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Reprint of The Big Bet, an eight-part series on gambling in New Mexico,

originally published in the Albuquerque Journal on Jan. 2-9, 2005.

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PART 1

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THE BIG BET

JUDGING THE BIG BET


From small change to billions, gambling has exploded in New Mexico over past decade
The first state-tribal agreements to legalize
Indian casinos were signed 10 years ago next
month. New Mexico has now had slot machines
at horse-racing tracks for more than five years.
In the eight-day series The Big Bet, the Journal looks at the gambling industry in New Mexico and how it affects our pocketbooks, our
neighbors and our communities.
BY COLLEEN HEILD
Journal Investigative Reporter

ohn Doe loves to gamble and, boy, does he


have a lot of choices in New Mexico.
He can play Las Vegas-style slots, blackjack and poker at 15 Indian casinos, buy lottery tickets at 1,100 outlets, play the ponies and
slots at five racetracks or gamble at more than
60 veterans and fraternal clubs.
Altogether, an estimated $3.9 billion will be
wagered this year at New Mexico casinos, racinos and clubs and on the state lottery.
It is a remarkable change from a decade ago
when New Mexico gambling was mostly bingo
halls, struggling racetracks and some fledgling
Indian casinos operating outside the law.
First came the creation of a state-run lottery
in 1995.
Then, on the slimmest of votes, lawmakers
legalized casino gambling on Indian lands, thus
changing New Mexicos economic, political and
cultural horizon.
To level the playing field, the Legislature
permitted racetracks to install slot machines.
A decade ago, just eight tribes operated casinos, with a total of about 1,800 slot machines
and a net win of about $150 million a year.
At the states four racetracks, attendance and
betting were down and track owners warned of
layoffs and possible closures.
Today, New Mexicos gambling industry
tribal and non-Indian is flourishing.
As always, the house wins in the long run.
Gamblers in New Mexico are projected to
lose nearly $850 million this year in a state
that for the past decade has ranked among the
poorest in the nation for personal per-capita
income.

See BETTING on PAGE 2

JOURNAL PHOTOS

GAMING TRIBES CASH IN

With Las Vegas-style Indian casinos, a state Lottery and horseracing with slot machines, New Mexico offers plenty of gambling choices.

SERIES AT A GLANCE
PART 1
Part 2
Page 1
n estimated
$3.9 billion will
be wagered this
year on the state
Lottery, racetracks, clubs and
at Indian casinos. Some Indian
tribes with gambling are among
the biggest winners.

Page 5
tate Lottery
sales have
grown every year
since its creation
in 1996. Evidence is mixed
on whether lowincome residents
wager more than
others. Lottery
profits have funded college scholarships for more
than 32,000 people.

Part 3

Part 4

Part 5

Part 6

Part 7

Part 8

Page 7

Page 9

Page 11

Page 14

Page 16

Page 18

ew Mexicos
racing and
casino barons
are a varied lot.
One lives in
Greece; another
once sold Fuller
brushes in
Kansas. A partowner of two
tracks is a close
friend of Gov. Bill
Richardson and a
relative newcomer to politics.

he response to
problem gambling in New Mexico has been
uneven, incomplete and uncoordinated. Most
money to
address the problem goes to a
group whose
executive director
earns $125,000
a year and has
financial interests in two racetracks and casinos.

here have
been both economic winners
and losers since
gambling exploded in the state.
There are new
jobs, entertainment and commerce, but more
bankruptcies and
increased need
for police and
emergency services. Meanwhile, the state
has made no
serious effort to
assess the economic impact.

lot machines
have subsidized a sagging
horse-racing
industry. Slot
play began in
1999 at tracks,
and nearly $118
million in slot revenues has gone
to fatten race
purses. About 60
veterans and fraternal clubs also
operate slots
today.

PAGE 3

tate gaming
regulators
wont say what
they do to oversee Indian casinos. Its secret.
But regulators
arent shy in
policing the racetracks with casinos or others
who may run
afoul of state
gaming laws.

ore gambling
could be in
the cards for New
Mexico. Five
more Indian
tribes have taken
steps toward getting into the casino business, and
three more towns
have been mentioned as possible sites for racetracks with casinos.

ALBUQUERQUE JOURNAL

RICHARD PIPES/JOURNAL

New Mexicos newest racino, the Black Gold Casino at Zia Park, pictured here on the day before its November opening in Hobbs, will combine live horseracing with 600 slot machines.

Betting Billions on Gambling


from PAGE 1

A host of unknowns
There are some things we
know about gambling in New
Mexico.
For starters, it has helped
some Indian tribes that were
desperately poor. Indian casinos and racetracks employ
more than 10,000 people, and
gambling generates tens of
millions of dollars for the state
treasury as well as for scholarships for thousands of students
at New Mexico universities.
But there are some things
we dont know, perhaps
because we dont want to.
There has been no serious,
independent attempt in recent
years to gauge Indian gamblings economic impact off
the reservations.
There has been no real
state study on problem gamblers since the mid-1990s.
There is anecdotal evidence of
foreclosures, bankruptcies,
divorce and even suicide. How
do the benefits measure up
against the social costs?
There is no way for the
public to know what, if any,
state regulation of tribal gaming is occurring. The process
is cloaked in secrecy.
Does the gambling lobby,
flush with money, wield too
much influence in Santa Fe?
Does the Lottery have a
disproportionate impact on
New Mexicos poor?
Should millions of dollars
from the states take of slot
machines at the
racetrack/casinos be used to
prop up the racing industry, or
should more go to needs like
teacher pay and police?
Former Gov. Gary Johnson,
who signed the historic gambling legislation in the 1990s,
said that under federal law he
had no choice but to negotiate
with the Indian tribes and
pueblos to expand gaming.
Is it good for New Mexico?
I think at best you can call it a
wash because, of course, there
are lot of people adversely
affected by gambling. But
then, on the positive side, its
good for tribes and pueblos,
Johnson said.
Others have a more negative
assessment.
I suspect if one took a poll
in New Mexico by and
large, the Lottery would be
very popular and gaming
would probably have the
majority of citizen support,
said former Democratic Gov.
Toney Anaya.
But we are not Nevada, and
we cant have our economy
based on gambling. But
because we dont have a lot of
other economic development
in the state, were eating ourselves up from inside.

The next wave


There may be more to come.
New racinos the term
used for racetracks with slot
machines are being discussed in Santa Fe, as well as
Tucumcari and Raton. The two
Eastern New Mexico areas
could use an economic shot in
the arm and racino supporters
hope to draw money from
neighboring states and travel-

ers on the interstates.


Santa Fe art dealer Jerry
Peters and Jemez Pueblo are
proposing an off-reservation
casino along the Interstate 10
corridor between Las Cruces
and El Paso. The Fort Sill Oklahoma Apache tribe is interested in the same area, and there
were reports that Picuris
Pueblo was, too. Any of these
would mark the first foray by
a tribe into off-reservation
gaming.
Lottery supporters may
renew a push to boost sales by
adding keno.
Rumors are afloat that
state compacts regulating
Indian gaming will be renegotiated, with some tribes hoping
to offer complimentary hotel
rooms and other incentives to
some gamblers.
There is concern about the
tribes use of a new class of
gambling machines that would
reduce the states revenue
from tribal casinos.
And, some legislators are
talking about opening the regulation gates even wider as a
way to level the playing field.
The attitude is, Why not
just let everybody have at it?
and then we (the state) can get
more revenues from it, or at
least not create a special
class, said one state official.

Keep it under control


Albuquerque attorney Paul
Bardacke represented former
Gov. Bruce King in fighting
efforts by the tribes to legalize
gaming in the late 1980s and
early 1990s.
Now he represents Gov. Bill
Richardson in compact-related
talks with the tribes.
Bardacke said expansion of
gambling wasnt inevitable
under federal law. He said the
state, under King, had prevailed on its legal arguments
in court battles to keep gaming

at bay.
Bardacke said Richardson
inherited wide-open gaming
throughout the state of New
Mexico, when he took office
in 2003.
My efforts on behalf of
Gov. Richardson have been to
try to keep it under control, to
keep it from proliferating to
the extent that its unworkable
for the state, and the Indian
tribes and the non-Indian gaming entities, Bardacke said.
Not surprisingly, King said
he doesnt believe gaming has
changed the state for the better.
I tried to tell everybody
that we better not go with all
that gaming, he said recently.
You cant deny the jobs (it has
created) but I think theres
other ways to create jobs is my
feeling. The other problem is
where they get to have entirely too much influence in policy.
After 40 years in public service, King lost his final re-election bid in 1994 to the pro-gaming Johnson.
I spent a long time trying to
show progressive government
and I didnt want to be the one
who brought gaming to New
Mexico, King said.
Johnsons election campaign
received more than $244,000
from gaming tribes. But he
said recently his decision to
sign the compacts had nothing
to do with the contributions.
From day one, when I started running for governor, I said
I would sign off on compacts,
Johnson said.

A better life
While many of the benefits
and liabilities of gambling can
be debated, it has without
question improved living conditions for some of New Mexicos Native Americans.
Today, 13 tribes operate casi-

nos in New Mexico several


offering more than one location. Five more tribes may
jump in over the next few
years.
Our casinos are going to be
bigger and better, said Charlie Dorame, chairman of the
New Mexico Indian Gaming
Association.
Gaming tribes are trying to
find ways to keep up with the
competition and become destination resorts to attract out-ofstate gamblers and their money.
Despite the economic
progress on Indian lands,
experts say there is still a long
way to go.
This is still an incredibly
poor population. ... Gaming is
not going to solve all of their
underlying problems, said
William Evans, a University of
Maryland economics professor
studying the economic impact
of Indian gaming nationwide.
Dorame said members of
gaming tribes arent interested
in getting rich; they want to
improve their communities.
For instance, 80 percent of
the money for Tesuques Head
Start program comes from
casino revenue, said Dorame,
former governor of Tesuque
pueblo and head of the
pueblos government relations.
Were living in the same old
mud and adobe homes but they
have new roofs.
Two months ago the basketball court at the pueblo consisted of a concrete slab with
two goals, Dorame said. The
other night I played basketball
with my sons in the new
$5 million intergenerational
center.
I finally have a two-car
family, he added, but I still
have a one-car garage.

widespread gambling was neither speedy nor direct.


It essentially began in 1988
when Congress passed and
President Reagan signed legislation to permit Indian casinos.
In the years that followed,
there were federal and state
lawsuits in New Mexico, votes
and re-votes in the Legislature.
What may have been the
most dramatic moment
occurred at 3:12 p.m. on Friday, March 21, 1997.
Reversing a vote from just a
day before, the House voted
35-34 to approve state-tribal
compacts to permit Indian
casinos.
The House-approved legislation also legalized slotmachine gambling at horseracing tracks and veterans and
fraternal clubs.
The reversal came when
Rep. Debbie Rodella, a Democrat from San Juan Pueblo
near Espaola, changed her
vote from no to yes.
Rodella, who was a major
recipient of campaign contributions from gambling interests, said at the time the donations had nothing to do with
her change and that she was
swayed in part by the promise
of Indian casinos bringing jobs
to her district.
I stand firmly by my decision to vote for gaming and
expect my friends and neighbors to accept it and move
towards what benefits us all,
she said at the time.
Contacted recently, Rodella
said she was too busy to comment.
The House had long been the
roadblock to gambling legislation in the Legislature. The
Senate quickly approved the
House-passed bill and Johnson
signed it soon after.

Change in direction

Smoothing the road

New Mexicos journey to

Tribes in New Mexico first

began asking the state to negotiate compacts in 1989, but


were rebuffed.
Some moved ahead anyway.
And by late 1994, there were
eight Indian casinos operating
slot machines in violation of
federal law.
After taking office in 1995,
Johnson wasted no time in
negotiating what were the
original compacts to permit
Las Vegas-style gaming on
Indian lands in New Mexico.
Those compacts were later
ruled unconstitutional by the
state Supreme Court because
the Legislature hadnt given
consent.
Bernalillo County Attorney
Tito Chavez, a Albuquerque
state senator in 1995, recalled
that many legislators believed
some form of gaming expansion was inevitable.
We went to see how other
states were doing it, and the
advice we got everywhere,
everywhere, was Start slowly,
do one thing at a time. Then
BOOM, Governor Johnson
signed that thing and it was all
off and running around the
track. It was just stunning. It
was gone, all at once.
Some say the prospect of a
state lottery helped smooth the
rough road that previously had
prevented other gambling
expansion.
Voters approved a constitutional amendment creating a
state-run lottery in November
1994 but the state Supreme
Court invalidated that vote
because the lottery issue had
been coupled with a ballot
question about video gambling.
The Legislature passed a bill
in 1995 to make the lottery
legal and Johnson signed it.
Then Johnson was off to
court for a fight over his Indian gaming compacts. The U.S.
Justice Department stepped
in, advising tribes with casinos
to close them or face legal
action to seize their slot
machines.
The department, through
U.S. Attorney John Kelly, followed through on the threat
and eventually forced the temporary closure of one Indian
casino.

The legal cloud lifts

PHOTOS BY MARLA BROSE/JOURNAL

BY THE NUMBERS
$58.5 million

$150 million

$877.5 million

$2.9 billion

Projected amount players


will gamble on slot machines
at veterans and fraternal
clubs this budget year.

Projected amount
players will gamble on the
state lottery.

Projected amount
players will gamble on slots
at racetracks.

Projected amount players


will gamble on slots at
Indian casinos.

Note: Projections are based on players winning back 80 percent of amount wagered on slots and $79.5 million in Lottery prizes
Source: New Mexico Gaming Control Board

That set the stage for the


Legislatures vote in March
1997 to approve new state-tribal compacts for Indian casinos
and slots at tracks and clubs.
The compacts allowed tribal
casinos to begin banking table
games, from blackjack to
craps. They had become fullservice gambling halls.
With the legal cloud no
longer over their heads, tribes
also found it easier and cheaper to borrow money for expansion and casino-related developments like golf courses and
hotels.
The compacts passed in 1997
required tribes to pay the state
16 percent of the take from
their slot machines in
exchange for limited competition from off-reservation gambling.
Tribes eventually won new
compacts that require them to
See NEW MEXICANS
on PAGE 4

ALBUQUERQUE JOURNAL

Gaming Tribes Cash In


Several use casino profits to boost education, improve quality of life
BY MIKE GALLAGHER
Journal Investigative Reporter

visitor to a pueblo ceremonial


dance 32 years ago would
have found communal water
spigots, dilapidated buildings
and outhouses.
Tourists sometimes called it
quaint.
Quaint might be picturesque
but it doesnt supply clean water
for children to drink. The correct
word was poverty.
Three decades ago, most New
Mexico pueblos relied on natural
resource leases, federal money and
tourist dollars spent at seasonal
ceremonial dances.
Per-capita incomes were among
the lowest in the United States.
Unemployment rates in some cases
approached 70 percent.
Thanks to gambling, that landscape is changing.
The millions of dollars flowing
through tribal casinos are building
sewer and water systems, new
schools, medical clinics and new
homes for New Mexicos gaming
tribes.
New Mexico Indian Gaming
Association chairman Charlie
Dorame said his pueblo, Tesuque,
has spent more than $20 million in
casino profits in the last few years
on infrastructure.
Thats more money than we
received from the federal government since 1976, he said.
Gov. Leonard Armijo of Santa
Ana Pueblo said the infrastructure
spending is essential.
You cant have economic development without a modern water
system, he said. You cant attract
businesses without infrastructure.
Not all the new tribal economic
infrastructure is hidden below
ground.
Sandia is building a new resort
hotel and golf course, joining Santa
Ana, which has the Tamaya resort;
and Mescalero tore down the Inn of
the Mountain Gods and is building
a 211-room luxury hotel and a larger casino with 1,000 slot machines.
Gaming also has made it possible
for tribes to spend millions to hire
high-powered law firms and lobbyists to pursue various economic
and legal agendas important to the
pueblos, as well as some investment strategies that have turned
controversial.
In addition to a desperate economic situation before Indian gaming, the underlying cultural values
were also in danger.
People were leaving the insulated
and religious pueblo life for the
military and for government jobs
in Albuquerque and Santa Fe. Fewer were fluent in their native
tongue. Skills like weaving and pottery-making for religious ceremonies were dying out as older
tribal members passed away.
A few years ago, only Sandia
Pueblo members over the age of 50
knew how to speak Tiwa, their
native language. At Santa Ana
Pueblo, the cutoff age for speaking
Keres was 48.
Now, native language classes
begin in preschool at both pueblos.
Our language was dying, said

ROBERTO E. ROSALES/JOURNAL

Two-year-old Andrea Chavez ponders her next move in designing a hat at Sandia Pueblos Head Start Program. Andrea and her fellow students will
be moving into a new building, paid for in part with casino profits.
Sandia Pueblo Gov. Stuwart
Paisano. Now 100 percent of our
children are being taught our
native tongue.

No direct distribution
A common misperception of Indian gaming is that casino profits are
distributed directly to tribal members.
That doesnt happen in New Mexico.
To distribute casino profits to
individual members, gaming tribes
would have to pass a law authorizing and explaining the distribution.
Then the tribe would need approval
from the Department of the Interior.
New Mexico tribes have not gone
that route.
The (Sandia) Councils main
focus is on the community,
Paisano said. There are a lot of
associated social problems that just
get worse when you hand out
cash.
Santa Ana Gov. Armijo said, We
dont want to make our people
dependent on gaming money.
Dorame said handing out money
really isnt the pueblo way.
We dont weigh success by the
amount of money people have in
their pocket. It is the success of the
community that matters.
Every pueblo leader the Journal
interviewed said the tribal government views casino profits like a
city or town would view gross
receipts and property taxes.

I think this attitude stems from


basic values, Paisano said. The
Council always goes back to what
is important culture, language
and religion.
Albuquerque Mayor Martin
Chvez was an outspoken opponent
of legalizing gaming, including
Indian casinos.
Ive come to accept the reality
that gaming isnt going away,
Chvez said. But what has
impressed me the most is the
sophistication the pueblos have
shown in handling the money.

Home improvement
Ask a tribal leader about what
the tribe has done with casino profits and invariably they start talking
about sewer hookups.
We have a crisis with groundwater contamination in this valley,
said Ron Lovato, San Juan Pueblos
development director. We are
working on it. We have 95 percent
of the homes hooked into the sewer
system.
San Juan is a medium-sized
pueblo with more than 700 homes
now hooked up to the sewer system.
At Sandia, the hookup rate is at
98 percent, Paisano said.
Replacing septic tanks with sewer systems is an expensive undertaking.
Running sewer lines to a residence can cost between $10,000
and $15,000. Hooking the home up
to the sewer line can cost more
than $1,200.
See GAMING on PAGE 4

ROBERTO E. ROSALES/JOURNAL

Indian Health Services pharmacist Dineyazhe-Toya


counts pills at Sandia Pueblos new health care facility.
Modern medical clinics have been built at Isleta, Sandia, Mescalero and other reservations using profits
from casino gaming.

PAT VASQUEZ-CUNNINGHAM/JOURNAL

JoAnna Garcia, 23, of Santa Ana Pueblo weaves a belt


for a traditional dance during a tapestry-and-weaving
class at the pueblo. Casino gaming has allowed
expanded programs in traditional pottery, weaving and
language.

ROBERTO E. ROSALES/JOURNAL

Saint Antonio de Padua Catholic Church at Sandia Pueblo is framed by the Sandia Mountains. Both the church and the mountains play important roles in the pueblos religious practices. The $2.3
million church, paid for in part with gaming revenues, was completed in 2002 and can seat 500, more than the tribes 480-member enrollment.

ALBUQUERQUE JOURNAL

Gaming Tribes Cash In


Pueblo, said, We developed the
Hyatt Tamaya resort and opened it.
Then the attacks of 9/11 took place
and we took a $1 million loss, but it
has bounced back.
Sandoval County recently helped
the tribe restructure and lower
interest rates on its resort debt by
providing conduit financing for
more than $60 million in bonds.
Right now 90 percent of the
tribal budget comes from gaming.
Thats our budget, Ortiz said.
The tribe is trying to move
beyond that.

from PAGE 3

Those costs dont include wastewater treatment.


Local governments normally
issue bonds to fund water systems,
a method that until gaming was
unavailable to tribes because they
lacked the long-term revenues
used to pay off the bonds.
We pay cash, Lovato said.
Sewer systems werent the only
infrastructure missing from tribal
lands.
There were no road departments. No parks and recreation
departments. No trash collection,
Lovato said. We are in fact building from scratch. The casino funded the trash transfer station.
Tesuques Dorame said, I think
the Indian Gaming Compacts are
too short. We are 20 to 30 years
away from building all the necessary infrastructure.
Tesuque, Dorame said, needs 110
new homes but federal money for
housing on the pueblo amounts to
about $150,000 a year.
We are pumping in the rest, he
said.
At Santa Ana and Sandia pueblos,
the housing programs are producing new homes after each tribe set
up a mortgage program.
Sandias operates like a traditional mortgage but with zero interest.
Santa Anas housing program uses
life insurance annuities to reduce a
monthly mortgage payment on a
$100,000 home to $250.
Banks wouldnt loan money for
homes on tribal lands because they
couldnt foreclose, Paisano said.
We used casino profits to create a
mortgage fund that tribal members can tap into after a local bank
reviews their qualifications.
Young people left the pueblo
because they had to live with mom
and dad, Paisano said. Now we
have a new housing program and
people are coming back.

Seeking to diversify
Many tribes have been taking
their own advice and are trying to
expand their economic base.
Unemployment rates on Indian
lands nationally run between 45
and 55 percent.
Six of the gaming pueblos Sandia, Isleta, Santa Ana, Taos, San
Juan and Pojoaque have unemployment rates in the single digits.
Sandia Pueblo has an unemployment rate of 1 percent, according
to the Bureau of Indian Affairs.
The success isnt uniform. Gaming tribes such as Mescalero and
Jicarilla have unemployment rates
of 44 and 33 percent respectively,
according to the same BIA report.

Recovering lands

ROBERTO E. ROSALES/JOURNAL

Lucy Gutierrez, left, and Jennie Holmes are trying to save the Tiwa language at Sandia Pueblo. The language instructors have helped develop
an alphabet and are working on a dictionary. Every school day they teach
Tiwa to even the youngest children.
A 2002 national study found that
tribes with casinos saw a 26 percent increase in Indian employment and the percentage of working poor dropped by 14 percent.
That is a trend tribal leaders
want to continue.
Some Indian casinos are expanding operations to include hotels
and golf courses in the hopes of
expanding the gambling market to
out-of-state and overseas tourists.
Were going to have work closely with the local hotel associations, Dorame said. It will
require partnerships off the reservation to accomplish this.
Mescalero Apache casino is
working on a $2 million advertising
campaign in conjunction with Ruidoso and the Ruidoso Downs horse
track and casino. The tribe will
contribute the bulk of the money,
targeting potential tourists from
Texas.
Santa Ana Pueblo has been courting retail outlets for property set
aside on U.S. 550.
Sandia Pueblo bought the Coronado Airport near I-25 for a hightech industrial park and has plans
for an RV park.
Our council has taken a conservative approach to off-reservation
investments, said Paisano. We
get approached all the time.
San Juan Pueblo is expanding an
airstrip in the Espaola Valley in
hopes of attracting manufacturing
jobs.
Weve met with officials at Los
Alamos Laboratory to try to get
some interest in developing business offshoots in the Espaola Valley, San Juan development direc-

tor Lovato said. Weve been


actively recruiting manufacturers
to the area. We hope the airport
serves as a linchpin to those
efforts.

