modest additional casino is likely to lead to significant efforts to expand gaming across Oregon, to the detriment of public welfare," Brown wrote in an April 13, 2016, letter to the Bureau of Indian Affairs.

What Brown didn't say specifically is that at the same time she opposes the expansion of tribal gambling, the Oregon Lottery is engaged in aggressive expansion plans of its own.

And, as first reported by The Washington Times, those plans include the lottery's first-ever partnership with another tribe: the Cow Creek, the main opponents of the Coquille's expansion—and a significant contributor to Brown's election campaigns.

That set of facts doesn't sit well with the Coquille. "She's not only expanding the lottery," says Judy Duffy-Metcalf, CEO of the Coquille Economic Development Council, "but she's cutting a side deal with the Cow Creek, our biggest opposition."

Last week, Brown unveiled her 2019-21 proposed budget. That document shows the state's dependence on the Oregon Lottery.

The governor expects the lottery to generate $1.3 billion over the next two years. Gambling is the state's second-largest source of revenue after personal income taxes.

But the lottery's growth has flatlined, and the long-term trend is bleak. Millennials don't like lottery products as much as earlier generations do, and the competition for other gaming options is fierce.

The Lottery is not sitting on its hands, however. Documents show lottery director Barry Pack is pushing forward with five "innovation categories," including "tribal partnerships."

In March 2018, the lottery signed a nondisclosure agreement with the Cow Creek tribe. The two organizations began examining whether the tribe could sell traditional lottery products at a truck stop it owns on the other side of I-5, just west of its Seven Feathers casino.

"We didn't know about it, nor did any other tribe," says Duffy-Metcalf. "Where's the transparency?"

Lottery spokesman Matt Shelby acknowledges the agency didn't seek expressions of interest from other tribes.

But Shelby plays down the significance of the agreement. He says the partnership would be merely a pilot program in which the Cow Creek offer "traditional" lottery products, such as keno, scratch-off cards and Powerball—but not video terminals.

"We are using the project as a trial to see if lottery products can be sold on tribal lands," Shelby says. "If the answer is yes, we will offer it to all Oregon tribes."

If consummated, the contract between the state and the Cow Creek, according to a leading tribal gaming lawyer, would be an arrangement unprecedented in the nation.

The relationships around the contract do raise questions.

Since Brown became governor in February 2015, the Cow Creek have given her $85,000 in campaign contributions. (The tribe gave her $30,000 in the decade prior to that.)

Brown's spokesman Chris Pair says correctly that the Cow Creek's contributions to Brown are comparable to the tribes' contributions to her predecessor, John Kitzhaber.

And Pair notes that, far from carrying water for the tribe, Brown angered the Cow Creek last year when she engineered the reversal of a state decision to sell the Elliott State Forest to an investor group that included the tribe.

"There was absolutely no favoritism or quid pro quo here," Pair says of the lottery's contract with the Cow Creek.

The Coquille says its interest in opening another casino is that its members face rising health care costs and the tribe needs to diversify its economic base.

Its current casino near Coos Bay is remote. The Coquille plan a Class II casino for Medford—more like a bingo hall than a Las Vegas-style Class III casino.

To accomplish this, the tribe needs the feds—specifically, the Bureau of Indian Affairs—to allow the Coquille to take the Medford real estate "into trust," i.e., make it part of their tribal lands. The feds' response to that request—the project's environmental impact statement—is expected soon and will determine whether the casino gets built.

Cow Creek's Rondeau has been vocal about his opposition. His argument includes the assertion that if the Coquille get what they want, "it will happen all over the state."

His claim is based on a document the Coquille submitted to the feds in 2016, showing that the Coquille had evaluated sites in its five-county "service area," including sites in Eugene and Ashland.

"That's a red herring," Duffy-Metcalf says of Rondeau's claim. "The tribe has the legal right to pursue economic development in our five-county service area—and that's what we're doing."