PALM SPRINGS — The much ballyhooed partnership between gambling giant Caesars World and the Agua Caliente Indians to build a $25-million casino here has been terminated, both sides announced Tuesday.
The dissolution was amicable and was prompted by various lawsuits that clouded the project, along with the partnership's delay in winning the blessing of the National Indian Gaming Commission, said Tribal Chairman Richard Milanovich.
The tribe, whose checkerboard reservation accounts for half of Palm Springs, still intends to build a casino--and Caesars may re-enter the picture later, Milanovich said.
The tribe may seek another casino partner or build it alone, banking on revenue it expects to generate from a card club that it will open this month at its downtown Spa Hotel, Milanovich said.
Caesars' withdrawal from Palm Springs is the second time in a week that a Nevada gaming company has ended its association with a California tribe.
The Elsinore Corp., which operates the Four Queens Casino Hotel in Las Vegas, was ordered by the Nevada Gaming Commission last week to drop its management contract with the Twentynine Palms band of Mission Indians after that tribe introduced slot machines at its new casino near Indio, despite California's ban on the devices. Casinos that conduct illegal operations elsewhere stand to lose their Nevada licenses.
The Agua Caliente tribe and Caesars had promised to move cautiously into the burgeoning arena of Indian gambling. They said their casino would stay clear of slot machines and other banned games and offer only high-stakes bingo and legal card games until such time that Las Vegas-style gambling is permitted in California.
Industry observers said Tuesday that Caesars may have grown frustrated by Gov. Pete Wilson's continued opposition to Indian gambling, and decided to drop out of the project until the issue is resolved in the courts.
Milanovich said that with Caesars' withdrawal, the tribe will consider opening a casino with slot machines.
When Caesars and the Agua Caliente announced their pact in November, 1992, it signaled a new era of partnership between the traditionally competitive forces of Las Vegas and California's tribes.
For years, Nevada casinos looked warily on the increasing number of California tribes developing their own gambling halls, given that 30% of Nevada's gambling income is generated by Californians. Today, about 8,000 slot machines are operated by 20 tribes in California, despite lawsuits by the Wilson Administration contesting their legality.
The Caesars-Agua Caliente project promised to build the glitziest Indian casino to date in California, shored up by the Caesars name and enjoying the most prime of locations--the tourist resort of Palm Springs.
But Milanovich said that delays in developing the casino frustrated the tribe, prompting the opening of the card club as an interim measure and putting the larger casino on the back burner.
Among the obstacles confronting the tribe was a lawsuit by state Atty. Gen. Dan Lungren challenging a convoluted land deal involving the city of Palm Springs in order to develop the casino site. A judge dismissed the suit, saying the state could not sue the tribe because of its sovereign status, and the state has not yet decided whether to appeal.
The Caesars-tribal pact also needed the blessing of the National Indian Gaming Commission, which regulates the involvement of management companies in Indian casinos. Approval of that pact stalled, said tribal Vice Chairwoman Barbara Gonzales-Lyons, because of the commission's opposition to the partners' revenue-sharing agreement, and because the partnership wanted a seven-year contract and the commission would only approve a five-year pact.
Palm Springs Mayor Lloyd Maryanov, who with other civic leaders had pinned much of their hope on a revitalized downtown economy with the Caesars casino, said he was "disappointed but not distressed" with the collapse of the deal. "In the long term, I'm sure something will still happen," he said.
Harrah's Casinos announced in December that it would develop a $22-million bingo and card club casino with the Pala band of Mission Indians in northern San Diego County.