A rocky transition
Laguna Pueblo has built a grocery store. Many tribes have built
gas stations that pay no state gasoline taxes.
But not all has been smooth. Sandia found itself part of a nationwide story when a Senate committee launched an investigation of a
Washington lobbyist-public relations team that had been paid more
than $45 million by more than a
dozen tribes, including Sandia.
Sandia had hired Jack Abramoff
to lobby for congressional
approval of a land settlement
agreement involving more than
9,000 acres on the west face of the
Sandia Mountains.
Paisano said the tribe was not
satisfied with the firms work and
was upset when it was disclosed
that Abramoff in e-mails had
referred to his Indian clients as
morons, monkeys and losers.
Paisano said, There have been
missteps.
Tribes have found that getting
into new businesses hasnt been a
sure thing.
Santa Ana Pueblo went to court
after a $1 million investment in a
Chinese computer school went
awry.
But the bulk of the tribes economic development efforts have
been in the tourism industry.
Bob Ortiz, a planner at Santa Ana

Tribal leaders stressed the need


to form alliances with non-Indian
governments on issues from the
environment to economic development.
The issue that may bring conflict
is land acquisition.
Like disputes over water rights,
this issue predates Indian gaming.
But casino profits have given
tribes the economic power to buy,
or bring lawsuits for, property that
individual tribes believe was lost
under Spanish, Mexican or United
States rule.
Sandia, Acoma, Taos, Santa Clara
and Isleta have all bought or recovered lands in recent years.
In some cases, the tribes sought
the properties for religious reasons or to protect religious sites, as
in the case of Taos Pueblos purchase of a ranch adjacent to the
Blue Lake property.
Other purchases have been for
economic development reasons,
like Sandias purchase of the Coronado Airport on North I-25.
If the tribes have the property
declared Indian Trust Lands, the
properties come off the tax rolls.
Depending on location, the tribes
can also run into land use, access
and zoning issues.
Sandia concluded a settlement in
2002 with homeowners and the federal government in its attempt to
reclaim the west face of the Sandias. The agreement basically
blocks development, protects
existing homeowners and public
access and secures Sandias access
to the land for religious observances.
Isleta Pueblo, meanwhile, is
seeking to extend its immunity
from civil lawsuits to property it
has acquired off the reservation.
Both the New Mexico Court of
Appeals and Supreme Court have
rejected the pueblos argument,
but the pueblo has asked for it to
be reconsidered.
One tribal leader told the Journal
that land acquisitions for religious
reasons are high on many tribes

priority lists.
He suggested that tribes are
more likely to be willing partners
with local governments on lands
acquired for economic development.
But properties obtained for religious reasons are likely to be
closed off to the general population
and lead to conflict.

Stitching a society
Bricks and mortar are one form
of infrastructure.
Education and health are just as
important.
Among New Mexico tribes, diabetes is considered an epidemic
that leads to heart disease, kidney
failure and amputations.
Nationwide, Native Americans
are twice as likely to develop diabetes than non-Hispanic whites
and amputation rates are three to
four times higher among Indians
than the general population,
according to the American Diabetes Association.
Several tribes have built medical
clinics and wellness centers to
combat health problems like diabetes that have troubled their communities for years.
Isleta Pueblo set up programs to
teach healthy lifestyles to children
and adults in a recreation center
that includes an Olympic-size pool.
The tribe also provides diabetes
education programs and a medical
clinic.
The Mescalero Apache tribe
built a full-service dialysis unit
that serves tribal members and
people in the surrounding community.
Were able to combine Indian
Heath Services and pueblo money
to expand services to include an
herbalist, physical therapist, a
pharmacy, and counselors for substance abuse, Paisano said. Its
worked tremendously.
Many tribes offer college and
high school scholarship programs,
but Sandias starts in the first
grade.
We will pay tuition for any child
on the pueblo to attend any private
school, Paisano said. We also provide transportation. We require a
commitment from the parents that
they will help their children with
homework and the students maintain their grades.
Most tribes now pay most of the
cost of preschool programs, and
have funded programs for the
elderly and teens.
We all look to how all our people
can benefit from this (gaming),
said Santa Anas Armijo.
Where is the benefit to the
tribe, is the first question we ask.

PAT VASQUEZ-CUNNINGHAM/JOURNAL

Two dogs stand guard at Santa Ana Pueblos new housing addition. Before casino gaming, New Mexico tribes relied on federal housing programs. Now tribes are using casino profits to establish
mortgage programs.

New Mexicans Bet Billions on Gambling


from PAGE 2

pay no more than 8 percent of


their slot take.
At least twice in his tenure,
Johnson put the brakes on
expanded gambling.
He refused to permit the
Fort Sill Apache tribe to set up
a casino near Deming in 1999,
and he pre-empted a state Racing Commission vote on a
Hobbs racetrack in late 2002.
Both ventures would have
violated the near-exclusivity
the state promised the gaming
tribes, Johnson said recently.

When a Richardson-appointed state racing commission


finally approved a new track
and casino in Hobbs in 2003,
there was no serious opposition from gaming tribes.
Dorame says that wont happen next time.

Every business
does it
Some opponents who fought
Johnson on Indian gaming a
decade ago are just as vehement on the issue today.

Ive always felt that horse


racing and lotteries were relatively benign compared with
the crack cocaine of gambling,
which is slot machines, said
Albuquerque attorney and former state senator Victor Marshall. And in fact, New Mexico would be much better off if
we went back to where we
were before the casinos, which
is horse racing and the lottery.
But Albuquerque Mayor
Martin Chvez and others
have given up their active
opposition.

Im a pragmatist, Chvez
said. It is here and it is not
going away. The challenge is
to make lemons into lemonade.
Chvez said the tribes are
doing wonderful things with
the money. They are investing
it in the tribes, their people.
They are looking to diversify.
They are investing in health
care, education.
Gaming tribes are also
incredibly sophisticated in
manipulating the levers of
power, Chvez said. They

lobby. They contribute to campaigns. This is not a bad thing;


every business does it.
Chevron, PNM, everyone.
Terri Cole, president of the
Greater Albuquerque Chamber of Commerce, said the
state is facing a complicated
dilemma that began with the
approval of a state-run lottery.
Adds Cole: The genie is out
of the bottle.
Journal investigative reporters
Thomas J. Cole and Michael Gallagher contributed to this report.

ABOUT THIS SERIES


TODAY: Gambling explodes after
New Mexico takes a chance.
DAY TWO: Lottery sales are
booming.
DAY THREE: A slot subsidy
revs up horse racing.
DAY FOUR: Casino baron is a
friend of Gov. Bill Richardson.
DAY FIVE: Problem gamblers are
left largely to chance.
DAY SIX: The economic winners
and losers of gambling.
DAY SEVEN: Regulation, New
Mexico-style: Casinos, hot dogs
and pizza parlors.
DAY EIGHT: Another crossroads.
Find this series on the Web
at abqjournal.com.

ALBUQUERQUE JOURNAL

HOME-OWNED

AND

125TH YEAR, NO. 3

HOME-OPERATED

62 PAGES

IN

MADE

IN THE

FINAL

U.S.A.

MONDAY MORNING, JANUARY 3, 2005

5 SECTIONS

PART 2

Copyright 2005, Journal Publishing Co.

Daily 50 cents

THE BIG BET

N.M. Lottery: Chasing the Rainbow


More than half of us play, and evidence suggests the poor have a higher participation rate
Second in a series

A BURST OF TEARS

BY COLLEEN HEILD

Delores Walker

Journal Investigative Reporter

New Mexicans, it seems, love their


lottery.
Every week, thousands of them
take a shot at the American dream
for as little as $1 a ticket.
Ushered in by public demand in
1996, New Mexico Lottery sales
have grown every year, racking up
nearly $1 billion in gross sales and
pumping millions of dollars into
scholarships for New Mexico kids to
go to college.
Nearly 60 percent of the public
plays the lottery here, according to
one study. But whats the current
breakdown on the people spending
all those millions on lottery tickets?
There are no recent studies that
show who is playing todays lottery
and how much they spend.
Lottery officials nationwide insist
the games dont target the poor, and
New Mexico Lottery officials cite a
1999 study here that shows people
who play are spread evenly across
the economic spectrum.
But there is evidence in New Mexico and elsewhere to suggest that a
small number of players account for
a large share of ticket sales; that participation of the poor is disproportionately higher; and that lottery
spending is regressive because poor
people spend a higher percentage of
their income.
Some say the lottery has special
appeal for lower-income people who
hold little hope of rising above their
circumstances.
Its kind of the rainbow of the
poor, says former Republican Gov.
David Cargo, a member of the state
Lottery Commission.
They look out and they see a lottery ticket, and they see a rainbow.
And occasionally they get it.
Cargo said the New Mexico Lottery has paid off in the sense that
we contribute huge amounts of money to scholarships.
But critics say it is still a tax, and
not that efficient. While it funds
scholarships, the money for education only amounts to about 24 cents
per dollar of sales, with the rest

PAT VASQUEZ-CUNNINGHAM/JOURNAL

Cliff Walker figured his wife


had been in an accident when
she burst into the house crying.
Times had been tough since
Walker fell off the roof of their
Roswell home
last March
and nearly
lost his life.
Recuperating
from his second major
surgery in five
months, he
tried to console his wife
WALKER
that morning.
Its okay,
its just the car. We can fix it,
he said.
Do you love me? Delores
Walker blurted out. Do you
love me an awful lot?
Walker tells folks now hes so
glad he said yes.
Delores Walker had just won
the lottery.

Circle K clerk Jim Weeks, center, waits for the Powerball machine to spit out a ticket for a customer. The store,
at 1200 San Pedro NE, was one of the top 10 locations in the state for lottery sales in fiscal year 2003.
going to prizes and expenses.
Yet many who fought the creation
of a state lottery now describe it as
benign.
As opposed to the other forms of
gambling we have in New Mexico,
the lottery is probably the least
onerous in my opinion, the least
harmful to society, said former
Gov. Toney Anaya, who resisted legislative attempts in the 1980s to create a state lottery.
Anaya still believes gaming
including the lottery is bad for
the state.
But if we have to have a lottery,
thank goodness that theres some
good that comes from it.

A good problem
Since the inception of the New
Mexico Lottery, more than half the

proceeds $485 million have


been returned in prizes.
The net profits have paid for
scholarships for more than 32,000
students. Thats more than the combined fall 2004 enrollments of New
Mexico State University, New Mexico Institute of Mining and Technology and New Mexico Highlands University.
Per-capita lottery sales in New
Mexico have climbed dramatically
from $49 in 1997 to $79.52 in fiscal 2004, according to the North
American Association of State and
Provincial Lotteries.
New Mexico was 32nd per capita
in lottery sales in fiscal year 2004 of
the 40 states that have lotteries.
So far the lottery has generated
enough profit to pay tuition for all
eligible students, but the pressure to
produce more every year isnt lost

on Lottery chief executive Thomas


Shaheen.
The steady growth in lottery sales
has bucked the trend seen in many
states. New Mexicos only the second lottery to have seven years of
sales increases since its inception.
The other is Georgia, one of the
most successful in the country.
Shaheen, who earns $159,500 a
year, was second in command in
Georgia before he took a pay cut to
run New Mexicos lottery.
Certainly this growth cant continue forever, Shaheen said in a
recent interview. Sooner or laters
theres going to be some leveling
off.
The challenge now is meeting the
success of the lottery scholarship
program, he said.
Now its how to keep raising
enough money to pay for it. Its a

good problem to have but its a challenge.

Pulling in the poor


No one can say definitively what
difference, if any, the lottery has
made on the states economy.
New Mexico had the highest
poverty rate in the nation the year
the lottery began. In 2004, U.S. Census figures ranked us 49th.
A 1999 survey on gambling behavior by the University of Chicagos
National Opinion Research Center
showed the poor spend a greater
proportion of their income on the
games than do higher-income players.
The annual lottery expenditure by
a household earning less than
See LOTTERY on PAGE 6

Lottery Pays Off for N.M. College Students


the time and that wasnt what
we promised, Sanchez said.
Its a promise we made to the
people of New Mexico that we
need to keep.
Sanchez, recently elected by
fellow Democrats to the position of Senate majority leader,
said the state needs to better
promote the scholarship program, especially in the school
system.
Ive had so many people
come up to me and tell me that
they are first-generation college students and that without
this lottery scholarship they
would never have been able to
go, Sanchez said.

But program critics


say scholarships should
only go to those in need

BY COLLEEN HEILD
Journal Investigative Reporter

Congratulations, New Mexico lottery players!


The money youve lost playing the lottery has helped
boost state college enrollment
by up to 6 percentage points.
More than 32,000 young people have received $150 million
in Lottery Success Scholarships.
Theres even a $50 million
surplus in the fund.
The concept of the lottery
scholarship program is simple:
Be a New Mexico resident,
enroll in a New Mexico college
and make a 2.5 GPA with a
course load of at least 12 credit hours.
If you do that, the program
pays your tuition.
The intent was simply to
make scholarships available to
every New Mexican who graduated from a New Mexico high
school regardless of where
they came from or who their
parents were, said Sen.
Michael Sanchez, D-Los Lunas.
To me, its the ultimate scholarship because its there for
everyone.
Proponents also say the program is another tool to keep
kids from middle- to upperincome families from leaving
New Mexico for their college
education.
But critics dont like the
merit aspect of the program,
arguing the scholarships
should be based on need.
They point to studies that
show many students who

A regressive system?
COURTESY OF NEW MEXICO LOTTERY AUTHORITY

Lottery success scholarship winner Brooke Brown graduated


from the University of New Mexico in May 2003.
receive the scholarships come
from middle-to-high-income
families and probably would
have gone to college anyway.

Richardsons plan
For every $1 spent on the
New Mexico lottery, about 24
cents is earmarked for lottery
scholarships.
In New Mexico, theres a
move backed by Gov. Bill
Richardson and others to
broaden lottery scholarship
eligibility criteria and change
the way benefits are dispersed.
A separate financial aid fund
would be set up for low-income
students. One proposal would
tap interest earned on the lottery surplus.
The governors plan would

relieve some pressure on the


state-operated lottery to foot
the entire bill for college
tuition which can run up to
$3,700 a year.
Instead, the state would pay
a flat amount based on the university. The change would also
allow families to take advantage of a federal tax credit.
But Sanchez, the legislator
credited for helping launch the
lottery scholarship program in
1997, is reluctant to tinker too
much with what many see as a
major New Mexico success.
Sanchez said a good portion of people who play the
lottery in New Mexico are
aware that the money goes to
education.
To start to change it, or try
to make it a needs-based scholarship, that wasnt the intent at

More than a dozen states,


including New Mexico, have
put their dollars into broadbased merit scholarship programs instead of financial aid
for low-income students.
About half of those fund the
programs from lottery revenue.
That doesnt sit well with
some who say limited government revenue should be spent
where the need is greatest.
Further exacerbating critics concerns is the regressivity of lotteries, which have the
effect of providing scholarships for middle- and upperincome students with lottery
revenues disproportionately
coming from poorer citizens,
says a report earlier this year
by two members of the Tennessee Higher Education Commission.
Unlike other states programs, the New Mexico lottery
scholarship is based on college, rather than high school,
performance.

According to an article in the


Chronicle of Higher Education, 64 percent of scholarship
funds in New Mexico go to students whose families make
$50,000 a year or more, while
only 15 percent of the money
goes to those earning $20,000
or less.
University of New Mexico
economists Melissa Binder and
Philip T. Ganderton report that
academic performance is
closely linked to family
income, so most merit programs will likely disproportionately benefit students from
better-off families.
For every (lottery) scholarship paid to a minority student
at UNM, another scholarship
went to a non-minority student, and for every low-income
scholarship, close to three
more went to students with
higher family incomes,
according to a newly released
study by Binder and Ganderton.
The lottery program requirement that students be enrolled
continuously aims to encourage students to graduate, but
an unintended effect might be
to hurt low-income students
who have trouble enrolling full
time while also working fulltime jobs, the report stated.
The GPA requirement of 2.5
may also disproportionately
affect minority and lowincome students, who are more
likely to be poorly prepared
academically, the UNM economists concluded.

More needy than


before
The Commission on Higher
Education study said funding
for the states need-based

grant program has deteriorated and federal support has


declined over the years, so students have come to rely more
on loans.
As a result, students from
New Mexicos lowest income
families (have been left) more
needy than before the state
Lottery Scholarship was implemented.
Jesse Mathews is a sophomore at Eastern New Mexico
University thanks in part to
the lottery scholarship.
All I had to do was just to
maintain a 2.5 GPA and it hasnt been hard to maintain it at
all, said Mathews, a music
education major who graduated from Carlsbad High School
in Carlsbad.
Along with the free tuition,
he has received other scholarships and a federal Pell Grant
to pay for student fees, his
dormitory room and meals. He
said he still would have gone to
college had he not received a
lottery scholarship.
There were some times in
high school I really considered
dropping out, but college was
always a dream of mine.
After finishing ENMU and
attending graduate school,
Mathews would like to help
revive the music program in
the Carlsbad public school system.
He was aware of the debate
over the lottery scholarship
program.
I would have been eligible
if it had been needs-based,
Mathews said. But I hope
they dont change it. I believe
everybody should be able to
benefit. It really is a blessing
for a lot of people.

ALBUQUERQUE JOURNAL

Lottery a Big Draw in Some Poor Areas


from PAGE 5

$10,000 a year was $520, compared to $338 annually for


households with incomes over
$100,000, the survey concluded.
A study commissioned by
the New Mexico Lottery found
that people earning $25,000 a
year or less didnt play the lottery more than other income
groups.
But data from the 2000 U.S.
Census and the New Mexico
Lottery for fiscal year 2004
show the lottery is a powerful
draw in some of the states
poorest counties.
McKinley County, which
had the states lowest per-capita annual income at $9,872,
spent more than $5.6 million
on lottery tickets. That is
about $76 per county resident.
Luna County, the second
poorest with a per-capita
income of $11,218, had lottery
sales of more than $2.4 million
$97.99 per resident.
Guadalupe County, third
poorest, had lottery sales of
more than $1 million $227
per resident.
Cibola County, fourth poorest, had lottery sales of $78.58
per resident.
By contrast, residents of Los
Alamos County, which had the
highest per-capita income with
$34,646, spent $53 apiece on
lottery tickets. In Santa Fe
County, the second wealthiest,
per-capita lottery spending
was $62.46. In Bernalillo County, which had the third highest
per-capita income, annual
sales in 2004 amounted to
about $71.42 per resident.
Lottery officials say some
New Mexico counties had
higher sales because they are
near another state or a major
interstate where tourists or
other out-of-state residents
stop for fuel or other purchases.
A 1996 study by the New
Mexico Department of Health
showed the lottery was the
most popular form of gambling among New Mexicans
surveyed.
Three percent of the callers
to the New Mexico Council on
Problem Gamblings hotline in
the third quarter of 2004 said
playing the lottery was their
favorite type of gambling.
Nearly half the callers said
they played the lottery, with 23
percent saying they often
bought lottery tickets.
A report to the National
Gambling Impact Study Commission in 1999 showed the top
5 percent of players accounted
for 54 percent of the total
sales.
The heaviest lottery players
tend to be middle-aged males
and are nearly twice as likely
as the general population to
lack a high school diploma, the
report said.

A winning reputation
Its a Powerball Wednesday
and the jackpot has climbed to
more $127 million.
Since 1999, John Brooks
Supermart #1 has been in the
top 10 retailers in the state
with the highest overall sales.
More than 1,100 retailers sell
tickets.
The store, at 12th and Cande-

PAT VASQUEZ-CUNNINGHAM/JOURNAL

A clerk keys in an order for a Powerball ticket. Per-capita lottery sales in New Mexico have
climbed from $49 in 1997 to $79.52 in fiscal year 2004.

BY THE NUMBERS
$148 million

$85.2 million

$35.9 million

$27.7 million

N.M. lottery sales


in fiscal year that
ended June 30, 2004

Amount paid out


in prizes (including
free tickets)

Lottery scholarship
fund

Expenses of running
lottery

ODDS OF WINNING
(Approximate odds per $1 of play)
ROADRUNNER CASH

POWERBALL

1 in 278,256

1 in 120,526,770

Odds of winning top prize

Odds of winning jackpot

1 in 66

1 in 36

Overall odds of winning a prize

Overall odds of winning a prize

Source: New Mexico Lottery

HISTORY OF LOTTERIES
c.100-44 B.C.: Form of lotteries dates back to Caesar
100 B.C.: The Hun Dynasty
in China creates keno. Funds
raised by lotteries were used
for defense, primarily to
finance construction of the
Great Wall of China

1700s: Benjamin Franklin


uses lotteries to buy cannons
for Revolutionary War
1878: All states in U.S.
except Louisiana prohibit lotteries, either by statute or
constitution

1964: New Hampshire Legislature creates state lottery,


the first legal lottery in the
United States in the 20th
century. It is tied to horse
races to avoid 70-year-old
federal anti-lottery statutes.
1996: New Mexico Lottery
begins sales

Source: North American Association of State and Provincial Lotteries

laria near downtown Albuquerque, sits just east from a


bingo parlor and across the
street from two package liquor
stores.
This store has sold
$1,255,944 in winning lottery
tickets, a sign at the liquor
department boasts.
Tony Gallegos walks out of
the store clutching only a
Powerball ticket.
Hes a regular lottery player,
but still hasnt struck it rich.
Ive won $4, and $11
before, he said, but I still
have hope.
Because of the stores reputation, people from all over
town head there to buy tickets.
One gentleman came from
the Heights because he looked

us up on the Internet (and saw


our record), a cashier tells a
customer. But you know,
youll win if its your time to
win.

A favorable climate
Lotteries across the country
and the District of Columbia
generated nearly $49 billion in
sales in fiscal year 2004. The
first was created 40 years ago
in New Hampshire.
It took New Mexico decades
to join the crowd.
As far back as the mid-1960s,
New Mexico politicians were
pitching lottery proposals. But
none got very far.
Weve tried these lottery
bills before, State Senate

floor leader Tibo Chavez, DValencia, said in a news story


published in February 1967.
I dont think the people of
New Mexico are ready to
resort to lotteries because of
their moral makeup, he said.
Based on our tradition, based
on our background, there has
never been a great response to
gambling proposals.
Lottery proposals arose
again in the mid-1980s, but
died after drawing criticism
from church groups.
Billed by then-Sen. Manny
Aragon, D-Albuquerque, as a
ticket to boost state government income without raising
taxes, the lottery was characterized by one Republican legislator as a golden octopus

that would create no new


wealth and hurt legitimate
business.
In a letter to then-Gov. Garrey Carruthers, 40 members of
the board of directors of the
New Mexico Conference of
Churches urged him to veto
legislation in 1987 that would
have created a sweepstakes
lottery that tied winning numbers to horse races.
Such a lottery would encourage fantasies of instant wealth,
the letter said. Carruthers ultimately vetoed the measure.
By the 1990s, the political
climate had warmed. A Journal opinion poll, for instance,
showed nearly 65 percent of
those surveyed said the state
should have a lottery.
In 1994, voters approved the
lottery by passing a constitutional amendment. The state
Supreme Court nullified the
vote because the lottery question had been coupled with
another gaming measure on
the ballot, an unconstitutional
practice known as logrolling.
But the Legislature sensed
the swing in public opinion and
months later approved another
lottery measure, which was
signed in 1995 by Republican
Gov. Gary Johnson.

An eye on profits
Initially criticized for excessive operational spending, the
lottery has since cut administrative costs by more than
$3 million annually.
The number of employees
about 62 has stayed the
same while proceeds to state
government have increased 67
percent since the first fiscal
year of operations.
Yet the amount returned to
the state as profits is still less
than 25 cents on the dollar,
compared to a national average about 33 cents.
Shaheen and others say New
Mexicos operational costs are
higher because vendors who
provide online games and other services charge more here
than in other states.
Were going to have higher
vendor fees because we
have a lower volume in sales
and they have to have a profit
margin, Shaheen said.
What the future holds is anyones guess.
With rising gasoline prices,
lottery officials have noted a
decline in sales of instant
scratcher tickets, which tend
to be impulse buys at convenience stores or gas stations
when purchasers have extra
dollars after filling up the gas
tank.
Shaheen said the advent of
legalized Indian gaming also
has had an impact.
Other factors affecting
future sales include the fact
that the state isnt expecting a
major population growth.
And were limited to the
types of games, limited by law
what we can do, he said.
As a result, theres renewed
talk of launching the fastpaced game of keno, which lottery officials once estimated
could add another $4.5 million
a year for education.
A bill to expand the lottery
to keno was rejected by lawmakers in 2001. Opponents
said the game was too addictive.

LIGHTNING STRIKES

Delores
Walker
Part 2
When it came to the
New Mexico lottery,
Delores Walker was no
big spender.
For the past two years,
shed head to the nearby
Circle K store on North
Main Avenue twice a
week and buy a $5
Powerball and a $5
Roadrunner Cash ticket.
For the Aug. 26 drawing, she splurged and
spent $10 on each game.
When Walker returned
to the store the next
morning and presented
her tickets, the cashiers
eyes got big as saucers.
Im going what did I
win, thinking it was like
$500 or something,
Delores Walker recalled.
Maam, you won the
whole thing, the cashier
said.
Youre kidding,
Delores Walker said.
The cashier put the
ticket down in front of
her, showing $290,000 as
the payoff.
Does that help you to
believe? she asked.
The winnings have
allowed Delores Walker
to quit her job of six
years at Desert Motors in
Roswell and care for her
husband.
The Walkers have paid
off medical bills and
bought a new pickup
truck and theres enough
money left so that they
can breathe a little easier about future finances.
With a niece attending
college on a lottery scholarship, she hasnt
stopped betting on the
lottery.
I say, You never
know, lightning could
strike twice.

ABOUT THIS
SERIES
DAY ONE: Gambling explodes
after New Mexico takes a
chance.
TODAY: Lottery sales are
booming.
DAY THREE: A slot subsidy revs
up horse racing.
DAY FOUR: Casino baron is a
friend of Gov. Bill Richardson.
DAY FIVE: Problem gamblers are
left largely to chance.
DAY SIX: The economic winners
and losers of gambling.
DAY SEVEN: Regulation, New
Mexico-style: Casinos, hot dogs
and pizza parlors.
DAY EIGHT: Another crossroads.
Find this series on the Web
at abqjournal.com.

REPORTING THE PROJECT


19-year veteran of the Journal staff, Colleen Heild
joined the investigative team in 1996.
A native of Tucson, she began her career at the
Journal covering federal courts. That led to more indepth reporting on topics such as the fatal shooting
of a Mountainair policeman in 1988 and the states
foster care system.
More recently, Heild assignments have included
reports on convicted sex offenders in New Mexico,
questionable procurement practices by state officials
and the controversial rewidening of N.M. 44, now
U.S. 550.

eff Jones, 35, covers gambling issues for the Journal, including tribal gaming, horse track/casino
operations and the business of horse racing.
Prior to taking over those responsibilities after his
assignment to the state desk in 2003, he covered
the police beat in Albuquerque.
Jones is a 1992 graduate of the University of Northern Colorado in Greeley.

homas J. Cole joined the Journal in 1992 and has


been an investigative reporter since 1996. His work
at the newspaper has won numerous state, regional
and national awards.
Cole, 50, previously worked for The (Santa Fe) New
Mexican and United Press International in Ohio, West
Virginia and Pennsylvania.
He is a native of Ohio and a graduate of the Journalism School at Ohio State University.

HEILD

ike Gallagher has been an investigative reporter for the


Albuquerque Journal since 1986.
A University of New Mexico graduate, Gallagher has been
a reporter in New Mexico since 1976. He has covered a
wide range of issues, including organized crime, political
corruption, drug smuggling, telecommunications, medicine
and state prisons.
His series on illegal and so-called gray area gambling in
the early 1990s was often cited during legislative hearings.

COLE

M
JONES

GALLAGHER

ALBUQUERQUE JOURNAL

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TUESDAY MORNING, JANUARY 4, 2005

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PART 3

Copyright 2005, Journal Publishing Co.

Daily 50 cents

THE BIG BET

Slots Keep Ponies Running


Sport of Kings rebounded with creation of racinos and infusion of cash
Third in a series
BY THOMAS J. COLE
Journal Investigative Reporter

magine youre a factory owner.


Lets say you make Hula-Hoops,
but fewer and fewer people want
to buy them because of fading
popularity.
Suppose then that state government, concerned your business may
close and people will lose jobs,
comes up with a plan to subsidize
your factory, making it profitable
for you to keep on making HulaHoops.
Finally, picture this: Over five
years, the subsidy totals nearly $118
million.
A good deal? You bet. And thats
the deal that owners, trainers,
breeders and riders of racehorses
got when New Mexico lawmakers
approved slot machines at tracks.
For every dollar gamblers lose on
the machines, 20 cents goes to subsidize race purses, the cash prizes
awarded based on how a horse finishes.
Horse owners get the biggest
share of the purses, but trainers,
breeders of horses bred in the state
and jockeys also share in the pie.
The state approved slot-machine
gambling at tracks in 1997 and the
gambling began two years later.
There is no dispute that the
machines have been good, even
great, for the horse-racing industry.
From 1998 to 2000, the number of
jobs directly related to the industry
jumped 180 percent, to 10,200,
according to one estimate.
New Mexico has five tracks now
and that number could jump to at
least eight in coming years. There
are more race days, and the amount
of money wagered on races is up.
Slot machines revived a dying
industry, says India Hatch, executive director of the state Racing
Commission.
In 2003, the purse subsidy accounted for 76 percent of all the prize money that went to horse owners and others.
And the money keeps pouring in.
The purse subsidy is projected to
grow more than 19 percent, from
$29.4 million to $35.1 million, in the
fiscal year ending this coming June
30.
But when is a lot of money
enough?
Some of that money now going to
race purses could be used by the
state to better educate children, put
more cops on the road or even prop
up another struggling industry.
Former state Rep. Max Coll, a
Santa Fe Democrat who fought
against slot machines at tracks, says
its time to reassess the purse subsidy.

RICHARD PIPES/JOURNAL

Jockey Ken Tohill, riding Barbarays Claim, left, finishes fourth in a race at Sunland Park. The ex-California jockey says he is making money and having
fun being a part of New Mexicos racing revival.
The question is how much more
will you bite the public for to support the industry, Coll says.
Through June of last year, slot
machine players at tracks and casinos had left behind $589.4 million
the net win for the racinos.
In addition to the 20 percent that
goes to purses, the state gets a 25
percent cut of what gamblers lose,
with the money going into its main
checking account to help pay for
government services.
Track owners keep the other 55
percent, but have to pay operating
expenses for the casinos, including
machine costs and payroll.
Each of the four tracks that operated in 2003 made a profit, according to their financial statements.
Sunland Park, the states most
successful track, reported net
income of $25.8 million, with slot
machines producing 86 percent of
its revenues. Net income for the other tracks ranged from $781,000 to
$2.9 million.

The revival
The racing industry was in trouble in the 1980s and for much of the
90s.
The industry was rocked by alle-

gations of horse drugging and other


corruption in the 80s, and attendance at racing dropped steadily in
the 90s.
The industry repeatedly tried to
convince the Legislature that it
needed slot machines to survive.
It succeeded in March 1997 as
part of a deal that settled a long-running legal dispute over Indian casinos and also put slot machines in
veterans and fraternal clubs.
Rhode Island first introduced
slots at tracks in 1993. West Virginia
followed, and New Mexico is one of
seven states today with racinos.
Three more states have plans to
make the move.
Doug Reed, director of the University of Arizonas Race Track
Industry Program, says, New Mexico was about at the end of its line
when slot-machine gambling began
in 1999.
Now its a respectable mid-level
(quality) type of racing, Reed says.
Some figures:
Horses will race at tracks 281
days in 2005, up from 194 in 1998.
The amount of money wagered
on racing was $153.6 million in 2003,
See RACING on PAGE 8

THE BREEDER

THE JOCKEY

Mac Murray

Ken Tohill

Before New Mexico tracks got slot


machines, Mac Murray and his wife, veterinarian Janis Spencer Murray, had a farm in
Utah to breed racehorses.
Today they operate MJ Farms near Veguita, about 40 miles south of Albuquerque.
It was a simple economic decision to make
the move to New Mexico in 2000.
First, theres more purse money for horse
racing. Second, theres added purse money
for owners and breeders of winning New
Mexico-bred horses. Third, on each day that
it offers racing, a racino must have at least
four races restricted to New Mexico-bred
horses.
You have a chance of owning a racehorse
here and making money, Mac Murray says.
A lot of other places, its just a hobby.
He says New Mexico has probably the
best program in the United States as far as
breeders awards and purse structure.
A survey conducted by the New Mexico
Horse Breeders Association in 2002 found
that MJ Farms was one of 26 breeders to
relocate to New Mexico in the few years
immediately after slot-machine gambling
began at racetracks.
The association says its membership shot
up from 672 in 1998 to 1,247 in late 2004.
MJ Farms is an impressive operation,
spread over 90 acres in the bucolic Rio
Grande bosque. Murray says he and his wife
have invested $2.5 million in the property,
which includes a large home, pens and a
neatly kept barn.
On a day last November, about 140 horses

Horse-racing jockey Ken Tohill was about


to hang up his crop a few years back.
Tohill had been riding for more than two
decades, mostly at Northern California
tracks. Competition was tough and the
pressure to win intense, he says.
The moneys good there but the expenses
are so high for everybody, Tohill says. It
just takes a lot of fun out of it. You cant
make a mistake. You will be replaced.
But in the summer of 2003, a friend convinced Tohill to make a trip to New Mexico
and check out the racing here. He stayed.
People enjoy what they do here and its
fun to be a part of, Tohill says. Everybody
has so much a better outlook on our industry.
Slot machines are responsible for putting
some of the joy back in horse racing in New
Mexico.
Youre running for real money because
of the (track) casinos, Tohill says. Im
making a better living. Its been one of the
better moves Ive made.
Tohill began racing at Albuquerque
Downs but competed last year at all New
Mexico tracks.
At Sunland Parks 2003-04 meet, he won
69 thoroughbred races, tying for first in that
category. He topped all thoroughbred riders
with victories in five stakes races, one with
a purse of nearly $133,000.
Tohill says he grossed about $160,000 last
year, with the major part of that income
coming from racing at Sunland Park. He

GREG SORBER/JOURNAL

Mac Murray says the revival of horse racing


has been good for the industry, as well as for
all of New Mexico.
were on the farm, many of them pregnant
mares.
Murray says he took in an average of just
over $20,000 a horse at a recent sale of 14
quarter horses bred at MJ Farms. His top
stallion takes in about $500,000 a year in
stud fees. The Murrays also race some horses.
There is a trickle-down economic benefit of
having MJ Farms in New Mexico.
Murray says he employs eight to 10 people
full-time, with an annual payroll of $250,000.
The farm also has to buy goods, like feed, fuel
and equipment. Murray says he spends
$300,000 a year just on feed.
You cant believe the (economic) multiplier effect in horse racing, Murray says. It
helps everybody. Its a big boost for the state,
tax dollars. It helps you and me.

Pregnant quarter horse


mares graze
at MJ Farms
near Veguita,
about 40
miles south of
Albuquerque.
Mac and Janis
Spencer Murray moved
their horsebreeding operation from
Utah to New
Mexico to
take advantage of the
rebirth of the
states racing
industry. The
rebirth is due
to the legalization of slot
machines at
tracks.

GREG SORBER/JOURNAL

RICHARD PIPES/JOURNAL

People enjoy what they do here and its


fun to be a part of, jockey Ken Tohill
says. Everybody has so much a better
outlook on our industry.

races four days a week and works out horses six mornings a week. His expenses eat
up about 40 percent of his pay.
Tohill talked about his move to New Mexico before racing on a day last November at
Sunland Park. He rode six races that day
but never finished better than fourth place.
It happens occasionally. No biggie, he
said afterward in the jockey room. These
are the days that make you appreciate the
good days.

ALBUQUERQUE JOURNAL

Racing Rises on a Tide of Slot Revenues


from PAGE 7

up from $106.8 million in 1999.


Purse money was projected to
total $35.3 million in 2004, up from
$9.2 million in 1999.
The average purse was projected
to be $13,659 in 2004, up from $4,798
in 1999.
In the two years after slot gambling began, purses at Sunland Park
grew faster than at any other track in
North America, according to the Daily Racing Form.
The average purse at Sunland
was projected to be more than
$20,000 in 2004, up from $3,410 in
1999.
Slot-machine revenues accounted
for 91 percent of the purse money in
2003 at SunRay Park in Farmington,
83 percent at Sunland Park, 72 percent at Ruidoso Downs, 51 percent at
the Downs at Albuquerque and 38
percent at the State Fair meet.
Slot machines accounted for 79
percent of the tracks $188.1 million
in revenues in 2003.
A 2001 study estimated that payroll for jobs directly related to the
horse-racing industry shot up from
$6.5 million in 1998 to $18.8 million in
2000, with jobs going from 3,633 to
10,200. Jobs directly related to the
industry include people employed by
tracks, as well as owners, trainers,
breeders, jockeys, farm workers and
others.
Tracks reported their attendance
was 1.1 million in 2003, up from
under 400,000 in 1998. However,
exact attendance is hard to monitor in
part since admission to racing is free
and casino-only patrons are free to
move in and out of the racing area for
drinks, food or other reasons.
A fifth racino opened in Hobbs in
November, and there is talk about
more racinos in Santa Fe, Raton and
Tucumcari.
Reed says the quality of horse racing in New Mexico has improved
since slot-machine gambling began.
Bigger purses equal better horses
competing, he says. Race fields are
fuller, and there are more top-quality
races, like stakes races.
By having a better product, you
can sell it outside of New Mexico
through simulcast wagering, Reed
says. Bettors are looking for full
fields and quality horses.

The purse money


Rep. Luciano Lucky Varela, vice
chairman of the Legislative Finance
Committee, says he doesnt expect

RICHARD PIPES/JOURNAL

Bruce Rimbo, president and partowner of the Ruidoso and Hobbs


racetracks, says the revival of the
racing industry has been good for all
New Mexicans because of the creation of jobs, increased taxes and
other economic benefits.

RICHARD PIPES/JOURNAL

Ken Tohill, aboard Barbarays Claim, prepares to leave the paddock for a race at Sunland Park.

BY THE NUMBERS

$589.4 million

$324.2 million

Amount of money taken


in by slot machines at
horse-racing tracks from
start of machine gambling in late 1999
through June 30

Track owners cut of


take, from which operating
expenses must be paid

$147.4 million
State governments share
of take. The money is used
for general
government purposes

$117.9 million
Amount of slot take used
to
subsidize race purses to
benefit owners, trainers,
breeders and
jockeys

Source: New Mexico Gaming Control Board

the Legislature to reassess the subsidy for horse-racing purses this year
because government is relatively
flush with cash, in large part because
of increased taxes due to higher energy prices.
But Varela, a Santa Fe Democrat,
says the purse subsidy could become
an issue in 2006 if, as he expects, government faces a money crunch as it
feels the full brunt of personal
income tax cuts enacted in 2003.
Were going to have to look at
some of these revenue sources to

meet government needs, he says.


The issue will be the health of the
horse-racing industry and whether it
can be sustained with fewer dollars,
allowing some of the purse subsidy to
be diverted to other programs, Varela
says.
We saved a dying industry, he
says. We might have been overaggressive in doing it.
Of the states that have legalized
slot machines at racetracks, New
Mexico sets aside the biggest percentage for the industry, says Reed of

the University of Arizonas Race


Track Industry Program.
The days of the large percentage
to the industry are gone, Reed says.
There are many demands on government. And, he says, the industry
needs to recognize those demands.
You got to look at the other side of
the coin, Reed says. Too much of a
good thing can always come back to
bite you.
Kay Thurman, a veterinarian and
president of the New Mexico Horse
Breeders Association, says she does-

nt believe a smaller purse subsidy


would kill racing but adds she isnt
supporting a reduction.
It isnt just like the money is going
into our pockets as profits, Thurman
says.
Her fear, she says, is a return to the
days when the industry was on its
deathbed.
When we didnt have slot machines,
we didnt have racing thriving in New
Mexico, Thurman says.
The racing industry makes substantial campaign contributions to state
policy-makers and has a stable of lobbyists to try to fend off any change in
how slot revenues are divided. And
the industry has a legislative wish list
that includes more hours of slotmachine operation.
As for the 55 percent cut for track
operators, Bruce Rimbo, president
and part-owner of the Ruidoso and
Hobbs tracks, says its a good deal for
a track like Sunland Park but not
such a good deal for Ruidoso Downs.
It kind of depends on the market,
he says. Ruidoso Downs, with a net
income of $804,000 in 2003, competes
against the nearby Mescalero Apache
casino.
Thurman and Rimbo both point to
the trickle-down effects of the industrys rebirth more jobs and more
taxes for government, for example.
Legislators need to look at the
original intent of putting slot
machines at tracks, Rimbo says.
That was to have a strong horse-racing industry. Heaven knows its done
that.

The Little Guys of N.M. Gambling


Veterans, fraternal
organizations take
smallest slice of
gaming pie

and veterans.
Veterans are our priority,
Post 49 Game Room Manager
Tommy Thompson said. We
support Blind Veterans of New
Mexico and help veterans with
hospital bills.

BY MIKE GALLAGHER

Scared by paperwork

Journal Investigative Reporter

Before there were Indian


and racetrack casinos, New
Mexico had charitable gaming
a rag-tag combination of
church bingo, school raffles
and casino nights at the American Legion Post.
Proceeds were just as scattered, funding everything
from civic groups to Christmas gifts for poor children.
It all looked pretty innocent,
but it was a mess.
Veterans and fraternal
clubs were using so-called
gray area video poker
machines.
Charitable bingo had been
transformed into a profit center for some commercial bingo
operators.
The now-defunct Governors Organized Crime Prevention Commission in 1987 and
1994 found numerous abuses
of the states bingo law and
fraudulent charities.
Commercial bingo hall
operators introduced electronic pull-tab and bingo machines
that were ultimately outlawed
by the state Supreme Court.
But it was the existence of
charitable gaming so-called
Las Vegas nights, in particular
that provided the slim legal
basis for casinos on Indian
land.
The legal argument was that
since the state permitted a
form of casino gaming, it could
not prevent Indians from running casino operations under
federal law.
When the fight was on for
legalized gaming, veterans and
fraternal clubs were key allies
of the Indian tribes and racing
interests.
While the tribes and the
tracks had money, the clubs, as
they were known in the Roundhouse, had warm bodies from
all over New Mexico to call on
legislators and pack committee
rooms.

Helping out vets


Today, 61 veterans and fraternal clubs around the state

RICHARD PIPES/JOURNAL

The Moose Lodge in Truth or Consequences, headed by Ken Johnson, contributed $125,000
to charities from slot machine revenues.

BY THE NUMBERS

61
Number of licensed clubs

$56
Average daily net win for a machine in club

$1.06 million
Amount club gaming paid the state in
fiscal year 2004
Source: New Mexico Gaming Control Board
out of 120 that are eligible
have electronic gambling
machines. Combined, they
comprise the smallest market
share of New Mexicos gaming
triumvirate, with just over 600
machines.
And the daily handle for
each machine is much lower
than originally predicted.
When the Legislature
approved gambling for the
clubs, estimates ranged that
each machine would garner a
net win of $120 or more each
day.
The daily net win for club
machines is less than $60 per
day, compared to more than
$200 a day per machine at
racetrack casinos.
In fiscal year 2004, the clubs

paid the state a little more


than $1 million on net wins of
more than $10 million.
In comparison, the racetrack
casino at Sunland Park pays
the state more than $1 million
a month.
But the clubs point out that
in fiscal 2004 they also contributed $1.9 million to charities.
State law dictates how the
money is spent: 10 percent to
the state, up to 35 percent to
lease machines, at least 18 percent to charity and 22 percent
for game room operations,
including bookkeeping and
management. The remainder
can go to the clubs upkeep.
Ken Johnson, governor of
the Moose Lodge in Truth or

Consequences, says the money


for charitable purposes is
important.
Weve given $125,000 to
charities and scholarships.
Theres not a chance we could
have done that without gaming.
Recipients include the local
domestic violence shelter,
sports programs and 26 college scholarships.
With federal cutbacks, we
have more organizations coming to us all the time, Johnson
said.
At American Legion Post 49
in Albuquerque, the situation
is similar, with money going to
support American Legion
baseball, high school ROTC,
programs for unwed mothers

Clubs are allowed a maximum of 15 machines, but nearly half the eligible clubs dont
have any.
Bill Previtti, past president
of the association representing
the clubs, cites two reasons:
Paperwork scared a lot of
them off, Previtti said. And a
lot of them just dont have a
building with enough room to
have a separate game room.
Ken Johnson said, When we
first started, the paperwork
was unbearable. Its still a hassle.
Thompson said, When they
originally started out they
based everything on a Las
Vegas-style setup. They
required things like glass
counting tables.
Previtti said paperwork has
been substantially reduced.
When it first started all the
board members had to have
complete background checks,
he said. Now only key
employees have backgrounds
done.
Brett Woods, executive
director of the Gaming Control
Board, said relations with the
clubs have improved.
Weve had to shut down five
or six over the last few years,
but once the problems were
taken care of, we allowed
those that wanted to reopen,
Woods said.
Most of the problems
stemmed from audit issues
and commingling of operating
funds with money earmarked
by law for charities.
The relationship between the
clubs and legislators has
helped the clubs get changes
they wanted.
Initially, alcohol was banned
from the game rooms in the
clubs. The clubs got that
changed in the Legislature two
years ago although the prohibition still stands for Indian
and racetrack casinos.
This year, the clubs expect to
ask the Legislature to allow
some clubs to have more than
the maximum 15 machines.
Most clubs have only six to
eight machines. A few of the

larger clubs want to be able to


lease machines from clubs not
using their limit.
Racetrack casinos are
allowed to lease unused
machines from other tracks
and the clubs believe they
should be able to do the same.

Bingo moves
elsewhere
Bingo, once the heavyweight
of charity gaming, is a shadow
of its former self.
This year there were fewer
than 150 bingo licensees, down
from almost 300 in the mid1990s, when bingo parlors
grossed $95 million. Last year,
gross revenues for bingo run
by charities were about
$30 million before prizes and
expenses were paid.
Serious bingo players are
more likely to spend their
money at the Indian casinos.
Sandia, for example, has a bingo hall that holds hundreds of
players.
Theres no question casinos
have made an impact on bingo, said Gary Tomada, director of the states Alcohol and
Gaming Division. On-reservation bingo is still very big.
Clubs pay the state 3 percent
of their net bingo win; tribes
dont pay anything under the
compacts and federal law.
Many of the clubs that have
machines also run bingo
games.
We run a bingo and 30 to 50
people will show up, Johnson
said. It is something people
enjoy.

ABOUT THIS
SERIES
DAY ONE: Gambling explodes
after New Mexico takes a
chance.
DAY TWO: Lottery sales are
booming.
TODAY: A slot subsidy revs up
horse racing.
DAY FOUR: Casino barons hit
the jackpot.
DAY FIVE: Problem gamblers are
left largely to chance.
DAY SIX: The economic winners
and losers of gambling.
DAY SEVEN: Regulation, New
Mexico-style: Casinos, hot dogs
and pizza parlors.
DAY EIGHT: Another crossroads.
Find this series on the Web
at abqjournal.com.

ALBUQUERQUE JOURNAL

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WEDNESDAY MORNING, JANUARY 5, 2005

PART 4

Copyright 2005, Journal Publishing Co.

Daily 50 cents

THE BIG BET

New Mexico Casino Barons Hit the Jackpot


Fourth in a series
BY THOMAS J. COLE
Journal Investigative Reporter

One lives in Greece; another is a


California abortion doctor with a
racetrack. A third grew up in an
Oklahoma City orphanage; yet
another sold Fuller brushes in
Kansas.
They are members of the same
club now: owners of New Mexicos
horse-racing tracks and casinos.
Many are millionaires some
many, many times over. And their
investments in the so-called racinos
are almost certainly going to make
them richer.
Gamblers will lose about $176 million this year on slot machines at
the tracks. For the owners, its akin
to having a license to print money.
The financial stakes were clear in
2003 when four groups competed
for the state license to open the
newest track, Zia Park in Hobbs. It
was a knockdown affair with
lawyers, threats and intense lobbying.
Meet some of New Mexicos casino barons and a Santa Fe art dealer
trying for a second time to join the
club.

Stan Fulton
Fulton, through a
company called My
Way Holdings,
owns Sunland
Park, the states
most profitable
racetrack and casino, located near El
Paso.
Fulton, 73,
FULTON: Likes
resigned in 2000
from Anchor Gam- to sit in the
directors box
ing, a major U.S.
gaming company
he founded more than a decade earlier.
Anchor bought stock held by Fulton at an estimated cash value of
$240 million. Also as part of the
deal, Fulton took over ownership of
Sunland from Anchor.
I figured it would be nice to sit in
the directors box and watch the
ponies run, then go downstairs and
hand out a trophy to the winner, he
has said.
Fulton also has said his two
remaining life goals are to make
Sunland Park a world-class operation and to give away a lot of money.
He has given money to the University of Nevada, where the Stan
Fulton Building houses the Interna-

tional Gaming Institute.


He also has contributed heavily to
New Mexico State University but
has threatened to rescind his plan to
give NMSU half-ownership of Sunland Park upon his death if another
casino is permitted in the area.
Fulton lives in Greece, according
to a track spokesman.

Paul Blanchard
Blanchard, an Albuquerque contractor and developer, owns 25 percent of the Downs at Albuquerque
and 15 percent of Zia Park.
Hes also an FOB. Thats Friend of
Bill, as in Gov. Bill Richardson. The
governor appointed him to a powerful state board and he literally sits
at Richardsons right hand.
Blanchards wife is Kandace Blanchard, executive director of the
New Mexico Council on Problem
Gambling. The council is a nonprofit organization that operates a telephone help line and provides other
services for troubled gamblers.
The Blanchards have a 35,000acre ranch in northeast New Mexico
valued at $4.8 million and a home in
Albuquerques North Valley valued
at $3.9 million.
The home, formerly owned by
health-care executive Andrew Turner, is a sprawling residential and
equestrian complex and has been
jokingly called the Taj MaHorse.
Its given name is Rio Ranchito.
The couple has 15 horses at the
home. He competes in steer-roping
and she in barrel-racing.
Paul Blanchard says the decision
to get into the horse-racing industry
was primarily a business deal, but
we are horse people.

R.D. Hubbard
Hubbard owns 71 percent of the
Ruidoso Downs track and casino
and 55 percent of the Zia Park racino in Hobbs.
He has amassed $200 million or so
in wealth since his humble beginnings in a small Kansas town. His
early jobs included carrying ice for
the family ice business and selling
Fuller brushes.
He and his wife, Joan Dale, give
away millions of dollars each year
for the arts, education and other
causes in New Mexico and elsewhere.
Hubbard got into trouble in 2002
with Indiana gaming regulators
over allegations that prostitutes
entertained high rollers at a golf
tournament hosted by Hubbard at a
casino development.

He settled, agreeing to pay a


$740,000 fine and
give up his stake in
Pinnacle Entertainment, a company
he took control of
in 1991 and built
into one of the
nations top gaming
HUBBARD:
companies.
From humble
Hubbard was
beginnings,
never accused of
helping to arrange an enormous
fortune
for the alleged
prostitutes.
Hubbard, who is in his late 60s,
took control of Ruidoso Downs in
1988. As a horse owner, he had been
racing there since the 1960s. He has
helped develop a golf course and
hotel in Ruidoso, as well as the Hubbard Museum of the American
West.
We love Ruidoso and love New
Mexico, he told the Journal in 1995.

Edward Allred
Allred, longtime partner and golf
buddy of R.D. Hubbard, owns 24
percent of Ruidoso Downs and 15
percent of Zia Park.
Allred, who is in his late 60s, also
is the sole owner of the Los Alamitos Race Course in Orange County,
Calif.
But he is perhaps best known for
being a doctor.
The Los Angeles Times reported
in 2002 that Allred owned one of the
nations largest privately held
chains of abortion clinics, Family
Planning Associates Medical Group,
with offices in California and Illinois.
Allred has been dogged for the
last 25 years by comments he made
to a newspaper reporter about Hispanics and African Americans.
He said in 1980 that Hispanic
immigrants had a lack of respect
for democracy and social order. Id
set up a (abortion) clinic in Mexico
for free if I could, he said.
Allred also said, When a sullen
black woman of 17 or 18 can decide
to have a baby and get welfare and
food stamps and become a burden
to us all, its time to stop.
Asked about those comments, he
told the Los Angeles Times in 2002,
Thats just not the way I am.

John Turner and


William Windham
Turner and Windham, both of
Bossier City, La., are longtime business partners. Each owns 25 per-

cent of the Downs track and casino


and 19.5 percent of the SunRay Park
racino in Farmington.
Turner, 72, is chairman of the
board of Dimension Development
Co., a hotel development and management company. He has developed hotels in New Mexico and has
a home in Santa Fe and a ranch near
Estancia. Turner and Windham also
have a ranch near Tierra Amarilla.
I dont get there as often as I
like, Turner says. New Mexico has
always been a kind of second
home.
Windham, 47, is the former owner
of Brentwood Health Management,
a behavioral health and addiction
medicine company. He says he also
has investments in real estate and
oil and gas.
Windham and Turner were among
a group of investors who purchased
Albuquerque Downs and Santa Fe
Downs in 1994. The Santa Fe track
was sold a year later to Pojoaque
Pueblo.
Windham and Turner became
shareholders in the Farmington
track after slot-machine gambling
began in 1999. When we took it
over, it was on the verge of not being
able to pay its bills, Windham says.

O.D. McDonald
McDonald owns 25 percent of
Albuquerque Downs and is president of Westland Corp., an Albuquerque owner of commercial property.
He and Paul Blanchard, another
investor in the Downs, have been
business partners since 1992 and
have interests in several commercial properties.
McDonald, in a report filed with
the Racing Commission in 1999, said
he had a net worth of about $20 million.
He is credited with helping Blanchard recover from financial troubles in the 1980s and early 90s.
McDonald, 82, is a law school
graduate. He grew up in an orphanage in Oklahoma City and later
attended the Naval Academy in
Annapolis, Md., Blanchard says.
He epitomizes the officer and
gentleman, Blanchard says.
He says McDonald is a longtime
horse-racing fan and was the driving force behind their decision to
buy into the Downs in 1999.

since teamed with


Jemez Pueblo to
propose a tribal
casino between Las
Cruces and El Paso.
Because the casino would be located
off the Jemez
reservation, which
is northwest of
PETERS:
Albuquerque, it
Working to
must be approved
get new tribal
by the Interior
casino
Department and
Gov. Bill Richardson. Peters and the pueblo would
share in profits.
Peters is a Richardson campaign
supporter and friend. He was part
of the Richardson entourage at the
De La Hoya-Hopkins boxing match
in Las Vegas, Nev., last fall.
Peters is the biggest art dealer in
Santa Fe and one of the nations
leading dealers in American art,
including the works of Georgia
OKeeffe and Frederic Remington.
He also is the owner of some of the
most exclusive business properties
in Santa Fe, the main shareholder in
a bank and the owner of several
restaurants.
I love the process of figuring out
how to make businesses work,
Peters said in 2003. Even though I
do a lot of other things, theyre on
the side of art. The arts the core.
Peters, who is in his mid-50s, was
worth more than $115 million as of
August 2003.
Editors Note: For a profile of Hubbard originally published Sept. 15,
2002, and a profile of Peters originally published Aug. 10, 2003, go to
ABQJournal.com/news/gambling/.

Jerry Peters: Wannabe


Peters failed in his bid to obtain
the state license to operate the
Hobbs track and casino, but has

ABOUT THIS
SERIES
DAY ONE: Gambling explodes after
New Mexico takes a chance.
DAY TWO: Lottery sales are booming.
DAY THREE: A slot subsidy revs up
horse racing.
TODAY: Casino barons hit the jackpot.
DAY FIVE: Problem gamblers are left
largely to chance.
DAY SIX: The economic winners and
losers of gambling.
DAY SEVEN: Regulation, New Mexicostyle: Casinos, hot dogs and pizza
parlors.
DAY EIGHT: Another crossroads.
Find this series on the Web at
abqjournal.com.

This Friend of Bill Is Riding High


Paul Blanchard
followed a winding
road to gambling
success

BY THOMAS J. COLE
Journal Investigative Reporter

Just five years or so into the


gambling game, Paul Blanchard is part-owner of the
Downs at Albuquerque racetrack and casino and the new
Zia Park racino in Hobbs.
A contractor and developer,
hes worth millions.
Hes also a member of Gov.
Bill Richardsons inner circle
and a major campaign contributor. The governor appointed
Blanchard to the state Board
of Finance, where they sit next
to one another.
Blanchard and Richardson
have hunted together, gone to
boxing matches and shared
after-dinner cigars.
Its fair to say things have
turned around for Paul Blanchard.
In the real-estate downturn
of the late 1980s and early 90s,
creditors and state and federal
tax collectors dogged him, filing lawsuits and tax liens seeking hundreds of thousands of
dollars.
Blanchards journey from
the IRS doghouse to the
Roundhouse is a story, friends
say, of a hard-charging dealmaker with a personality that
many people warm to.
To be successful in business

EDDIE MOORE/JOURNAL

Albuquerque businessman Paul Blanchard, left, sits at the right


hand of Gov. Bill Richardson at meetings of the state Finance
Board. Blanchard, part-owner of two racetracks and casinos, is
a close friend of Richardson and a political ally.
or anything else, you have to
sell yourself. He has a lot of
confidence, says Jamie Koch,
a University of New Mexico
regent and Democratic fundraiser who has known Blanchard for a decade.
Others find Blanchards persona off-putting. One veteran
lobbyist describes him as
obnoxious, pushy and loud.
Those who know the former
UNM middle linebacker also
use the word aggressive to
describe him.
Hes a very driven guy,
Koch says. Hes just a real
hard-charging person, like a
horse. He doesnt know anything but full speed.
Blanchard once got in a bar

fight; once, he threatened


another man over a construction bill. He says he was provoked both times.
But whether its because hes
a Richardson friend, a genuinely good guy or for other
reasons, not many people who
have known Blanchard in business or government had an
unflattering word to say about
him.
And no one was willing to
say it on the record.

A step into the arena


For most of his adult life,
Blanchard conducted his personal and business affairs
largely out of the public eye.

He knew powerful politicians like ex-Sen. Manny


Aragon, D-Albuquerque, and
former Republican Gov. Gary
Johnson but says he was
busy with work and politics
had no attraction for me any
way, shape or form.
He says he was apolitical. He
made a couple of small campaign contributions to Sen.
Pete Domenici, R-N.M., in the
1990s.
Blanchard took a step into
the public arena in 1999 when
he purchased an interest in
Albuquerque Downs, a political machine of sorts that
makes substantial contributions to politicians and lobbies
the Legislature, Governors
Office and gaming regulators.
But the big step came when
he decided to get involved with
Richardsons campaign in
2002.
Blanchard spoke about his
relationship with the governor
over lunch last fall at a restaurant not far from the Capitol.
He says he was attracted to
Richardson in part by his
rsum former Energy secretary, one-time ambassador to
the United Nations and former
congressman.
Us having Richardson was
the best opportunity for this
state to get somewhere, and
its proven out, he says. It
was like being able to have
(Microsoft founder) Bill Gates
to figure out all of our technology stuff or having (pro basketball star) Shaquille ONeal
be able to come in and play
center for the Lobos. When are

you ever going to get that


opportunity?

Middle of the road


Blanchard says he also was
attracted to Richardson
because hes pretty much
middle of the road a probusiness Democrat, not a taxand-spend liberal.
I dont like the left. I dont
like the right and I kind of like
the middle, says Blanchard,
whose listed party on his voter
registration is DTS, or
declined to state.
He says he had a campaign
contribution check in hand
when he first met Richardson
in late 2001 or early 2002 at an
arranged meeting at the office
of Albuquerque lawyer Paul
Bardacke, a former state attorney general and another
Richardson pal.
Richardson spotted him at a
distance in the hallway and
gave him his shadow-boxing
routine, a familiar sight to
those who know Richardson.
Blanchard returned the gesture. It was love at first jab.
It was one of those silly little deals that sort of make you
feel comfortable, Blanchard
says.
Richardson put Blanchard
on his fund-raising committee.
He later made him campaign
finance chairman and a director of the governors political
action committee, Moving
America Forward.
Blanchard and his wife
donated $25,000 to Richardson
and Albuquerque Downs

kicked in another $100,500.


Blanchard also has made
contributions in recent years
to New York Sens. Hillary
Clinton and Charles Schumer
and Connecticut Sen. Joseph
Lieberman, all Democrats.
After the election, Richardson named Blanchard to the
transition team and appointed
him to the state Board of
Finance, which supervises
government money matters,
including cash deposits and
securities.
Blanchard says Richardsons
mandate to him as a Board of
Finance member was simple:
Dont let the state be
screwed.

All should prosper


In truth, Blanchard isnt just
a Richardson friend; hes a
best friend.
Theyre like the best of buddies, says former Sen.
Aragon, now president of New
Mexico Highlands University
in Las Vegas and himself a
Blanchard friend.
Blanchard describes his personal relationship with
Richardson this way: Its fair
to say were pretty close.
Blanchard was part of the
Richardson entourage at the
De La Hoya-Hopkins boxing
match in Las Vegas. He sat
courtside with the governor at
a womens pro basketball game
in Albuquerque.
They have cut red meat
together at Yannis MediterSee THIS on PAGE 10

10

ALBUQUERQUE JOURNAL

This Friend of Bill Is Riding High


The charges against Blanchard
were dismissed.
In another incident in 1992, a carpet
store employee reported to police
that Blanchard had threatened in a
telephone conversation to beat him
up.
Blanchard says he made the threat
because he was owed hundreds of
thousands of dollars for constructing
the store and because the employee
had verbally abused a woman in Blanchards office.
No charges were ever filed in the
case.
Blanchard says the two cases were
isolated incidents and arent a reflection of his character.
Im not a thug, he says.

from PAGE 9

ranean Bar & Grill in Albuquerques


Nob Hill neighborhood.
Blanchard traveled with Richardson to the opening of the Hobbs
tracks and casino. He says theyve
also been horse riding, elk hunting
and clay-pigeon shooting. They share
a love for cigars.
The guys a mans man, no question about it, Blanchard says. Hes
the real deal.
Blanchard says he and Richardson
share the philosophy that things
should be fair and that all should
prosper.
Richardson was unavailable for an
interview prior to publication deadlines for this series.

Finding prosperity

Winning the big ones


Blanchard has benefited from some
actions of the governor and his
administration.
Shortly after taking office in January 2003, the Fair Commission, made
up of Richardson appointees,
scrapped a plan to put the operation
of the Albuquerque Downs out to
competitive bid. The Downs is part of
the fairgrounds and leased to Blanchards group.
Later that same year, it was
Richardsons hand-picked Racing
Commission that gave the coveted
licensing for the Hobbs track and
casino to a partnership that included
Blanchard.
The governor last year signed a law
to take up to an estimated $1.5 million
a year in tax revenues from the
states horse-racing tracks and give it
to the state Fair Commission for
improvements at the fairgrounds.
But Richardson vetoed language
sought by Aragon and Blanchard
that would have allowed the Fair
Commission to enter into a lease for
up to 25 years with the operator of
the Downs.
Richardson also sided with horse
owners and trainers in a dispute with
the Downs last summer over the
number of racing days scheduled for
this year.

I get screwed
so much
Blanchard says Richardson told
him he vetoed the longtime lease language because Blanchard hadnt
come to him to explain the proposal.
Blanchard says it doesnt make
sense for his group to make significant improvements to the Downs
without the guarantee of a long lease.
He says he told Richardson after
the veto, I wished I hadnt been a
supporter. I wished I hadnt been a
contributor. When the governor
asked why, Blanchard says he told
him, Cause I get screwed so much.
Blanchard says he also told a
Richardson aide that he was getting
counseling at the rape crisis control
center. He adds, Its like all of these
stories about people getting deals
(from the administration). Im waiting for one.
The Fair Commission has hired an
architect and a gaming consultant to
study whether it should build a new
casino for the Downs, possibly at the
corner of a busy intersection.
The current casino is cramped and
inconvenient, limiting its ability to
make money for Blanchard and his

PAT VASQUEZ-CUNNINGHAM/JOURNAL

Albuquerque businessman Paul Blanchard, shown here with Socks, competes in steer-roping competitions and has
horses at his home and ranch.

(Blanchards) just a real hard-charging person, like a horse.


He doesnt know anything but full speed.
UNM REGENT JAMIE KOCH

partners, as well as produce tax dollars for the state and purses for horse
racing.
Also, the Downs is seeking nearly
$271,000 from the Racing Commission
to cover what it says are extra costs
for rebuilding the $4 million-plus
horse barn at the fairgrounds. The
construction work was done by a Blanchard company.

Success,
then trouble
Paul Emir Blanchard was born in
Chicago in November 1949. His mother was born in San Salvador and
raised in Nicaragua, he says. His
father was from Oregon and served
during World War II as a Navy pilot.
The two met in Miami.
Blanchards father died when he
was 16 and his mother moved the
family to Miami.
He attended a private high school
in Coral Gables and the University of
Miami.
Blanchard transferred to the University of New Mexico and played
football for two seasons, in 1970 and
71. He was listed as a 6-foot, 218pound middle linebacker.
He had a falling out with his coach
and didnt play his senior year. He
also didnt graduate, falling a few
hours short of earning a degree.
I was poor. I was very poor, Blanchard says. I just didnt have the
money to finish those last nine hours.
So I went to work.

Teammate Houston Ross, now an


Albuquerque attorney, says Blanchard moved into his linebacker position after Ross was injured in 1971.
Paul was a good team player,
Ross says. He was quite a competitor.
Blanchard is a barrel-chested man
and is active in Lobo athletics. His
one-time football teammates include
Rocky Long, now the UNM coach.
Blanchard Development & Construction applied for a state contractors license in 1976. Blanchard has
been a principal in several companies
since, including Blanchard Construction.
Blanchard says he initially was successful, but the 1980s brought trouble
as interest rates climbed and demand
for real estate fell. He and/or his companies were sued numerous times for
money due and breach of contract.
Blanchard is outwardly uncomfortable talking about those times but
says, The facts are the facts; the
truth is the truth. He blames his
troubles on the downturn in the realestate market and his ignorance in
investing money.

Isolated incidents
The federal government was
among those who wanted a piece of
Blanchard.
In addition to back taxes, it wanted
the repayment of money loaned to
Blanchard Development & Construction by a federally backed small-busi-

ness investment corporation called


Venture Capital.
The government sued in 1988 and
later secured a judgment for more
than $132,000 against Blanchard and
his first wife and another $62,000
against Blanchard individually. The
government eventually settled for
$50,000.
Blanchard says Venture Capital
actually loaned the money to a roof
truss company, but that he had guaranteed the loan and was held liable
when the company failed.
The shareholders in Venture Capital included Nick Kapnison, who was
convicted in 1982 on federal felony
charges after an investigation into
loans made by First National Bank of
Clovis. Kapnison was a bank director.
Today, Kapnison is owner of Yannis
restaurant, where Richardson and
Blanchard have dined together. Kapnison, who was pardoned in 2001 by
then-Gov. Johnson, also is a gubernatorial appointee.
Blanchard also had some other
problems in the 1980s and early 90s.
In June 1989, a man filed assault,
battery and other charges against
him in state Metropolitan Court.
The man later told police that Blanchard cold-cocked me from a blind
side at a restaurant.
Blanchard says he was dating the
mans estranged wife and the two
were in a bitter custody dispute. He
says he hit the man, but only after the
man threw beer on him and butted
him with his head.

The turnaround for Blanchards


fortunes got a major boost in 1992
when he teamed with O.D. McDonald,
a real estate investor, to purchase the
Mountain Run Shopping Center in
Albuquerque. The Blanchard and
McDonald partnership has since purchased other commercial properties.
McDonald says he doesnt want
credit for Blanchards success over
the past decade or so. Blanchard says
a banker who never lost faith in him
also played a major role.
He has worked diligently at it and
I havent hindered him, McDonald
says. Ive helped in whatever area I
could. I dont change peoples lives. I
sometimes participate.
McDonald joined with Blanchard in
1999 in purchasing shares in Albuquerque Downs.
Blanchard, in a document filed with
the Racing Commission in 2003,
reported nearly $26 million in assets
and $8.6 million in debts. The largest
chunk of his assets was in properties
owned by his partnership with
McDonald.
Blanchard, McDonald and two
Louisiana men each own a 25 percent
interest in the Downs.
Blanchard says a large part of his
success has been due to McDonald.
He says McDonald brought a more
stable financial background to their
partnership and taught him the value
of steady income over quick profit.
He was a detail guy and I was a
wild-horse rider, Blanchard says.
All the disciplined things I hadnt
done, he had done.
McDonald says Blanchard has a
knack for spotting business opportunities and the drive to pursue them.
He didnt come from wealth, says
Koch, the UNM regent. What hes
done hes done on his own.
The employees of Blanchard Construction include Patricia Mattioli,
who resigned her education job with
the Richardson administration last
year after being arrested for cocaine
possession along with W. John Brennan, then state chief district judge in
Bernalillo County.
Blanchard says he and Mattioli are
former neighbors and that he socialized with Mattioli and Brennan.
He says Mattioli called after her
arrest and said she needed a job to
support herself and her daughter.
I took a chance with her. I tried to
help, Blanchard says. I guarantee I
wouldnt be here if some people hadnt helped me. Life can be difficult at
times and Im a person that can testify to that.

EDITORIAL

Smart Money Says Gambling Here To Stay

f you wanted to gamble


legally in New Mexico a
decade ago, your choices
were playing bingo, betting on horse races or playing
slot machines at a handful of
legally questionable Indianowned casinos.
Today, you can gamble
legally at five racinos
(horse racing tracks with slot
machines), 15 Indian-owned
casinos, dozens of fraternal
clubs with slot machines, or
play state and interstate lotteries.
As an in-depth look at this

growth industry points out in


a series beginning today,
gamblers will wager an estimated $3.9 billion in the state
this year. That almost equals
the states general fund revenues for 2004.
And
more
gambling
options may be on the way.
Groups in Raton, Santa Fe
and Tucumcari are lobbying
for new racinos; wellfinanced efforts are being
made to allow off-reservation casinos; and the state
lottery has talked about
adding keno.

There are clear winners in


the states embracing of
gambling: Some tribal coffers have never been so full;
the state is collecting tens of
millions of dollars from
gambling
proceeds;
the
nearly dead horse racing
industry is off the critical
list; thousands of college students are profiting from lottery
scholarships;
and
tourism is reaping sizable
benefits.
There are losers, too. Problem gamblers are a hidden
epidemic thats poorly stud-

ied and only marginally


addressed. Disagreements
over state/tribal gambling
compacts continue; gambling interests have a huge
impact on politics; nobody
seems to know whether gambling is properly policed by
the state.
After a decade of legalized
gambling, the smart money
says its not only here to stay,
its likely to grow.
The billion-dollar question
is whether the state will control gambling, or gambling
will control the state.

ALBUQUERQUE JOURNAL
T.M. PEPPERDAY, Publisher 1926-1956
C. THOMPSON LANG, Publisher 1956-1971

T.H. LANG, Publisher


Kent Walz, Editor
An Independent Newspaper
Published at Journal Center, 7777 Jefferson NE
Albuquerque, NM 87109-4343, by the Journal Publishing Co.
This newspaper is copyrighted, reprint of this masthead prohibited.

B2

Sunday, January 2, 2005

11

ALBUQUERQUE JOURNAL

HOME-OWNED

AND

125TH YEAR, NO. 6

HOME-OPERATED

98 PAGES

IN

MADE

IN THE

FINAL

U.S.A.

THURSDAY MORNING, JANUARY 6, 2005

6 SECTIONS

PART 5

Copyright 2005, Journal Publishing Co.

Daily 50 cents

THE BIG BET

Losing Streak
In a state where gaming has exploded,
problem gamblers wind up hurting more
than just their wallets
Fifth in a series
BY THOMAS J. COLE
Journal Investigative Reporter

n Albuquerque judge writes


hot checks.
A PTA treasurer steals
money from student candy
sales.
A priest makes use of church
bank cards.
A grandmother holds up an Indian
casino.
An investigator for the state
attorney general robs banks and,
when caught, commits suicide by
cop.
Those are some of the stories of
troubled gamblers since gaming
exploded in New Mexico.
Its a simple equation: More
access to gambling equals more
addicted gamblers equals more
thefts, suicides, domestic violence,
bankruptcies and divorces.
Yet the response to problem and
pathological gambling in New Mexico has been uneven, incomplete and
uncoordinated.
Heres how:
No one knows how many New
Mexicans have gambling problems
or who is most at risk of developing
problems. Theres been no study
since 1996, when researchers estimated that more than 175,000 New
Mexicans had some kind of gambling problem.
Indian casinos and horse-racing
tracks are required to spend part of
their slot-machine winnings on programs for problem and pathological
gambling, but there is no such
requirement for fraternal and veterans clubs with slots.
Tribes, tracks and the state lottery will spend close to $2 million
on problem and pathological gambling programs this year, but
nobody coordinates the spending to
ensure a balanced approach of education, prevention and treatment or
a targeting of resources at the people most at risk for developing
problems.
Much of the money for problem
and pathological gambling programs goes to a nonprofit group
whose executive director has a
financial interest in two racetracks
and who earns nearly $125,000 a
year.
The state Health Department
recently began reviewing how
tracks spend their money but can
make only recommendations on
changes.
State government is a big winner in gambling, raking in more
than $80 million this year in taxes
and revenue-sharing payments
from slots (there is no revenue
sharing for table games at tribal
casinos), but it doesnt have a single
program that specifically targets
problem and pathological gambling.
Adolescents who gamble are
more likely than adults to develop
problems, but New Mexico schools
arent required to teach students
about the dangers.
Two-thirds of New Mexicans now

THE TORMENTED

Lionel Griego
Lionel Griego pulled his
truck into the Capitan Cemetery sometime Saturday night
or early Sunday on a weekend
in November 2001.
A prison guard, Griego had
just gambled away his pay at
the Mescalero Apache casino.
He also had been drinking
Miller Lights from an ice chest
in the front seat.
Griego parked next to his
fathers grave and removed a
blue blanket from the truck.
He then cut or tore strips from
the blanket to
make a 6-foot7-inch rope.
Griego, 54, a
husband,
father and
grandfather,
hanged himself from a
cedar tree.
His widow,
GRIEGO
Gloria, says
Griego began
playing slot
machines several years before
when they became available
on the Mescalero Apache
Reservation.
As time passed, he spent
less time with his family and
gambled more, losing paycheck after paycheck. He tried
to quit, once attending a Gamblers Anonymous meeting and
even voluntarily having himself banned from the casino,
Gloria Griego says. She says
he still managed to get in.
An executive at the
Mescalero Apache casino
declined to comment for this
story.
Gloria Griego says she had
nightmares about trying to
See THE TORMENTED
on PAGE 12

live in a county with at least one


casino.
Some steps have been taken to
address the public health and safety
threat of problem and pathological
gambling the formal names for
the medically recognized impulse
disorder.
Theres a well-advertised toll-free
telephone number for advice and
treatment referral, a fund that
finances treatment for those who
cant afford it and training programs for health-care providers
and casino workers.
Guy Clark, executive director of
the New Mexico Coalition Against
Gambling, says the states less-thancomprehensive response to problem and pathological gambling has
been politically driven.

RICHARD PIPES/JOURNAL

Lionel Griego, tormented by his gambling problem, hanged himself from a cedar tree at his fathers grave in the
Capitan Cemetery. Griegos marker is decorated with flowers, crosses and angels.
The states leaders, he says, dont
want to upset gambling interests,
which not only help fund government, but also make large contributions to political campaigns.
Its a conscious decision on the
part of many politicians, quite
frankly, Clark says. Public servants ought to take better care of
the citizens of the state.

The last study


The National Gambling Impact
Study Commission, a panel created
by Congress, recommended in 1999
that states survey their populations
every two years for gambling problems.
The commission wanted states to
target education and prevention

programs at those people most vulnerable to developing problems.


New Mexicos last study was in
1996.
At the time, 11 tribes operated
casinos. Today, 13 tribes and five
tracks have casino gambling. Some
60 veterans and fraternal clubs also
have added slots since 1996.
A survey conducted for the
national gambling commission
found the presence of a gambling
facility within 50 miles roughly doubles the prevalence of problem and
pathological gamblers.
The 1996 study of New Mexicans,
conducted by the University of New
Mexico, estimated that 40,000
adults had experienced serious
gambling problems and another
137,000 adults had low to moderate

problems in the previous year.


The 177,000 with problems represented about 12 percent of the
states adult population.
The most vulnerable segments of
the population included Hispanics,
women, those 18 to 20 years old, the
very poor, high-school dropouts,
students and the disabled or unemployed.
The state Health Department
planned to use the study to develop
a campaign against problem gambling. If a plan was ever developed,
it was never implemented.
Then-Gov. Gary Johnson was
unimpressed by the study as he
moved forward to expand gambling
in New Mexico. He even suggested
See DOWN on PAGE 12

Gambling Treatment Boss Has Casino Ties


Councils link
raises hackles of
gambling critics

Kandace Blanchard says her


passion is her job as executive
director of the New Mexico
Council on Problem Gambling.
Blanchard, 43, a licensed
counselor, has financial interests in two horse-racing tracks
but says they are just businesses.
I could care less about
that, she says.
Blanchards husband, Paul, is
a part-owner of the Downs at
Albuquerque and the recently
opened Zia Park in Hobbs. He
also is a friend and adviser to
Gov. Bill Richardson.
Kandace Blanchard helped
found the nonprofit New Mexico Council on Problem Gam-

bling, an affiliate of the


National Council on Problem
Gambling, in 1998.
Funded by
the gambling
industry, the
New Mexico
organization
operates a 24hour toll-free
telephone help
line, pays for
treatment for
gamblers who BLANCHARD:
cant afford it
Passion
and trains
is helping
counselors in
troubled
how to treat
gamblers
problem and
pathological gambling.
The group had revenues of
$578,326 and expenses of
$555,662 in its 2002 tax year.
Salaries and wages accounted for more than $300,000 of
the expenses. The group spent

nearly $103,000 on treatment,


according to its tax return.
That treatment is in addition to
counseling provided by telephone to help-line callers.
A caller to the organizations
help line is much more likely
to be referred to Gamblers
Anonymous than to a counselor, according to the groups
caller data.
Guy Clark, executive director of the New Mexico Coalition Against Gambling, says
the New Mexico Council on
Problem Gambling is compromised because of its ties with
the industry.
Its not an objective, a disconnected relationship, Clark
says.
Kandace Blanchard opposes
a proposal by Clark for the
state Health Department to
take over the administration of
money that Indian casinos and

tracks must set aside for programs for problem and pathological gambling. Thats the
source of most funding for
Blanchards group.
Blanchard says her position
on the Health Department
takeover isnt taken out of selfinterest.
Even if the Health Department took control of the purse
strings, the New Mexico council would likely survive as a
department contractor, she
says. We would still be in
business, Blanchard says.
Blanchard earned $129,302
in the councils 2002 tax year,
its return shows.
She says the 2002 wages
included some pay she had
foregone in leaner years. She
says her current annual salary
is $124,997.
Blanchard took over the

position of executive director


in the 2002 tax year, stepping
up from the job of executive
clinical director.
She says she now performs
both jobs and that she gave up
her private counseling practice to become executive
director.
Blanchard also says her pay
was approved by the groups
board of directors.
She was one of two employees of the council to earn more
than $50,000 in the 2002 tax
year. The other was Daniel
Blackwood, who left the position of executive director during that period. He earned
$89,463.
Blanchards pay is about
double that of the executive
directors of the Nevada, New
York and California affiliates
of the National Council on
Problem Gambling.

Blanchard says the national


council requires its affiliates
to remain neutral on the general issue of gambling.
The gambling industry is
not going to hand over money
to someone that is going to
oppose them, she says.
If she had a magic wand,
Blanchard says, she would do
away with gambling, alcohol,
drugs, domestic violence and
child abuse.
But this is reality and those
things arent going to go
away, she says. Like everyone else, I have to live in reality.
Blanchard says her personal
ties to the gambling industry
are an advantage.
Ive had the ear of those in
the gaming industry, she says.
Its an opportunity that I have
that others might not have.

12

ALBUQUERQUE JOURNAL

Down on Their Luck


WARNING SIGNS FOR
PROBLEM GAMBLERS

from PAGE 11

that some alcoholics may have traded for a


new addiction. He said:
I would just venture a guess that there
is one gambler who might have a worse
alcohol problem but now they have a gambling problem instead of an alcohol problem because they choose to gamble rather
than drink.
The Legislature in 2003 passed a bill calling for a new study of the effects of gambling on New Mexicans, but Gov. Bill
Richardson vetoed it. The Legislature considered a nearly identical bill last year but
didnt approve it.
Daniel Blackwood, an Albuquerque
counselor who works with problem gamblers, says he would like to see a new
study conducted in New Mexico, in part
because of his suspicion that the elderly
are more at risk than previously shown.
If theres been a shift, we need to know
about it, Blackwood says.
But Kandace Blanchard, executive
director of the New Mexico Council on
Problem Gambling, says the state doesnt
need a new study in order to target its
resources.
Problem gamblers go to casinos, and
casinos have signs and literature offering
help, Blanchard says. Lottery tickets also
have the number for a toll-free telephone
help line.
Its easy to target whos gambling,
Blanchard says.
Even the national gambling commission
acknowledged that studies of problem and
pathological gamblers have their shortcomings. It said:
While getting an exact number is
important for scientists, policy makers and
treatment providers, more important is the
acknowledgement that a significant number of individuals are pathological, problem or at-risk gamblers. And it is time for
the public and private sector to come
together in a meaningful way to address
these problems.

How can I tell if Im a


pathological gambler?
You may be a pathological gambler if you answer
yes to five or more of the following questions:
1) Are you preoccupied with gambling for
example, reliving gambling experiences, planning
the next venture or thinking of ways to get money
for gambling?
2) Do you need to gamble with increasing
amounts of money to achieve the desired excitement?
3) Are you restless or irritable when attempting
to cut down or stop gambling?
4) Do you gamble to escape problems or
improve your mood?
5) When you lose money gambling, do you often
return another day to try to get even?
6) Do you lie to family members or others to conceal the extent of your involvement with gambling?
7) Have you made repeated unsuccessful
attempts to control, cut back or stop gambling?
8) Have you committed illegal acts, such as
forgery or theft, to finance your gambling?
9) Have you jeopardized or lost a significant relationship, job or educational or career opportunity
because of gambling?
10) Have you relied on others to provide money
to relieve a desperate financial problem caused
by gambling?
What do the terms problem gambler, compulsive gambler and addicted gambler mean?
Generally, a problem gambler is someone who
answers yes to fewer than five of the above
questions. Some people use the words compulsive gambler and addicted gambler to describe
pathological gamblers.

The money
Under their gaming compacts, or agreements, with the state, tribes with casinos
must spend at least one-quarter of 1 percent of the take from their slot machines
on prevention, treatment
and assistance programs
related to compulsive
gambling. That will
amount to about $1.4 million this year.
State law also requires
tracks to spend at least
the same percentage from
their slots about
$439,000 this year.
CLARK:
The Legislature didnt
Gambling
impose such a mandate on
industry relies
the state lottery but
on problem
authorized it to spend
gamblers
money on compulsive
gambling rehabilitation.
The lottery said it will spend about
$193,000 this year.
The money set aside for problem and
pathological gambling programs is small
compared to what troubled gamblers
spend wagering.
Problem and pathological gamblers are
some of the industrys best customers.
Studies estimate troubled gamblers
account for 15 percent to 50 percent of
industry revenues.
They wouldnt survive without problem
gamblers, says Clark of the New Mexico
Coalition Against Gambling.

What causes pathological


gambling?
Pathological gambling is an impulse disorder.
There appears to be no single root cause, but
certain patterns of behavior may predispose a
person to develop a gambling problem. Pathological gambling often occurs in conjunction with
other behavioral problems, including substance
abuse, mood disorders and personality disorders. Pathological gamblers also are more likely
than non-pathological gamblers to report that
their parents were pathological gamblers.
Research indicates that the earlier a person
begins to gamble, the more likely he or she is to
become a pathological gambler.
Is pathological gambling
difficult to treat?
Yes, in part because of the lack of information
about what causes it. Reoccurrence is high
among those who seek help.
Where can I get help?
The New Mexico Council on Problem Gambling
operates a 24-hour, toll-free telephone line that
provides advice and referrals. That number is
(800) 572-1142. You can also contact Gamblers
Anonymous in Albuquerque at (505) 260-7272
or in Santa Fe at (505) 984-7277. There are GA
meetings throughout the state. A third alternative is contacting a mental health professional.

MARLA BROSE/JOURNAL

See LEAVING on PAGE 13

THE TORMENTED

THE RECOVERED

Lionel Griego

Everett G.

from PAGE 11

Everett G. hasnt gambled


in five years but still attends
Gamblers Anonymous meetings at least three times a
week.
Everett who has pledged
anonymity as a GA member
says he still needs the
therapy but also wants to be
available to help new members.
There were a lot of good
people that held a hand out
to me, says Everett, 67, of
Albuquerque, who works in
the construction industry.
Everett says he started
gambling as a way to while
away his off hours while traveling around the state on
business. He played mostly
video machines, a little
blackjack.
Next thing you know I
couldnt quit, he says. Gambling becomes your lover. It
becomes your friend.
He began to lie to his wife
about his whereabouts and
money. He attended his first
GA meeting on Aug. 11, 1999,
not long after his wife booted
him from the home.
I was just tired of hurting
myself and others, Everett
says. Youll never find a
compulsive gambler that

save her husband but being


unable to do so.
He would say, I know Im
letting you down ... you would
be better off without me,
she says. It was a constant
worry that something was
going to happen.
The Griegos were married
more than 35 years. They
were high-school sweethearts. He was a star athlete
and she a cheerleader.
Her husband, she says,
was a hard-working, churchgoing family man who loved
to hunt and fish. While working at Camp Sierra Blanca in
1993, he was honored by the
governor as state correctional officer of the year.
If you would have told me
my father was going to
become an addicted gambler,
I never would have believed
it, says daughter Brenda
Taylor. Gambling, she says,
changed everything.
At the time of his death,
Griego was working at the
state prison in Las Cruces.
On that weekend in November 2001, he stopped at the
Mescalero Apache casino
without first going home to
Capitan, according to police

RICHARD PIPES/JOURNAL

Gloria Griego says her husband, Lionel Griego, recognized he


had a gambling problem but couldnt overcome it, committing suicide in November 2001.

He would say, I know Im letting you down


... you would be better off without me,
and his family. He was wearing his guard uniform when
he hanged himself.
Police searched his wallet
after his death but found not
a single dollar. They did find

two handwritten notes.


One note read: Please
Stop Gambaling. The other
read: Please Stop Gamling.
The notes had been written
by Griegos grandson.

Sources: The National Gambling Impact Study Commission, New Mexico Council on Problem Gambling, Gamblers Anonymous and National Research Council

PAT VASQUEZ-CUNNINGHAM/JOURNAL

Members of Gamblers Anonymous meet on a Friday night at


an Albuquerque church. There are GA meetings every week
in about nine New Mexico towns.

I couldnt quit. (Gambling) becomes your


lover. It becomes your friend.
doesnt absolutely hate themselves.
He estimates he has seen
300 to 400 people come
through his GA meetings in
Albuquerque over the years.
There have been doctors,
lawyers, academics, business
owners and ditch diggers.

Everett says about a dozen


or 18 people attend each of
his GA meetings.
This replaces that loneliness, that isolation of troubled gambling, Everett says.
You finally found someone
that understands.

13

ALBUQUERQUE JOURNAL

BY THE NUMBERS

0
Amount of money state government spends on specific
programs for problem or pathological gambling.

9
Years since New Mexico last conducted a study of
troubled gamblers.

177,000
New Mexicans with some type of gambling problem,
according to 1996 study.

1,236,047
New Mexicans who live in a county with at least one
casino.

$84,265,605
State governments estimated take this year from taxes and revenue-sharing payments on slot machines.
Sources: 2000 Census and New Mexican
Gaming Control Board

The Black Gold Casino in Hobbs is one of the states


newest gambling facilities.
RICHARD PIPES/JOURNAL

Leaving Problem Gamblers to Chance


from PAGE 12

The

National Gambling Impact Study


Commission says, For those in need
of such treatment (for gambling
problems), the gambling industry,
government, foundations and other
sources of funding should step forward with long-term, sustained support.
Clark says the state could easily
spend more on education, prevention
and treatment, but Blanchard says
there is already enough money in the
system.
Blanchard, however, has been pushing a proposal that would require veterans and fraternal clubs to also set
aside a portion of their slot winnings
for problem and pathological gambling programs.
Much of the funding from the Indian casinos, tracks and lottery now
goes to Blanchards group, the New
Mexico Council on Problem Gambling. Her husband is a part-owner of
two tracks and casinos.
Blanchards group operates a 24hour toll-free help line, funds treatment for those who cant afford it and
trains counselors and gambling
industry workers in dealing with
problem and pathological gambling.
Tribal casinos and tracks separately spend money on so-called responsible gambling advertising and on
training programs for their workers.
Many Indian casinos are also members of the Responsible Gaming Association of New Mexico.
Blackwood, the Albuquerque counselor, works with the association and
says it also has funded training for
counselors and paid to produce and
air a television show on problem and

pathological gambling.
While veterans and fraternal clubs
arent required to spend a percentage
of their slot winnings on problem and
pathological gamblers, they, like the
tracks, must submit plans to deal
with the problem.
The state Gaming Control Board
mandates the plans and requires slot
operators to train workers on how to
recognize compulsive gambling
behavior, to have procedures to deal
with problem and pathological gamblers, and to have signs and brochures
on how patrons can seek help.
The board moved recently to
restrict how much tracks can spend
on administering their compulsive
gambling programs to prevent possible abuse.

The state
Citing a lack of in-house expertise,
the Gaming Control Board last year
entered into an agreement for the
state Health Department to review
the compulsive gambling plans submitted by tracks and clubs.
The departments role, however,
will be limited to making recommendations to the Gaming Control Board
on whether a program should be
approved or rejected.
George Wallace of the departments
Behavioral Health Services Division
says the goal of the agreement is to
make compulsive gambling programs
more professional and to better target dollars.
Were trying to raise the bar incrementally, Wallace said.
Clark is critical of the arrangement, saying the Health Departments role is nothing more than that
of bystander.

Blanchard also doesnt like the deal,


but for a different reason.
She says the Gaming Control Board
should hire its own health expert to
review plans by the tracks and clubs.
That way, she says, the same agency
that reviews the programs will be
responsible for compliance.
Clark has been pushing a proposal
for the Health Department to take
over supervision of the funding and
administration of programs for problem gamblers.
That would require a change in
state law and the state-tribal gaming
compacts.
Clark says the New Mexico Council
on Problem Gambling doesnt have
the competency level of the Health
Department. Theres no doubt about
it.
Blanchard and Blackwood, who cofounded the council, oppose the idea,
saying the departments bureaucracy
would chew up dollars needed to
address problem and pathological
gambling.
Blanchard says she also has a philosophical problem with the government taking over a job thats being
done by private business.
They would dismantle every single
organization that has been dealing
since the early 1990s with this problem, she says. Do you think if someone calls them in the middle of the
night, they are going to get help?
Other states have taken steps to
coordinate their programs.
The Oregon Department of Human
Services oversees that states Gambling Treatment Fund, which is
financed by the Oregon Lottery.
The department conducts public
awareness campaigns, operates a
telephone help line and funds inpa-

tient or outpatient treatment for anyone needing it.


Arizona has a state Office of Problem Gambling to oversee the funding
of state and local programs to prevent and treat problem and pathological gambling.
The state of Missouris efforts are
coordinated by an alliance whose
members include representatives of
the state Department of Mental
Health and the gambling industry.
Blackwood says he likes the Missouri model. I would be all for privatized coordination and with everything above board and fully disclosed, he says.

The young
How New Mexico deals with problem and pathological gambling is
especially critical when it comes to
children.
We have the first children that are
going to go from the cradle to the
grave with gambling, says Donna
Marie Giaquinto, a Los Alamos counselor who works with troubled gamblers.
Studies have found that rates of
problem and pathological gambling
are higher among adolescents than
among adults despite gambling age
restrictions.
Studies also show that the earlier in
life a person starts gambling, the
more likely he or she is to become a
problem or pathological gambler.
Private gambling, lotteries and unlicensed gambling are the most likely
forms of wagering for those ages 12
to 18, according to the National Gambling Impact Study Commission.
The national commission found that
adolescent pathological gambling is

associated with alcohol and drug use,


truancy, low grades, problematic gambling in parents, crime and violence.
The commission recommended that
students be warned of the dangers of
gambling, beginning at the elementary
level and continuing through college.
In New Mexico, school districts
must generally teach students about
risky behavior but there is no specific
requirement for gambling education.
Youth is more at risk for everything, Blackwood says. Do we need
to make this part of health education?
No doubt about it.
Clark says schools need to teach
students to abstain from gambling.
It should be brought up as a public
health issue, he says. We have no
idea what will happen to these kids
that become addicted.

ABOUT THIS
SERIES
DAY ONE: Gambling explodes after
New Mexico takes a chance.
DAY TWO: Lottery sales are booming.
DAY THREE: A slot subsidy revs up
horse racing.
DAY FOUR: Casino barons hit the jackpot.
TODAY: Problem gamblers are left largely to chance.
DAY SIX: The economic winners and
losers of gambling.
DAY SEVEN: Regulation, New Mexicostyle: Casinos, hot dogs and pizza parlors.
DAY EIGHT: Another crossroads.
Find this series on the Web at
abqjournal.com.

EDITORIAL

State Racing Industry Arrives at Crossroad

ne of the early near-casualties of


the lottery and Indian casinos
was New Mexicos horse racing
industry. Betting on the ponies
was already in decline. But when legal
gambling venues went from bingo and
betting on ponies to lottery tickets and
slots at new casinos, gamblers left race
tracks in droves.
In 1997, the Legislature decided to rescue the horse tracks by letting them have
slot machines. The racino was born.

Since 1999 when the first racino slot


was plugged in, New Mexicans have given the one-armed bandits at racinos more
than $589 million. Racino owners got
more than $324 million of those proceeds;
the state got upward of $147 million; and
horse owners, breeders, trainers and
jockeys got nearly $118 million.
The horse racing industry didnt just
survive, it flourished. The state recently
added its fifth racino, and at least three
others hope to join the pack.

But before considering further expansion of horse racing, legislators should


address whether the subsidy that has
channeled $118 million into horse racing
purses over the past five years should be
continued.
If the answer is yes, should it be at the
current level, or should more of that money go to meet the states other needs?
The state has been good very good
to horse racing. Perhaps its time to
decide if its been too good.

ALBUQUERQUE JOURNAL
T.M. PEPPERDAY, Publisher 1926-1956

C. THOMPSON LANG, Publisher 1956-1971

T.H. LANG, Publisher


Kent Walz, Editor
An Independent Newspaper
Published at Journal Center, 7777 Jefferson NE
Albuquerque, NM 87109-4343, by the Journal Publishing Co.
This newspaper is copyrighted, reprint of this masthead prohibited.

A8

Thursday, January 6, 2005

14

ALBUQUERQUE JOURNAL

HOME-OWNED

AND

124TH YEAR, NO. 7

HOME-OPERATED

112 PAGES

IN

MADE

IN THE

FINAL

U.S.A.

9 SECTIONS

FRIDAY MORNING, JANUARY 7, 2005

PART 6

Copyright 2004, Journal Publishing Co.

Daily 50 cents

THE BIG BET

Gambling Creates Economic Winners and Losers


Casinos bring
benefits to some,
but at what cost?
Sixth in a series
BY COLLEEN HEILD
AND MIKE GALLAGHER
Journal Investigative Reporters

ts a trade-off.
Nearly a decade of legalized
casino gambling in New Mexico
has produced new jobs, entertainment and commerce.
And more bankruptcies, traffic
congestion, and an increased need
for police and emergency services,
according to interviews and national studies.
State government has more
spending money. But in some New
Mexico towns, people have lost
their homes, their cars and their
families and now rely on public
assistance.
Its not easy to quantify how gaming has changed New Mexico.
And the state in recent years has
made no serious effort to do so
just as it hasnt studied the issue of
problem gamblers.
Albuquerque attorney Victor Marshall, a longtime opponent of Indian
gaming, said he believes thats
intentional.
We wouldnt want to know the
truth about gambling, would we,
given all the money that they (gambling interests) give to politicians of
both parties and thats whats being
suppressed.
There are the obvious pluses:
Indian casinos and racetracks
employ more than 10,000 people and
more than $84 million will go to
state coffers this year. Last year,
lottery success scholarships went to
more than 10,000 students.
Gaming has been a fast-growing
employment sector in recent years,
with an annual estimated employee
payroll of $630 million, according to
state government estimates.
Most casinos provide entertainment that even non-gamblers can
enjoy: bowling, golf, auto or motorcycle racing events, big-name concerts, and appearances by top-draw
performers.
Nationwide, Indian gambling revenue has helped the poorest minority in the country boost its standard
of living and become more self-sufficient.
But theres a sense that the benefits have come at a price.
Its a golden goose for the tribes,
it brings in a huge amount of money, said Larry Waldman, an economist with the University of New
Mexico Bureau of Business and
Economic Research. From the private sector perspective, its hardly
great.
In the initial years after Indian
casino gambling was legalized,
some New Mexico business owners
blamed it for a slump in sales and
for displacing jobs.
Now, many business and government leaders arent as critical.
Gambling is not our favorite
strategy for building New Mexicos
economy. But it is here to stay, said
Terri Cole, executive director of the
greater Albuquerque Chamber of
Commerce. Our focus is on managing it well.
For example, the state Department of Tourism joined forces with
Indian casinos at the Texas State
Fair last year to promote New Mexico as a tourist destination.
The New Mexico Indian Gaming
Association plans a major economic
impact study this spring, but no
government agency in New Mexico
has attempted a cost-benefit analysis of the state gaming industry
since 1998.
Elsewhere:
One national study of Indian
gaming showed increased employment and lower mortality rates in
counties with casinos. The study
also found that bankruptcy rates,
violent crime, auto thefts and larceny were up 10 percent four years
after a casino opened.
A study in California showed
lower unemployment rates in counties with casinos, high tax revenues
and somewhat higher crime rates
and individual bankruptcy filings.
The National Research Council
reported that while gambling
appears to have net economic benefits for economically depressed
communities, the available data are
insufficient to determine with accuracy the overall costs and benefits

of legal gambling.
National Indian Gaming Association chairman Richard G. Hill has
addressed the critics.
The NIGA encourages all those
who would disparage Indian governmental gaming to, first, add up all
the benefits to their own communities from Indian gaming and what
would happen to the jobs and businesses if Indian Nations and their
economic development were no
longer there.

Thousands of jobs
In 2000, employment in New Mexico Indian casinos was estimated at
5,000 to 6,000, according to the University of New Mexico Bureau of

Business and Economic Research.


Today that number has doubled,
although gaming tribes and the
state of New Mexico have slightly
different totals.
Eli Lee, a political consultant with
the New Mexico Indian Gaming
Association, estimated that there
are 12,000 people working in the
Indian casinos, with about twothirds of the jobs going to nontribal
members.
That adds up to $92 million in payroll, $109 million in employee salary
benefits and $120 million in purchases of goods and services for
2002, Lee said.
The state of New Mexicos
Department of Labor recently came

Gamings dark side


Espaola officials see underbelly of
gambling PAGE 15

up with its own numbers, at the


request of Gov. Bill Richardsons
office.
The agency estimated Indian
gaming directly employs about
9,000, and indirectly accounts for
another 9,000 jobs.
Indirect jobs stem from goods
and services purchased by the
employees and by the casinos, said
Gerry Bradley, manager of the
agencys economic research division.

JAELYN DEMARIA LEARY/JOURNAL

Convenience stores like this one at Laguna Pueblo dont pay state gross-receipts taxes. But without gaming revenues it is unlikely these small markets would exist.

States Cut May Come at Towns Expense


BY COLLEEN HEILD
Journal Investigative Reporter

New Mexico state government


has more money because of gaming.
But cities, towns and counties
end up the losers.
Thats the assessment of several
economists who have studied the
fiscal impact of legalized gaming
in New Mexico.
The state collects revenue-sharing payments of up to 8 percent
directly from the tribes on slot
machine revenue. That money
goes into the general fund.
But the tribes dont pay grossreceipts taxes that also fund local
governments. There is no provision to give a portion of the revenue-sharing money to local governments to make up for that loss.
I dont think it (gaming) will
make us poorer as a state, what it
does do is divert revenues away
from local government, said
Christopher Erickson, an associate professor of economics at

New Mexico State University.


And to the extent that local
governments are providing key
services that promote economic
development or provide services
that people need, well, then thats
a hindrance.
Of course some of the money
does come back to local government indirectly, because people
who work at casinos and shop in
town pay gross-receipts taxes.
But nobody knows how much.
Legislators from Espaola and
the Grants area introduced bills
last year to claim for their communities from one-sixth to 2 percent of net receipts from the revenue sharing pot.
The money would have been
earmarked for local infrastructure or for police and fire protection in Espaola. A bill sponsored
by Sen. Joe Fidel, D-Grants,
would have given the money to
Cibola County without restriction.
Sen. Cynthia Nava, D-Las
Cruces, tried to tap state gaming

tax revenue collected from the


Sunland Park Racetrack and Casino for infrastructure improvements or police and fire services
in the town of Sunland Park.
None of the measures passed.
The state is expected to collect
$84 million this year from gambling at Indian casinos, racetrack
casinos and veteran fraternal
organizations.
None of the money is earmarked for a particular purpose.
About 46 percent of the general
fund goes to education, 16 percent
goes to higher education, 12 percent to Medicaid, 12 percent to
the health department and 7 percent for corrections and public
safety.
Bill Taylor, chief economist of
the Legislative Finance Committee, says that while gaming
receipts account for only 2 percent
of the states general fund money,
it still represents a significant
amount of money and we would be
hard pressed to make it up.

ROBERTO E. ROSALES/JOURNAL

Defenders of tribal casinos say multimillion-dollar construction projects like the hotel project at Sandia Pueblos
casino fuel the states economy even if they are exempt from gross-receipts taxes.

Bradley said casino jobs pay an


average of about $30,000 a year
more than double the annual minimum wage.
Horse racing accounts for another 1,000 jobs. To that, Bradley estimated the indirect impact creates
another 1,000 jobs.
The state is prevented from disclosing specific numbers related to
casino employment.
But at one of the states largest,
most prosperous casino operations,
Sandia Pueblo employs 2,000 people,
of which 96 to 97 percent are nonNative American.
Sandia Pueblo Governor Paisano
said the average salary is $9.50 an
hour and benefits include life and
medical insurance, educational
leave, dental, retirement and vision
coverage.
We are one of the largest private
employers in the community, he
said.
Paisano also said that once the
pueblos hotel and convention center are completed, the tribe will
have to partner with the Albuquerque tourism industry.
We cant do it alone, Paisano
said.
A 2002 study by University of
Maryland professor William Evans
compared economic outcomes
before and after tribes opened casinos to outcomes over the same period for tribes that didnt have gaming.
Four years after tribes had
opened casinos, employment among
tribal members had increased by 26
percent and the fraction of Native
American adults who work but are
poor had declined by 14 percent.
The surrounding counties also had
job growth.
There seems to be a lot of
spillover. Theres a lot of local businesses that arent associated with
the reservations that have been
built up as a result, theres been
fast-food restaurants, and gas stations and hotels, said Evans in a
recent interview.
If a county gets a casino, it looks
like that county is getting more jobs
in aggregate, but that money has to
be coming from somewhere else in
the community, said Evans, who is
with the Maryland Population
Research Center.
In aggregate it could be that
theres this overall loss, but were
unable to measure that, Evans said.
I think that one is the $64,000 question, which I think is going to be
incredibly difficult to estimate.
The increase in economic activity
appears to have some health benefits, in that four or more years after
a casino opens, mortality has fallen
by 2 percent in a county with a casino.

Shuffling the pie


All told, the 20,000 gaming-related
jobs represent a small slice of the
New Mexico economy, which has
about 800,000 non-agricultural jobs,
Bradley said.
But the jobs are important to the
tribes, since many Indian pueblos
have for years suffered high unemployment and high poverty rates.
All that has been changed,
Bradley said. Whether that means
that other sectors of the economy
have been negatively impacted, I
wouldnt be surprised, but I dont
have any way of quantifying it with
the tools I have.
As sovereign entities, Indian
tribes in New Mexico are exempt
from paying gross-receipts taxes on
their gaming profits.
But almost all the gaming tribes
pay 8 percent of their net win on
slot machines to the state as part of
revenue-sharing agreements.
Whether gaming benefits New
Mexico depends on the number of
out-of-state tourists who come here
and gamble.
Absent destination resort casinos
stimulating significant increases in
tourism, the predominant effect of
the casinos has been to shuffle the
existing economic pie, said a study
of gaming by the state Taxation and
Revenue Department in 1998.
That study concluded that each
incremental job in a casino has been
matched by the loss of a job in the
taxable economy.
But Bill Taylor, chief economist
for the Legislative Finance Committee, said those conclusions might
not be so accurate today.
There was an assumption back
then that almost all the gambling
was by New Mexicans, he said.
He said jobs have probably been
See THE PAYOFF on PAGE 15

15

ALBUQUERQUE JOURNAL

The Payoff: Gambling Creates Winners, Losers


from PAGE 14

BREAD AND BUTTER

lost in other sectors because of Indian


gaming, but there is no recent data
available on how many.
Nobodys gone in and done a follow-up study on it and its not an easy
thing to do. You kind of need the
cooperation of the tribes.

Don Padilla

Gauging the impact


Historically, Indian gaming tribes
have been reluctant to share much
information about their casino operations with the state or with
researchers.
As a result, Taylor recalled, state
Tax and Revenue Department
employees some years back resorted
to counting license plates at Indian
casino parking lots to try to determine the number of out-of-state
patrons.
Waldman said his agency is currently studying the impact of casinos
on restaurants in New Mexico.
Its clear that there is a loss of jobs
in the private sector and a loss of revenues in the private sector, Waldman
said.
Chris Erickson, an associate economics professor at New Nexico
State University, said Indian gaming
diverts discretionary income from
other expenditures in the community.
So in terms of economic development, casinos dont add much to the
local economy. But it can move business away from non-Indian areas into
Indian areas and to the extent that
there are problems with poverty on
the reservations, that might be beneficial, he said.
Erickson said evidence of the
impact may not be a matter of businesses closing so much as businesses that would have started that didnt.
With the general growth in the
economy, you dont realize that only
one business opened here instead of
three, because the Indians opened
and attracted a business away from
this part of town.
Erickson recently conducted a
study that highlighted the negative
effects of opening an off-reservation
Indian casino resort near Anthony.
He was hired as a consultant by
nontribal owners of the nearby Sunland Park racetrack which is trying to keep a competitor from opening.
Albuquerque attorney Marshall
said the state would be better off
without Indian gaming.
Putting aside the enormous social
costs, which you cant, when you have
local gambling and its local gambling
by Indians who are not even part of
the taxable economy, its a giant sucking sound.

JAELYN DEMARIA LEARY/JOURNAL

Laguna Pueblos Fire and Rescue units respond to all accidents on I-40 from
Grants to the Bernalillo County line. A new emergency response center is
planned as gaming revenues become available.

Win-win situation
Ten years ago, Gov. Gary Johnson
signed the first compacts to legalize
Indian casino gaming in New Mexico,
saying they were beneficial to
everybody in the state of New Mexico.
He called the agreements a winwin situation.
But not everybody is a winner.
The Maryland study found that four
years after a casino opens, bankruptcy rates, violent crime, auto thefts
and larceny are up 10 percent in
counties with a casino.
Evans study, which was based on
data from the 1980s and 1990s,
included New Mexico.
We dont know why theres an
increase in crime, Evans said
recently. It could be that a lot of the
increase is just the congregation of
people together. Its not problem gamblers going out and mugging people
for money.
New Mexico legislators have introduced bills seeking a portion of state
revenue sharing money to bolster
emergency services in areas near
casinos in Espaola and Grants. So
far, none of that legislation has
passed.
The town of Espaola is also seeking funding to build a bypass around
its main street because of traffic congestion related to the four casinos in
the area.

Ugly little secret


Evans said the evidence on bankruptcy rates was the most convincing
to emerge from his study. Bankruptcy rates were up 10 percent in counties with a casino and 7 percent in

counties within 50 miles of a casino.


The rates grew at this really pronounced pace after you opened up
these casinos. I think thats the most
troubling aspect of this rising gaming
that I see, Evans said.
There are people that just werent
exposed to this and now they are,
Evans said, and as a result they pick
up a habit.
Alfred Sanchez, a bankruptcy attorney in Albuquerque, estimates about
10 percent of clients can attribute
their bankruptcy to a gambling problem.
Its an ugly little secret, Sanchez
said.
In New Mexico, gambling debts
tend to be owed to credit card companies, because gamblers use their
cards to get cash advances.
Its difficult to see it in the court
records, although there is a question
about gambling losses in the initial
filing, Sanchez said.
He said many of his clients who
have gambling problems tend to be
older people.
Sanchez said the major reason for
bankruptcy among people he represents tends to be divorce in twoincome families. As a family, they
could handle their mortgage and other debts, but as individuals they cant.
Albuquerque attorney Steve Sessions said he thinks the number of
bankruptcy clients with a gambling
problem may be closer to one in six.
He can only recall one client in the
early 1990s whose bankruptcy was
directly attributable to gambling. But
the impact has increased.
Casinos have been a mixed blessing, he said. On the one hand, they
have brought a lot of good-paying

Don Padilla has been making


handmade custom frames for 13
years in Albuquerque out of his
shop in the Four Hills Shopping
Center.
It is a competitive business,
with small shops and chain stores
providing similar services.
Padilla hustles business sometimes just driving around to construction sites and passing out his
business cards.
Sandia Pueblo is Padillas best
customer, although his Frame
City and Gallery is a small
account for Sandia Pueblo.
I started working for them
before they built the new casino,
Padilla said.
Commercial accounts are the
bread and butter of this business,
he said. Owning a small business
can be kind of scary. An account

like Sandia helps keep the doors


open. Theyre a year-round
account. That is important in this
business.
Padilla has done custom frames
for the photographs in the tribal
council chambers, along with
casino and concert posters for the
casinos entertainment venue.
Sandia Pueblo Gov. Stuwart
Paisano estimated the tribe has
done about $100,000 worth of business with Padilla over three years.
As long as a company can meet
our needs, we want to do business
at the local level, Paisano said.
They keep me on my toes,
Padilla said. They put the work
out to bid and Ive had to go up
against others to get the business.
I really like working for them,
he said.

PAT VELASQUEZ-CUNNINGHAM/JOURNAL

Don Padilla, owner of Frame City and Gallery, and manager Tiffany
Marvel build a picture frame at the shop, which has supplied frames
to Sandia Pueblos casino and government offices.

jobs, and on the other, there are people with gambling problems.
Sessions said gambling may also be
only one factor in a bankruptcy petition.
Brad Wallin, director of education
for Consumer Credit Counseling in
Arizona and New Mexico, said gambling is a factor in about 10 percent of
the cases his agency handles.
Some clients dont always disclose
that they are gamblers, he said, but
credit counselors see the evidence on
their clients financial statements.
You see an ATM charge at Isleta,
and then another and another. Were
presuming thats not at the golf
course, Wallin said.

ABOUT THIS SERIES


DAY ONE: Gambling explodes after
New Mexico takes a chance.
DAY TWO: Lottery sales are booming.
DAY THREE: A slot subsidy revs up
horse racing.
DAY FOUR: Casino barons hit the jackpot.
DAY FIVE: Problem gamblers are left
largely to chance.
TODAY: The economic winners and
losers of gambling.
DAY SEVEN: Regulation, New Mexicostyle: Casinos, hot dogs and pizza parlors.
DAY EIGHT: Another crossroads.
Find this series on the Web at
abqjournal.com.

Espaola Officials See Gamblings Dark Side


BY COLLEEN HEILD
Journal Investigative Reporter

As executive director of
Espaola public housing,
Leroy Salazar sees the underbelly of gambling.
I deal with that all the
time, Salazar said. Its sad
when I have to go and evict a
family because the single
parent who lives in the home
has spent all the family
income at the casino and they
dont have any food and they
cant pay their utilities, much
less their rent.
Its kind of hard for me to

I see a lot of my residents at the casino


when in fact they are delinquent on their
lease agreements. Theyre looking for the pot
of gold at the end of the rainbow.
LEROY SALAZAR

go home and sleep at night


when I know there are young
children who dont have a
place to sleep.
He doesnt blame solely
Indian gaming, but more
Indian gaming than anything
else. Ever since it became as

open as it is, and as legal as it


is, it has created a big epidemic among the lowerincome families I deal with.
There are four Indian casinos within 15 miles of his
office in the San Pedro area
of Espaola.

Were just overtaken by


them, Salazar said.
Hes not much of a gambler,
but sometimes goes to a casino for one thing or another.
I see a lot of my residents
at the casino when in fact
they are delinquent on their
lease agreements, Salazar
said. Theyre looking for the
pot of gold at the end of the
rainbow.
Most of his residents dont
have jobs, and are receiving
some form of public assistance.
He said he also knows a lot
of people who are waiting to

move into one of his 382 federally subsidized apartments


or houses because they have
lost more than what they
should have at the casinos.
Theyve lost their homes,
theyve lost their vehicles,
theyve lost their families,
and all of a sudden, both male
and female, theyre either
divorced or thrown out of the
home and they have nowhere
to live and they apply for public housing.
The waiting list for housing
is in excess of 600 families, he
said, more than triple the
number that were on the list

when he started at the agency


18 years ago.
I attribute over 50 percent
of it to gambling, Salazar
said.
Espaola Mayor Richard
Lucero said gaming is taking
its toll on the community.
The city spends $500,000 a
year responding to emergencies at Santa Claras Big Rock
Casino because it is located
within city limits.
And, he added, I come into
contact with people with a
gambling problem on a daily
basis. We are not helping
them.

EDITORIAL

Problem Gamblers Get Little State Help

necdotal evidence the only


kind
currently
available
regarding problem gambling in
New Mexico suggests this
state is doing precious little to help those
addicted to betting.
The so-called system the state has set
up to address problem and pathological
gamblers is riddled with shortcomings,
and is in dire need of an overhaul.
For starters, no scientific study of the
breadth of the problem has been undertaken since 1996. If you cant measure
the problem, you cant hope to manage it.
Though the state requires casinos and

racinos to put a minuscule one-quarter


of 1 percent of slots proceeds toward
helping problem gamblers, theres no
real accounting of how that money is
spent. Thats particularly true among
Indian-owned venues, which are permitted total secrecy on the issue.
Most money to help problem gamblers
goes to the New Mexico Council on Problem Gambling, which is closely tied to
the gambling industry. The conflict of
interest is clear.
And the state spends nothing on programs to treat gambling addiction, even
though it will take in more than $84 mil-

lion from gambling proceeds this year.


Meanwhile, 1996 numbers indicate at
least 177,000 New Mexicans have gambling problems that can, and do, destroy
families and lives.
Legislators need to get this system
back on the drawing board, where they
can build in openness, accountability and
viable ways of measuring both the size of
the problem and progress toward
addressing it.
Having opened the gates on gambling
nearly a decade ago, the state bears
some responsibility for those who get
trampled in the stampede.

ALBUQUERQUE JOURNAL
T.M. PEPPERDAY, Publisher 1926-1956

C. THOMPSON LANG, Publisher 1956-1971

T.H. LANG, Publisher


Kent Walz, Editor
An Independent Newspaper
Published at Journal Center, 7777 Jefferson NE
Albuquerque, NM 87109-4343, by the Journal Publishing Co.
This newspaper is copyrighted, reprint of this masthead prohibited.

A10

Friday, January 7, 2005

16

ALBUQUERQUE JOURNAL

HOME-OWNED

AND

124TH YEAR, NO. 8

HOME-OPERATED

102 PAGES

IN

MADE

IN THE

FINAL

U.S.A.

13 SECTIONS

SATURDAY MORNING, JANUARY 8, 2005

PART 7

Copyright 2004, Journal Publishing Co.

Daily 50 cents

THE BIG BET

You Can Ask; State Wont Tell


Tribes have primary authority, but N.M. regulation of tribal casinos is cloaked in secrecy
Seventh in a series
BY JEFF JONES
Journal Staff Writer

UIDOSO As of late last year,


you could walk into the
Mescalero Apache Tribes casinos, sit down in front of a slot
machine and a smiling cocktail
waitress would cheerfully take
your order for beer, wine or
whiskey.
The gambling-floor liquor service
was convenient for players busy
punching buttons on twinkling slots,
playing the roulette wheel or clutching a hand of cards at the blackjack
table.
It was also a clear-as-vodka violation of a provision in all state-tribal
gambling compacts designed to
keep booze off the gambling floor.
The liquor service at Mescalero
casinos apparently had been
offered for some time. Journal visits to the casinos in November
found both were selling alcohol to
gamblers.
A woman who answered the telephone at one of the casinos earlier
this week said liquor service had
been cut off as of Dec. 27.
Meanwhile, Mescalero President
Mark Chino said during a brief telephone interview on Monday that to
his knowledge, the tribe has always
been in compliance with the compact he and Gov. Bill Richardson
signed seven months ago.
What did state gaming regulators
do about the Mescalero situation
and for that matter, do they do much
of anything when it comes to Indian
gaming?
Difficult to say.
Regulators didnt publicly confirm the existence of the Mescalero
issue until after its apparent resolution.
They wont say what they did to
resolve it, beyond this statement:
As a result of a collaborative
effort between the Mescalero
Apache Nation and the New Mexico
Gaming Control Board, a favorable
resolution has been reached
regarding the outstanding matters
of serving alcohol in the gaming
area and the hours of casino operation.
Patting themselves on the back,
the statement from Gaming Control
Board chairwoman Carla Lopez
went on to say: I think this is a
good example of effective government to government relations.
The board maintains details of
any tribal investigations are secret
under state law and the compacts
a contrast with Arizona, which

MARLA BROSE/JOURNAL

Maxine Velasquez, an Albuquerque lawyer and Laguna Pueblo member, is acting head of the pueblos gaming
control board. She believes the tribes casinos, including Route 66 Casino off Interstate 40 west of Albuquerque, are subject to solid oversight from the tribe, state and federal government.

Solid oversight

has joint state/tribal regulation and


considers alleged violations part of
public record.
Beyond admitting it has sent
investigators into all gaming facilities, the New Mexico Gaming
Control Board refuses to provide
much in the way of information.
Consider the boards response to
a question from the Journal asking
whether, as a matter of routine,
investigators go into tribal casinos
to ensure compliance with the compacts.
The degree and frequency to
which the GCB sends investigators
to any entity, whether it be a tribal,
racetrack or nonprofit venue, is an
operational issue, the disclosure of
which jeopardizes the integrity of
the investigative process.

Wheres the state?


Regulation of tribal casinos is a
complex mix of state, federal and
tribal authority. The tribes have
primary authority, but the state has
broad inspection powers and, in the
case of an allegation such as
improper liquor service, could
force arbitration.
Despite a refusal to say so, New

Mexico gambling regulators have a


high profile at nontribal racinos.
And in the past 16 months, they
have cracked down on veterans and
fraternal clubs allegedly caught
breaking the rules and have made
news for seizing a handful of illegal
slots from truck stops, pizza parlors
and a department store.
But state regulation of the tribal
casinos is a secret matter leading some to question whether there
is any.
As far as the tribes are concerned, I think regulation is just
about zero, said Guy Clark, executive director of the New Mexico
Coalition Against Gambling.
Its hands-off with the tribal
casinos.
Clark said regulation of the states
five nontribal horse track/casino
operations is way more visible and
palpable.
But Charlie Dorame, Tesuque
Pueblos governmental affairs officer and chairman of the New Mexico Indian Gaming Association, said
he believes the state has too much
regulatory power over the tribal
casinos.
I think weve given them too
much, Dorame said. Weve got
regulators in our back door. Were
in constant scrutiny by the feds.
Why would we want the state doing
that?

PAUL CONNORS/FOR THE JOURNAL

Della Meness, left, a gaming inspector for the Salt River Pima-Maricopa
Indian Community, and Jose Rivera, an inspector with the Arizona Department of Gaming, check slot-machine paperwork recently inside the tribal
Casino Arizona outside of Scottsdale. Arizona believes such dual regulation is the best way to oversee that states 22 tribal casinos.

The current state/tribal agreements the Mescaleros and all but


one of New Mexicos other casinooperating tribes have signed have a
long list of dos and donts.
One of the donts is a ban on selling, serving or drinking liquor on
the gambling floor.
The Mescaleros, the last among a
dozen tribes to sign the 2001 compacts, were apparently the only
tribe in the group that operated outside that liquor rule.
The only hints that something
was brewing with the Gaming Control Board came on its October
meeting agenda, which listed Compliance Issues With Mescalero
Apache Tribe under the boards
closed-session topics.
Visits to several other tribal casinos by a Journal reporter late last
year found they were sticklers for
alcohol rules, while several, including Tesuques Camel Rock Casino
and San Felipes Casino Hollywood,
dont serve liquor anywhere.
Dorame declined to comment on
the Mescalero situation but said
See REGULATION on PAGE 17

RICHARD PIPES/JOURNAL

The bright lights of the Casino Apache Travel Center outside of Ruidoso beckon passing travelers on U.S. 70. The travel center is one of two casinos operated by the Mescalero Apache
Tribe, and both of the tribal casinos up until recently had been serving alcohol on their gambling floors.

17

ALBUQUERQUE JOURNAL

Regulation of Gambling Full of Mystery


from PAGE 16

that overall, state residents


should feel confident that
tribes are sticking to their end
of the compacts.
We dont want to jeopardize
in any way our compacts with
the state of New Mexico its
too high of a price to pay,
added Maxine Velasquez, an
Albuquerque lawyer, member
of Laguna Pueblo and acting
chairwoman of that pueblos
gaming commission.
Theres some solid oversight.

N.M.s rules
Under federal law, tribes
themselves are the primary
regulators of their own casinos, and most casino-operating
tribes around the United States
have gaming commissions.
The New Mexico compacts
specify that the tribes are primarily responsible for enforcing regulatory sections of the
compacts.
Among other things, the compacts require tribes to establish
laws and provisions that:
Require all slot machines
to pay out at least 80 percent of
what is pumped into them over
the lifetime of the machine.
Prevent their casinos from
serving alcohol on the gambling floor or to intoxicated
patrons.
Mandate that all slots in a
casino be connected to a computerized reporting and auditing system.
Limit the number of hours
a casino can be open to no
more than 20 hours a day during the week.
Require tribes to keep all
gambling books and records
in accordance with generally
accepted accounting principles.
In exchange for a promise
that the state will limit nontribal gambling competition, the
compacts require the tribes to
pay the state up to 8 percent of
their net slot revenues an
arrangement that pumped
more than $9.5 million into the
states coffers in the third
quarter of last year alone.
The New Mexico compacts
also give the state the right to
inspect Indian casinos, all
gambling that takes place
inside and all on-site tribal
gambling records to ensure
the tribes are holding up their
share of the bargain.
The Gaming Control Board
said it has access to wager and
payout data from the tribal
slots. The data is used to reconcile tribal quarterly report
information that also is provided to the state.
The compacts also specify
that tribal casinos at least once
a year must undergo an independent audit, with the results
going to the state.
Board chairwoman Lopez
asked that all questions concerning the boards compliance work with tribal casinos
be submitted in writing.

Basically meaningless
While the board refused to
say whether investigators routinely checked tribal casinos
because it would violate the
integrity of the investigative
process, it doesnt appear an
answer would tip off the tribal
casinos to any surprise visits:
Under the compacts, state
investigators must announce
themselves when entering the
casinos.
The state either doesnt ask
or cannot get straight
answers to questions, said
Victor Marshall, an Albuquerque lawyer, former state
senator and opponent of casino
gambling.
On paper, theres an elabo-

MARLA BROSE/JOURNAL

Jay Bautista, a Laguna Pueblo tribal gaming regulator, watches over the table games recently at Route 66 Casino.

One track case involved a


single incident in which a
patron had one beer on the
gambling floor.
The board said it has initiated
six tribal-gaming investigations
but added that details concerning those cases are secret.
It bases such secrecy in part
on a section of the compacts
that specifies all documents
provided to the state by the
tribes are confidential. The
compacts also say Gaming Control Board documents prepared
from information provided by
the tribes are confidential.
Bob Johnson, executive
director of the New Mexico
Foundation for Open Government, said he doesnt believe
the compacts preclude the
Gaming Control Board from
releasing details on alleged
violations.
What theyre doing is bowing down to the tribes and
they have since the first,
Johnson said. The changes in
the administration of the control board havent made any
difference.
The Journal recently made a
public-records request to the
Gaming Control Board concerning potential compact violations.
The response: The board
said it had no documents on
such an issue that were not
confidential.

Push the envelope

Gaming Watchdogs Scrutiny Varies


BY JEFF JONES
Journal Staff Writer

The New Mexico Gaming Control


Board was created in 1998. It currently
has about 60 employees and an annual
budget of nearly $5 million for its work
with tribal casinos, nonprofits and racetrack casinos.
The Arizona Department of Gaming
has about 55 employees that do work
inside that states 22 tribal casinos.
The New Mexico board through its
central computer system turns on and
shuts off the slot machines each day at
the nonprofits and tracks, so it knows to
the penny how much the tracks owe the
rate scheme. Its basically
meaningless, Marshall said.
Its pretty much an honor system for the tribes. Theres no
way to regulate casinos on the
honor system.
Velasquez, the acting chair
of the Laguna Gaming Control
Board, said tribal casino regulation goes well beyond that.
She said her tribes gaming
board has 19 staffers who
make sure the Laguna casinos
stay in line.
Velasquez said she believes
all tribal gaming boards have a
love/hate relationship with
the casinos they regulate.
Were there to be the regulators the tribe has given us
that authority. We do whats
right. If a casino is violating or
potentially violating, were on
them, Velasquez said.
Were very strict constructionists when it comes to the
reading of the compacts.
Velasquez and Dorame, head
of the state Indian Gaming
Association, said the National
Indian Gaming Commission
also works with tribal casinos
to make sure they follow federal guidelines.
But gambling opponent
Clark said there arent nearly
enough federal investigators
to go around.
The tribes say theyre the
most regulated gambling in
the country. Thats just nonsense. Its the same people
making the money that are
doing the regulating, Clark

state in gambling taxes.


It also assigns investigators and auditors to go inside the tracks casinos to
make sure theyre on the up and up.
Meanwhile, the New Mexico Racing
Commission regulates the horse-racing
side of the tracks business. That commission must approve nearly everything a track does right down to
approving the prices of the $2 hot dogs.
Bruce Rimbo, president of Ruidoso
Downs and the brand-new Zia Park in
Hobbs, said Gaming Control Board
investigators assigned to those tracks
come in unannounced at any hour and
are there almost daily.

said.
Alan Fedman, National Indian Gaming Commission director of enforcement, said his
agency has about 70 employees nationwide working with
tribes to ensure casinos are
following federal rules.
Five of the federal investigators are assigned to a region
that includes New Mexico, Arizona, Colorado and a portion of
Nevada. Additional federal
auditors make routine visits to
New Mexico as well, Fedman
said.
There are 400-plus tribal
casinos nationwide.
Fedman said federal regulators work primarily to make
sure tribal casinos are complying with federal rules such as
internal accounting standards,
licensing of key employees
and the filing of the required
financial information.
The compliance of the
terms of the compact are, as a
general matter, left between
the tribes and the state, Fedman said.

Eyes on the money


Arizona is working on a computer system that will provide
a real-time computer link to
slot accounting information at
half of that states tribal casinos.
It also routinely sends investigators inside tribal casinos,
where they work alongside
tribal gaming regulators.

They walk around the floor. Primarily, theyre looking at surveillance tapes
to see if anything has gone on. For
instance, if we did a money drop and we
didnt follow all (of the boards) internal
controls, we would get a citation, Rimbo said.
Theyll tell us the littlest things you
can imagine (like) Make sure your
tellers show their hands on the cameras
before they count out money, Rimbo
added.
Every I and every T is dotted or
crossed. It creates an environment
where the public can be safe. The public
can be really confident theyre getting
the payback theyre supposed to get.

We will go out and check


slot machines. We will also
request surveillance tapes.
(We) do spot checks, 50 slot
machines at a time. Last
month, we did about 1,000
machines, Arizona Department of Gaming spokeswoman
Christa Severns said in a
December interview.
Were out there on an
every-other-day basis.
Severns said that having
such dual regulation makes
it more difficult for corruption
to seep into the process.
The philosophy of dual regulation means you have checks
and balances. It makes it more
difficult for the industry to
steamroll over the regulator,
Severns said.
We think its the gold standard.
Severns said Arizona does
not mandate secrecy concerning alleged compact violations.
If Arizona believes a tribe is in
violation, it will send a letter to
the tribe and that letter is a
public document.
I. Nelson Rose, a California
law school professor and an
expert on gambling law, criticized secrecy.
The government of the
state is supposed to be representing the people. They
instead have secret dealings
with the tribes, Rose said.
He added he also is a proponent of dual regulation.
It is dangerous for any
(entity) to regulate them-

selves, Rose said. In the gambling industry, Theres so


much money that the more
eyes you have watching, the
less chance you have that
something will go wrong.
In Minnesota, state gambling
agents can walk into tribal
casinos unannounced, where
they can do work including
checking slot machines for
proper payouts.
We go in and make sure
theyre holding up their end of
the deal, said Scott Stewart, a
special agent with the Minnesota Department of Public Safety.
The customer is looking to
the state to make sure theyre
getting a fair play.
Lopez, chairwoman of the
New Mexico Gaming Control
Board, said in an interview prior to her written-questionsonly edict that the current
board is taking a more aggressive stance on regulation.
In its written responses, the
board said it was taking an
assertive approach to
addressing complaints and
reports of violations, but that it
would be inappropriate to
provide specifics.

Secret documents
The Gaming Control Board
has initiated a dozen noncriminal cases against various nonprofit clubs since January
2003. It also has pursued nine
noncriminal cases against the
tracks.

The Casino Apache Travel


Center off U.S. 70 appears to
have been designed at a time
when the tribe did not envision
ever signing the compacts:
The centerpiece of the casino
is a massive, circular bar with
electronic gambling machines
built into the countertop.
The New Mexico compacts
contain a provision for the
state and the tribe to enter into
arbitration if either side
believes the other is breaking
the rules.
The compacts say such arbitration proceedings can be
public. But they also contain
wording that allows the arbitrators to keep the proceedings completely confidential.
It seems to be the nature of
the gambling industry to try
and push the envelope any way
they can, Clark said.
Speaking of the Mescalero
situation late last year, Clark
said it could set a dangerous
precedent for other gambling
tribes.
Velasquez, the Laguna
Pueblo gaming regulator, said
she didnt see that happening.
Rose, the gambling-law professor, said in an interview prior to the Mescalero casinos
cutting off their liquor service
that he knew of no other U.S.
tribes violating liquor provisions in their casinos.
If they can get away with
that, Rose said, they can get
away with anything.

ABOUT THIS
SERIES
DAY ONE: Gambling explodes
after New Mexico takes a
chance.
DAY TWO: Lottery sales are
booming.
DAY THREE: A slot subsidy revs
up horse racing.
DAY FOUR: Casino barons hit
the jackpot.
DAY FIVE: Problem gamblers are
left largely to chance.
DAY SIX: The economic winners
and losers of gambling.
TODAY: Regulation, New Mexicostyle: Casinos, hot dogs and pizza parlors.
DAY EIGHT: Another crossroads.
Find this series on the Web
at abqjournal.com.

18

ALBUQUERQUE JOURNAL

THE SUNDAY JOURNAL


HOME-OWNED

AND

125TH YEAR, NO. 9

HOME-OPERATED

252 PAGES

IN

MADE

IN THE

FINAL

U.S.A.

22 SECTIONS

SUNDAY MORNING, JANUARY 9, 2005

PART 8

Copyright 2005, Journal Publishing Co.

$1

THE BIG BET

Whats in the Cards?


More casinos and tracks, keno, and slots in bars could be in N.M.s future
Last in a series
BY THOMAS J. COLE
Journal Investigative Reporter

ew Mexico is at a gambling
crossroads, facing its biggest
public-policy questions since
approving casino gaming and a
lottery.
There are more questions than
answers.
Will New Mexico allow Indian
tribes to build off-reservation casinos? Will tribes with relatively
remote locations be able to put casinos in populated areas, like the corridor connecting El Paso and Las
Cruces?
Will the state expand the number
of horse tracks with casinos? Will
the economic-development needs of
towns like Raton and Tucumari
trump the interests of the racing
industry?
New Mexico also faces less
meaty, but nonetheless important,
questions about gambling expansion.
Should bars and restaurants,
which say their cash registers
arent ringing like they did before
casino gambling, get a chance to
compete with their own slots?
How about allowing track casinos
to be open more hours or having the
state Fair Commission build a new
casino for the operators of the fairgrounds track?
The state lottery also may renew
efforts to add a fast-paced keno
game to its menu.
The continuing push to expand
the gambling industry is no surprise, given the money at stake.
New Mexicos 13 gaming tribes
are raking in an estimated $592 million a year from gamblers. Racetracks will take in close to $175 million from slots.
Former state Rep. Max Coll, a
Santa Fe Democrat who helped lead
the effort to prevent casino gambling in New Mexico, says the gambling industry is a greedy business
that has the money to pursue its
interests.
They have the ability to protect
themselves, expand, get bigger and
bigger, Coll says.
State government, a benefactor of
casino gambling and its biggest
beneficiary, is projected to take in
about $84.4 million this year from
gambling. That figure includes revenue-sharing payments from tribes

PAT VASQUEZ-CUNNINGHAM/JOURNAL

Dealer Raelene Henry, center, and pit manager Paul Lamb are among the workers at Sandia Casino near Albuquerque, the most successful Indian casino
in New Mexico. Thirteen tribes operate casinos in the state and at least five more are considering getting into the business.

(slots only) and taxes from the


tracks and veterans and fraternal
clubs that operate slots.
Greed drives the state, too, Coll
says.
Gov. Bill Richardson, a longtime
supporter of casino gambling who
will play a pivotal role in any expansion, has sent mixed signals over
the last year.
After appearing to support more
tracks, Richardson said in September that he thought the state had
enough tribal casinos and tracks.
A spokesman said the governor
would seek a full assessment of
gaming in New Mexico after the

fifth track, in Hobbs, opened in


mid-November.
Richardson was unavailable for
an interview prior to publication
deadlines for this series.

Location matters
As in real estate, location is just
about everything when it comes to
casino gambling.
In large part because of their
locations, some New Mexico tribes
have benefited greatly, others less
so and some not at all from federal
and state law legalizing tribal casinos.
For example, Sandia Pueblo,

located on Albuquerques northern


edge, is one of the states smallest
pueblos, with fewer than 500 members. Yet its casino is New Mexicos
most successful, with gaming revenues estimated at $135 million a
year.
Jemez Pueblo, located in a rural
area northwest of Albuquerque, is
seeking to overcome its location
disadvantage by building off-reservation in Anthony between Las
Cruces and El Paso.
Picuris Pueblo, located in the
foothills of the Sangre de Cristo
Mountains in northern New Mexico,
away from a major population cen-

ter and often favored tourists routes,


is also reportedly pursuing the idea
of a casino in the Anthony area.
An Oklahoma tribe the Fort Sill
Apaches has expressed interest
in a casino in southern New Mexico,
as well.
The area between Las Cruces and
El Paso is attractive to tribes
because of the large population of
the region, lots of traffic on Interstate 10 and relatively little competition for the gambling dollar.
The area now has two casinos, one
at the Sunland Park track and the
See STATE on PAGE 19

Gaming Tribes Fear End to Good Times


Indian leaders expect
more competition,
plan next move

BY MIKE GALLAGHER
Journal Investigative Reporter

Talk to New Mexico Indian


leaders about casinos and
eventually the conversation
comes around to when their
gambling boom will end.
Thirteen tribes have a semiexclusive lock on casino gaming, competing with five racetracks and 61 veterans and fraternal clubs scattered around
the state.
Gross revenues from slot
machines in three months this
year topped $120 million
before expenses like casino
staff salaries were paid.
Estimates of gross revenues
from tribal casinos are around
$600 million a year, with industry experts estimating roughly
$200 million left after the
expense of running the casinos.
But tribal leaders expect an
expansion of off-reservation
gambling more racetrack
casinos, slot machines in bars
and resort casinos near ski
areas.
Some of the would-be competitors are other Indian tribes
seeking to move into off-reservation gaming and get a cut of

ROBERTO E. ROSALES/JOURNAL

PAT VASQUEZ-CUNNINGHAM/JOURNAL

Sandia Pueblo Gov. Stuwart Paisano and the Tribal Council Santa Ana Pueblo Gov. Leonard Armijo expects off-reservation
stress the importance of traditional values.
gaming to expand in the future. Whats important, he says, is
how the tribe will benefit before that happens.
what they see as a bonanza.
The current gaming tribes
are preparing for this and
expect it to happen in the nottoo-distant future but not
without a fight.
Maybe it is what they see as
the history of broken government promises that makes
tribal leaders fatalistic about
the future of Indian gaming.
Or maybe it is the simple
wisdom that acknowledges
that when it comes to money,
everyone wants some.
We have to diversify our
economy. Whos to say offreservation gaming wont

explode? said Santa Ana


Pueblo Gov. Leonard Armijo.
It gets so political. Money
talks. Im not against it or for
it. The question for me and the
council is, how do we benefit
ahead of that time? Armijo
said.

Much uncertainty
Sandia Pueblo Gov. Stuwart
Paisano said, We have to
move away from relying on
gaming revenues. There is too
much uncertainty. The compacts expire in 2014 but we
expect an increase in off-

reservation gaming before


that.
In return for the semi-exclusive gambling business, the
tribes pay up to 8 percent of
their gross slot machine revenues (or net win) to the state.
Thats down from 16 percent in
the first compacts the state
signed with the tribes.
That has amounted to more
than $180 million since the
mid-1990s. And several tribal
leaders said they would like an
accounting of what the state
has done with that money.
Last year, for example,
Tesuque Pueblos casino paid

more than $2 million in revenue sharing to the state. It


received just over $115,000 in
state money for capital
improvement projects.
Pojoaque Pueblo, which has
not made any casino payments,
received five times the amount
Tesuque Pueblo did.
I think we need an accounting of whats been done with
that money, said Charles
Dorame, former Tesuque
Pueblo Governor and head of
the New Mexico Indian Gaming Association.
It goes into the states General Fund and thats a black

hole.
Dorame said he expects
efforts to expand gambling to
grow stronger in the coming
years but warns that any
expansion of off-reservation
gaming will violate the compacts.
We may have to look at
whether another racino (racetrack casino) will result in a
reduction in what we pay the
state, Dorame said.
That expansion includes
plans that Pojoaque Pueblo has
kicked around for several
years to reopen the Santa Fe
Downs racetrack just south of
Santa Fe.
Pojoaque is locked in a civil
lawsuit with the state over
whether the 8 percent payment portion of the compact is
legal. The lawsuit had held up
Pojoaques expansion efforts.

The Peters casino


Dorame, whose tribe competes head-to-head for casino
customers with Pojoaque, said
Pojoaques plans to expand its
operations off reservation
would violate the current compacts, while a plan to build a
new casino on pueblo land does
not.
We work together with
Pojoaque on a lot of projects
but this is something we disagree on, he said.
See GAMING on PAGE 20

19

ALBUQUERQUE JOURNAL

State Reaches a Gambling Crossroads


from PAGE 18

other in Ciudad Jurez in Mexico.


Sunland Park owner Stan
Fulton is trying to protect his
near-monopoly. He has threatened to rescind his plan to give
New Mexico State University
half-ownership of the track
upon his death if another casino is permitted in the area.
Jemez Pueblo has teamed
with Santa Fe businessman
Jerry Peters on the proposal
for a $55 million casino in
Anthony.
Peters, a close
friend of
Richardson,
lost the competition in 2003
for the license
for the track
and casino in
Hobbs.
Jemez
FOWLER:
Pueblo and
You can only
Peters would
be partners in grow so fast
with the livethe casino, as
well as related stock, the
horses
development,
such as a hotel
and restaurant.
The pueblo and Peters have
declined to release financial
projections for the casino or
how exactly profits would be
divided.
But the stakes are enormous.
Based on what Indian casinos
are taking in, the Anthony
casino would have an estimated $67 million a year in gaming revenues although the
large population in the area
and the limited competition
could drive that amount much
higher.
Gambling critics have said
allowing Jemez Pueblo to build
in Anthony could lead to further reservation shopping
and lead to further expansion
in tribal gambling, including
into urban areas.
Nambe Pueblo and the Navajo Nation also are considering
constructing casinos, but on
their reservations.

The tracks
Raton has a history of horse
racing. The towns La Mesa
Park opened in 1946 but went
out of business in 1992. The
track had been the oldest in
New Mexico.

Farmington
Navajo

Jicarilla Apache

SunRay Park

Taos
San Juan
Santa Clara
Pojoaque

Gallup

San Felipe
Santa Ana

Navajo

5
Horse-racing tracks
with slot machines
in New Mexico.

Nambe
Tesuque
Santa Fe

13
Tucumcari

Sandia

Tohajiilee
Laguna
Acoma

BY THE
NUMBERS

Raton

40

Albuquerque
Downs

Isleta

NEW MEXICOS
CURRENT AND
PROPOSED CASINOS
AND RACETRACKS

Current tribal
casino sites

Possible new
tribal casinos

Current
racetracks
with casinos

Possible new
racetracks
with casinos

Ruidoso Downs
Mescalero
Apache
Zia Park
Hobbs

Las Cruces
Picuris Pueblo
El Paso

NEW MEXICO

Amount tracks are


projected to pay to the
state this year in taxes on
slot machines.

Amount tribal casinos are


projected to pay to the
state this year in revenuesharing payments on slot
machines.
Source: New Mexico Gaming
Control Board

TEXAS

MEXICO
CATHRYN CUNNINGHAM/JOURNAL

Eric Culver, who once owned


the track, is on the board of
Racing at Raton Inc., which is
planning to seek permission
from the Racing Commission
to open a $30 million-plus
track and casino in Raton.
Price International, a Canadian real-estate investment
firm, is among the investors.
Pojoaque Pueblo also wants
to reopen a track, plus casino,
just south of Santa Fe, and
Tucumcari has been mentioned
as a possible third site for a
racino.
Like Raton, which is on
Interstate 25, Tucumcari
would have the potential to
draw large numbers of travelers because of its location, on
Interstate 40 in eastern New

$43.9
million

$39.3
million

25

Fort Sill Apache


Jemez Pueblo
Sunland Park

Indian tribes with casinos.

Mexico. Raton and Tucumcari


tracks also could pull in gamblers from Colorado, Texas
and Oklahoma.
Richardson has helped fan
the flames of possible tracks
in Raton and Tucumcari, saying in April that marketing
studies showed the towns were
good bets for tracks.
The talk of more racinos in
New Mexico started months
before the track and casino
opened in Hobbs.
The other existing racinos
are scattered throughout the
state in Albuquerque, Farmington, Sunland Park and Ruidoso in the Sacramento Mountains of southeast New Mexico.
Pojoaque Pueblo appears
almost certain to win Racing

Commission approval to
reopen the Santa Fe track,
closed since 1997. Approval
for additional tracks appears,
at best, less certain.
Any additional track would
have to wait a couple years,
commission Chairman Jack
Cole says.
Cole says he understands
that Raton and Tucumcari
need economic development
but that his job is to protect
the health of the horse-racing
industry, not pave the way for
the profitable casinos that now
go along with tracks.
Im not an advocate for proliferation of casinos, Cole
says.
The concern of Cole and others is that the industry doesnt

have enough resources


horses and workers, for example to meet the needs of any
tracks beyond Santa Fe.
We just cant start putting
racetracks in every community, says Eddie Fowler, president of the New Mexico Horsemens Association. We dont
have that much horse flesh.
You can only grow so fast with
the livestock, the horses.
Fowler says the best interests of the industry need to
come first in any decision on
new tracks.
I dont want to see us put in
tracks just for the casinos, he
says. There are other economic opportunities for those
communities than the fast
buck.
A decision by the state to
hold the line on the number of
tracks with casinos would
open the door for tribes to propose additional towns, like
Raton and Tucumari, as sites

THE TRIBE

THE SLOT PLAYER

THE GAMBLING FOE

Jemez Pueblo

Barbara Solano

Guy Clark

for off-reservation casinos.


Some are concerned that
further expansion in the
horse-racing industry could
threaten the agreements
under which Indian casinos
pay part of their slot winnings
to the state in exchange for
limited competition.
Tracks, however, pay a higher percentage of their slot
winnings to the state. Because
of that, the five operating
tracks are expected to pay
more to the state this year
than the gaming tribes.

Benefits and costs


When the Zia Park track and
casino in Hobbs opened in
November, Tonya Henderson
was behind the counter as a
cashier.
Henderson, 25, a single
mother without a college
degree, earns about the same
as she did as a cashier at WalMart.
She wants to learn all she
can about the casino business.
I want to move up, Henderson says. I could never be
happy making six bucks an
hour. So, its very important to
make money.
She says her long-term goal
is to return to college, get a
degree in education and teach
elementary or high school students.
The job at Zia Park, Henderson says, will help get her to
that goal. It pays the bills,
she says.
In its 1999 report, the
National Gambling Impact
Study Commission said casinos
can generate economic development through the creation of
quality jobs.
But the commission recommended that casinos be targeted at communities with high
levels of unemployment and
underemployment, with a lack
of jobs for which residents are
qualified.
Gambling, like any other
viable business, creates both
profits and jobs, the commission said. But the real question is not simply how
many people work in the
industry, nor how much they
earn, nor even what tax revenues flow from gambling.
The central issue is
whether the net increases in
See FLOOD on PAGE 20

ADOLPHE PIERRE-LOUIS/JOURNAL

RICHARD PIPES/JOURNAL

ADOLPHE PIERRE-LOUIS/JOURNAL

Jemez Pueblo former Gov. Paul Chinana says the tribe


needs the profits a casino would generate to improve the
quality of life for pueblo residents.

Barbara Solano, a part-time bartender at the Veterans of Foreign Wars post in Raton, says a horse-racing track and casino in Raton would provide much-needed entertainment for
the area. The VFW post has just four slot machines.

Guy Clark, an Albuquerque-area dentist and longtime antigambling activist, says he believes the gambling industry will
eventually collapse in New Mexico because of its social and
economic costs.

Barbara Solano likes to


play slot machines.
She sometimes plays at the
Veterans of Foreign Wars
post in Raton, where she
works as a part-time bartender. But the club has just
three nickel machines and a
quarter slot.
Its very limited, says
Solano, 53, a divorced mother
of two.
So about once a month or
so, she drives with friends or
hops a chartered bus to one
of the many casinos in the
Albuquerque/Santa
Fe/Espaola area.
Were not heavy gamblers, Solano says. Its just
penny or nickel machines.
Its entertainment.
The problem: Its a twohour drive or more from
Raton in northeast New Mexico to a tribal casino or a
track with slots.
Northeast New Mexico,
without any Indian tribes,
has been left behind in the
explosion of casino gambling,
which has been centered in

Guy Clark has been on the


front lines of the battle
against gambling for more
than a decade.
Clark, a dentist in Corrales,
is executive director of the
New Mexico Coalition
Against Gambling. Its an
unpaid job requiring lots of
hours every week.
An active member of the
Mormon Church, he got
involved with the multidenominational coalition in
1993 and was initially successful in helping to block
proposals for casino gambling and a state lottery.
But in 1995, then-Gov. Gary
Johnson signed casino compacts, or agreements, with
Indian tribes, as well as legislation to create a lottery.
Clark and others fought
back, eventually winning a
state Supreme Court decision
that the compacts were
unlawful.
Clark says his darkest
moment was the day in
March 1997 when the House,
by a one-vote margin,
approved new compacts and
slot-machine gambling at
horse-racing tracks and veterans and fraternal clubs.

Jemez Pueblo former Gov.


Paul Chinana can rattle off
his tribes needs:
The pueblo needs a filtration system for drinking
water, a sewer-treatment
plant, improvements to its
irrigation system and a new
high school.
The pueblo also needs
more businesses to provide
jobs for members. There are
hopes for a restaurant, theater, spa and RV park.
The pueblos youth need
scholarships to pay for college and other residents need
job training in trades such as
plumbing and electricity.
We just need a lot of
things to have a better quality of life, Chinana says.
Tribal leaders have a plan
to address those needs: Build
a casino in Anthony some
290 miles south of the pueblo
between Las Cruces and El
Paso.
No other New Mexico tribe
has built an off-reservation
casino. To do so requires the
approval of the U.S. Interior
Department and the governor.
Tribal leaders say a casino

at Jemez Pueblo, about 30


miles northwest of Albuquerque, doesnt make sense
because of the pueblos
remote location and because
it would have to compete
against Indian casinos closer
to Albuquerque.
Chinana says the casino in
Anthony also would be a
boon for residents there.
They are almost in as bad
a shape as we are, he says.
The 2000 Census found one
in four Jemez Pueblo families lives in poverty, one in
three homes doesnt have a
telephone and 35 percent of
families are headed by single
women. Interior Department
statistics show an unemployment rate of 27 percent for
2003. The pueblo has a population of about 3,500.
People need to have jobs
instead of staying home and
maybe becoming alcoholics,
Chinana says.
He says the pueblo is being
forced into the gambling
business because it can no
longer rely on grants and federal aid to meet its needs.
Wed rather not do it but
we have to, Chinana says.

the Rio Grande corridor.


While most New Mexicans
have easy access to casinos
and their restaurant buffets,
concerts and sporting events,
many residents dont.
Solano is among the supporters of a track and casino
being opened in Raton.
A track and casino, she
says, would provide muchneeded entertainment. Its a
very quiet little town, very
quiet.
Mercedes Swanson is a
travel agent in Raton who
organizes bus trips about
once a month to casinos in
Espaola, Pojoaque and
Cripple Creek, Colo. Most of
the casino-goers are retirees,
she says.
These buses are full every
month, says Swanson, also a
supporter of a track and casino.
Others in the community
are worried about the costs
of a track and casino, including gambling by those least
able to afford it.

The Senate followed suit


shortly after.
Im disappointed in a lot
of people in very high
places, he says. We won
years and years but you only
have to lose once to have it
(gambling) for a long time.
Clark is 63 now. He and his
wife, Joan, have seven children, including three who
were adopted. His youngest
son is a Marine serving in
Iraq.
He opposes gambling
because of its social and economic costs bankruptcies
and suicides by troubled
gamblers and the loss of
business for retailers and
others as New Mexicans
spend more at casinos and
less elsewhere.
The effects are going to
get worse and worse as it
goes along and it expands,
Clark says. Eventually, I
think the whole thing will
collapse.
He says he doesnt know
when that will occur. It could
be five years, or 20.
I hope to be around that
long and be in the fight when
it happens, Clark says.

20

ALBUQUERQUE JOURNAL

Gambling Industry Is N.M.s 800-Pound Gorilla


Campaign donations,
lobbyists help to
promote interests

BY THOMAS J. COLE
Journal Investigative Reporter

A decade ago, experts


warned state lawmakers that
the gambling industry could
become the 800-pound gorilla
of New Mexico politics.
In truth, it already was.
And not much has changed,
with the industry doling out
campaign contributions and
employing an army of lobbyists to pursue its interests in
Santa Fe.
The money spent on political
donations and lobbyists has
been a good investment, with
the industry repeatedly winning favors from state policy
makers over the past decade.
You feel outgunned, says
Guy Clark, executive director
of the New Mexico Coalition
Against Gambling and a lobbyist for the group. They have
all the money and they have
the political power and they
have the lobbyists.
Gaming tribes first emerged
in 1994 as major political players in New Mexico, contributing more than $190,000 to the
successful gubernatorial campaign of Gary Johnson.
Johnson, just weeks after
taking office in January 1995,
signed the first state-tribal
compacts legalizing full-scale
casino gambling on Indian land.
By 1996, the gambling industry, led by gaming tribes and
horse-racing tracks, had
become the top special-inter-

est contributor to races for


seats in the Legislature.
And the money just keeps
coming.
A Journal analysis of campaign contributions found that
gambling interests gave at
least $796,000 to the successful
gubernatorial campaign of Bill
Richardson in 2002. That total
includes contributions from
lobbyists who also represent
other interests.
The donations amounted to
about 10 cents on every dollar
raised by Richardson.

Help from Richardson


The governor, a longtime
supporter of Indian gaming,
received more than $214,000
from gaming tribes and their
lobbyists.
Richardson did even better
with the horse-racing industry
and those trying to get into the
business, raking in more than
$467,000 from that group and
its lobbyists.
So what have gambling
interests gotten? Millions.
Not long after taking office
in January 2003, Richardson
followed through on a campaign pledge to expand the
horse-racing industry, allowing a track and casino to be
built in Hobbs.
The licensee for the track
went to a partnership of contributors to Richardson.
The governor also has raised
the possibility of more tracks,
in Raton and Tucumcari, and
his administration is exploring
the possibility of building a
stand-alone casino for the
Downs at Albuquerque on the
state fairgrounds.

You feel outgunned. They have all


the money and they have the political power
and they have the lobbyists.
GUY CLARK, NEW MEXICO COALITION
AGAINST GAMBLING

In addition, the governor


intervened in June when the
New Mexico Horsemens Association complained the Racing
Commission planned too few
racing days in 2005.
The commission later agreed
to increase the number of days
by 17, to 281.
The horsemens association
contributed nearly $13,000 to
Richardsons campaign.
Santa Fe businessman Jerry
Peters, another major donor to
the governor, lost out in the
competition for the license for
the Hobbs track but now wants
Richardson to approve a plan
by him and Jemez Pueblo to
build a casino in Anthony,
between Las Cruces and El
Paso.
Richardson was unavailable
for an interview prior to publication deadlines for this
series.
He has acknowledged knowing who his campaign contributors are but has repeatedly
said there is no link between
donations and official actions.
Richardson has said financial supporters get goodwill
but thats all.

The ears
of lawmakers
Gambling interests also have
done well with the Legislature.
Lawmakers passed a law in

2001 more than doubling the


maximum number of slot
machines at each track, from
300 to 750.
That same year, lawmakers
approved new state-tribal
gaming compacts that reduced
how much Indian casinos must
pay to the state in exchange
for limited competition.
Gaming tribes now pay a
maximum of 8 percent of their
net win on slot machines, down
from 16 percent.
Albuquerque Mayor Martin
Chvez says tribes are putting
gambling profits to good work,
like improving health care and
education for their members.
But, Chvez says, the tribes
are also incredibly sophisticated in manipulating the
levers of power. They lobby.
They contribute to campaigns.
This is not a bad thing. Every
business does it. Chevron,
PNM, everyone.
Clark says his group has
managed to win some battles
in recent years. For example,
he says, tracks with casinos
were defeated in a recent
attempt to increase their
hours.
Clark says his group relies
on letter-writing and petition
campaigns to put pressure on
policy makers.
We mainly have the grass
roots, the people and the

truth, he says.
Clark says he isnt above siding with one gambling interest
who feels its business is
threatened by a expansion proposal by another segment of
the industry.
Gambling interests have
about two dozen lobbyists
working policy makers.
They are among the most
experienced lobbyists in Santa
Fe, with some having served in
the Legislature. Those lobbyists have made many friends
over the years.
The gambling industry has
the money to hire the ones who
are well liked, says former
Rep. Max Coll, a Santa Fe
Democrat.

Effective lobbying
Many of the lobbyists make
political contributions in addition to those by their clients.
Also, some of the lobbyists
have major clients outside the
gambling industry, giving
them even more credibility
and leverage.
Theyre tough; theyre
effective, says Rep. Luciano
Lucky Varela, D-Santa Fe.
The lobbyists for gambling
interests include:
Mickey Barnett, a former
Republican national committeeman who represents Santa
Ana Pueblo. His other clients
include El Paso Electric and
Corrections Corporation of
America.
Odis Echols, a former senator who represents Sandia
Pueblo and the New Mexico
Indian Gaming Association.
His other clients include insurance giant AFLAC and Wells

Fargo financial services.


Thomas Horan, a former
House member who represents
slot-maker International Game
Technology. His other clients
include Presbyterian Health
Plan, the New Mexico Press
Association and Albuquerque
Publishing, which prints and
distributes the Journal and The
Albuquerque Tribune.
Edwin Mahr, a former corrections secretary who represents the Albuquerque Downs
racetrack and Scientific
Games, a lottery products
company. His other clients
include Southwest Airlines and
T-Mobile, the wireless communications provider.
Robert McBride, a former
senator and state judge who
represents the Ruidoso Downs
track. His other clients include
Miller Brewing and the tobacco
company Philip Morris USA.
New Mexico gaming tribes
also have been active in Washington, D.C.
Sandia Pueblo, the
Mescalero Apache Tribe and
Jicarilla Pueblo employed lobbyists in Washington in 2004,
paying a total of about
$250,000 for services for the
first six months of the year,
according to lobbyist reports
filed with the Senate.
Sandia previously employed
a lobbyist-public relations
team now under investigation
for keeping a kickback scheme
secret from its clients.
The pueblo employed the
team in 2001 and 2002 to lobby
Congress on its plan to reclaim
land in the Sandia Mountains.
Sandia eventually reclaimed
the land.

Gaming Tribes Fear End to Good Times Flood of Racinos


from PAGE 18

Pojoaque Gov. George


Rivera did not return telephone calls seeking an interview.
At least part of the unease
of Indian leaders over the
future expansion of gaming
rests with the contradictory
remarks by Gov. Bill
Richardson.
Earlier this year, Richardson mentioned Tucumcari as
a possible location for a new
racetrack and casino. Others
are lobbying to reopen the
racetrack in Raton.
We let the new racetrack
at Hobbs slip by, Dorame
said. I dont think that will
happen again.
Richardson was unavailable for an interview prior to
publication deadlines for this

series.
Dorame also said proposals
for an off-reservation casino
south of Las Cruces would
violate the gaming compacts
and require re-examination
of the revenue sharing agreement.
One of those casino proposals involves Santa Fe businessman Jerry Peters in
partnership with Jemez
Pueblo. Peters is a close associate of the governor and a
major financial campaign
supporter.
Jemez Pueblo is geographically isolated from any major
urban center or interstate
highway. It has no casino and
is desperately poor. It makes
the same arguments the gaming tribes have made for why
it needs a casino.
While sympathetic to

Jemez Pueblos inability to


cash in on the gaming boom,
Dorame said, We call that
the Peters casino.

A quick fix
Most of the tribal casinos in
the state are located in two
areas.
Around the Albuquerque
metropolitan area are Sandia,
Santa Ana, Isleta, Laguna and
San Felipe casinos.
In the Espaola Valley
north of Santa Fe are
Pojoaque, Tesuque, Santa
Clara and San Juan casinos.
Leaders in both areas are
concerned that they are running out of gamblers.
Our population growth in
New Mexico cannot keep up
with the growth in gaming,
Paisano said. We dont have

the millions of people that


create the market in Southern California.
When Laguna Pueblo
opened its $60 million Route
66 casino in 2003, gaming
revenues at other Indian casinos in the Albuquerque area
temporarily decreased or
went flat.
As a tribe, we know that
gaming provides a quick fix
for some basic needs but, as
the market saturates, we
have to look for something
else, Dorame said.
He points out that tribes
have been in this situation
before.
Jewelry and pottery making were a good business, he
said. But the market got saturated with pots and jewelry
from Mexico using our
designs.

EDITORIAL

Changes Are Needed Before Gambling Grows

he gambling explosion in New Mexico


has produced winners, losers and
questions.
Among the winners: gaming tribes, the state general
fund, scholarship recipients, the racing industry
and a handful of casino
barons.
Among the clear losers:
problem gamblers and
some local communities
that bear the burden of
gambling but dont directly
reap the rewards.
Its no small problem.
The dark side of gambling
means more bankruptcies,
evictions, domestic violence, divorce, auto thefts
and larceny. All of which is
set against the backdrop of
a state that still shoulders
one of the highest poverty
rates.
The states attempt to
address these social ills has
been half-hearted at best.
Real people are behind
the statistics.
Lionel Greigo was a
father, grandfather and
husband who worked as a
prison guard near Las
Cruces. His second home
was a casino, where he
gambled away his pay. He
tried to stay away, even
sought help.
In November 2001, police
found his body dangling
from a cedar tree. His wallet was empty but a note
was found nearby with an
agonizingly simple message written by his grandson please stop gambal-

ing (sic).
Griegos story is one powerful testament to the
downside of this age-old
vice.
Self-inflicted
wounds?
Perhaps.
But
wounds nonetheless.
The Journals eight-day
series on the rise of gambling in New Mexico
explored this and more.
There are some easy conclusions. For example, the
states efforts to combat
the ills of gambling are
woefully inadequate, and
state regulation of Indian
casinos is cloaked in secrecy.
But questions emerge
with equal prominence.
The state doesnt know
much about the scope of
the social problems, nor
does it have a handle on the
relative economic impact.
In 2003, Gov. Bill Richardson vetoed a study that
would have asked the right
questions which hasnt
been done since the mid1990s.
That was a mistake that
should be rectified, even if
many dont want to know
the answers.
Among the winners, the
states general fund is
healthier to the tune of $84
million this year alone.
Thousands of jobs have
been added to some sectors
of the economy, although
we dont know how many
were lost in others. More
than 30,000 students have
benefited from the states
lottery scholarship.
Some of the most persis-

ALBUQUERQUE JOURNAL
T.M. PEPPERDAY, Publisher 1926-1956
C. THOMPSON LANG, Publisher 1956-1971

T.H. LANG, Publisher


Kent Walz, Editor
An Independent Newspaper
Published at Journal Center, 7777 Jefferson NE
Albuquerque, NM 87109-4343, by the Journal Publishing Co.
This newspaper is copyrighted, reprint of this masthead prohibited.

B2

Sunday, January 16, 2005

tent Indian poverty has


been alleviated thanks to a
cash cow that is funding
needed
infrastructure,
health and education programs.
Still, the majority of New
Mexicos Indian population
has not shared in the windfall.
Whats needed most is a
clear-headed
focus
on
where the state goes from
here. Gambling, buoyed by
the political influence its
profits have bought, is likely here to stay. But that
shouldnt be an excuse for
inaction.
The cloak of secrecy that
surrounds the regulation of
Indian casinos is troubling.
State investigations into
violations of the compacts
should be public as they
are in Arizona.
The main recipient of
gaming dollars used to
address gambling problems needs an arms length
relationship with the indus-

try. Even better, the state


Health Department should
take over administration of
the money that tribal casinos and racetracks are by
law required to set aside
for programs.
More must be done to aid
communities that are home
to casinos. Local costs of
providing police and other
services have risen, but
revenue goes to the state.
These
are
minimal
reforms.
The states flourishing
$3.9 billion gambling industry is spread across 13 Indian casinos, five racetracks,
61 veteran and fraternal
clubs, and a growing state
lottery. Expansion is being
proposed on several fronts.
Any growth must be
rejected out of hand until
hard questions are asked
and answered and obvious reforms are put in
place for the gambling
thats already here.

Concerns Racing
from PAGE 19

income and well-being are


worth the acknowledged
social costs of gambling.

The bars
In addition to new Indian
casinos and tracks, gambling
could expand in other ways in
New Mexico.
One of those is the introduction of slot machines at bars
and restaurants.
The liquor retail industry
has lobbied for years for the
machines and it may make
another push in the legislative
session beginning this month.
Billy Baldwin, an Albuquerque bar owner and president of the New Mexico Hospitality Association, says
liquor licensees cant compete
with casinos.
The last two years have
been pretty tough, Baldwin
says. I dont know if its terrorism or casinos putting
more of a hurt on us.
Baldwin says the association
supports a proposal for five
slot machines per liquor
licensee.
We hope to get somebody to
carry the bill for us in the
session, he says. A lot of the
legislators have seen whats
occurred.
Some legislators in the past
also have pushed proposals
for casino gaming in resort
areas, such as Angel Fire near
Taos.
The National Gambling
Impact Study Commission
found destination resorts create more and better quality
jobs than casinos catering to a
local clientele.

The Mescalero Apache Tribe


near Ruidoso in southeast
New Mexico will open a new
hotel/casino this spring catering to both local residents and
tourists.
Also possible is a new casino
for the Downs track on the
state fairgrounds in Albuquerque.
The Fair Commission has
hired an architect and a gaming consultant to study
whether the casino should be
renovated or moved elsewhere
on the fairgrounds, possibly to
the corner of a busy intersection.
Track operators also are
expected to make another
effort to extend their hours of
operation. Legislation to
accomplish that got pushed to
the side in the final days of
the 2004 Legislature.

ABOUT THIS
SERIES
DAY ONE: Gambling explodes
after New Mexico takes a
chance.
DAY TWO: Lottery sales are
booming.
DAY THREE: A slot subsidy revs
up horse racing.
DAY FOUR: Casino barons hit
the jackpot.
DAY FIVE: Problem gamblers are
left largely to chance.
DAY SIX: The economic winners
and losers of gambling.
DAY SEVEN: Regulation, New
Mexico-style: Casinos, hot dogs
and pizza parlors.
TODAY: Another crossroads.
Find this series on the Web
at abqjournal.com.