Oregon AFL-CIO throws union support behind proposed casino

By KATU.com Staff and Associated Press Published: Oct 11, 2012 at 4:36 PM PDT Last Updated: Oct 11, 2012 at 8:04 PM PDT

PORTLAND, Ore. - Two ballot measures that would give developers the go ahead to create a non-tribal casino and resort in Wood Village are now getting major support from union workers.

On Thursday, the Oregon AFL-CIO, which represents 135,000 Oregon workers, announced its endorsement of The Grange.

If Measures 82 and 83 pass, along with a local Wood Village ballot measure, the construction on the casino and resort would start in November and it would open in 2014.

The Oregon AFL-CIO president said he has received guarantees that the project will create more than 2,000 good-paying jobs.

Casino proponents believe The Grange would not only provide jobs for the local economy, but also generate money for parks, police and schools - as much as $100 million.

However, there is quite a bit of opposition to the casino from some high places. On Thursday, opponents announced that the state Republican and Democratic parties had both come out against the proposal. And earlier this week, three former Oregon governors joined current Gov. John Kitzhaber, who recently filmed a television commercial urging a 'no' vote, in opposing the proposal.

Republican Vic Atiyeh and Democrats Barbara Roberts and Ted Kulongoski held a news conference on Monday where they implored voters to oppose Measures 82 and 83. They warned that a new casino would increase crime in the area while harming Indian tribes that operate Oregon's nine existing casinos and rely on the profits to pay for social services such as housing, health care and education.

The primary investors behind the project are two Canadian companies with extensive experience in the gambling industry. Most of their projects have hit the jackpot, so to speak, but a few have struggled.

The developers have blanketed airwaves and mailboxes with promises of $100 million for schools and public services.

Oregon would get quite a bit more money if the developers gave the state the same deal they've given governments elsewhere. In other jurisdictions, the same developers share a much larger portion of their revenue with the government — 75 percent in British Columbia, 50 percent in New Brunswick, 45 percent in Illinois.

Company executives point out that the regulatory and market environments are different in every state or province. In British Columbia, Parr said, some of the taxes are dedicated to a fund for refurbishing the property. He also said the government owns and maintains the slot machines. In New Brunswick, Clairvest has a monopoly for 20 years and the government helps market the casino.

"What we wanted to do is be able to give something simple, clean, easy for the government of Oregon to understand," Parr said. "They don't have to support us in any way shape or form and we will dedicate 25 percent off the top."

The new Oregon casino would be owned by PDX Entertainment company, a corporation with about 19 shareholders created in March and based in Lake Oswego. Clairvest Group Inc. and Great Canadian Gaming Corporation, publicly traded Canadian companies, together own a majority stake in PDX Entertainment.

The investors point to letters of support from leaders in other communities where they run casinos. The campaign provided a letter from the mayor of Des Plaines, Ill., calling casino management and owners "welcome members of our community." The president of the British Columbia Lottery Commission wrote that Great Canadian casinos there are well-run.

"You want to deliver something that people are going to love to come to and have fun at, and people that are around it are going to be proud to be associated with it," said Jeff Parr, co-chief executive of Clairvest Group Inc., one of the primary investors in the Oregon casino project. "That's just good business, frankly. And that's what we do."

If voters sign off, the casino would be required to give 25 percent of its winnings to the state lottery fund. The state's share is far more than the 6 percent Spirit Mountain Casino pays toward nontribal community services.

Clairvest, a private equity firm based in Toronto, was founded in 1987 and made its first foray into the casino industry a decade ago. It has at least seven casinos in the United States, Canada and Chile that comprise half of its total portfolio, according to securities filings.

Clairvest reported a profit of $9.6 million in the quarter ending June 30, which was boosted by a $7.75 million legal settlement.

Most of Clairvest's casinos have been profitable for the company and the local government. Its brand-new casino outside Chicago took in $177 million in winnings between July and December last year and paid $61 million in taxes.

But there have been some blemishes.

The Chicago casino paid a $25,000 fine last year for violations of a voluntary program for problem gamblers who want to opt out of casino marketing materials. People in the self-exclusion program aren't allowed to visit a casino or take out credit on site. However, a person in the exclusion program was able to take out credit card cash advances worth $600 from a credit card over two days, according to a civil complaint filed by the Illinois Gaming Board.

Several others were able to sign up for rewards cards or received marketing materials. The casino reported the violations to the gaming board on its own.

People are sometimes able to fool casino security, but the casino takes the exclusion program seriously, Parr said.

In Kansas, Clairvest was part of a group selected to build a casino outside Wichita to help generate cash for the state. After a series of delays the governor pulled the plug, saying Kansas needed clear certainty for the state budget.

Parr countered that developers faced uncertainty in the market and couldn't come to terms with the government.

Clairvest also was part of a consortium that was initially selected to build a massive gambling project in New York City but was later disqualified. An inspector general found a flawed selection process that invited unsavory spending on lobbyists and campaign contributions, but the investigation laid the blame largely on politicians and lobbyists.

Clairvest was never found to be complicit in any wrongdoing, Parr said.

Great Canadian Gaming Corp., based in Richmond, British Columbia, owns 12 casinos and race tracks in Canada and five card rooms in Washington state. Great Canadian would manage the Oregon casino.

The company reported a profit of $2.7 million on revenue of $101 million in the quarter ending June 30.

About 72 percent of Great Canadian's revenue comes from gambling, including $5.4 million from its Washington card rooms. Great Canadian is reeling from changes to gambling regulations in Ontario, where it will have to remove slot machines that provide the bulk of revenue at two race tracks, according to documents filed with Canadian securities regulators.
It's also struggling from overestimating the demand in British Columbia, the records show.

Copyright 2012 The Associated Press.

This week's "Your Voice, Your Vote" is about this issue. Watch the debate between Justin Martin, the campaign chair of "It's Still a Bad Idea," and Rick Metsger, spokesman for "Yes on 82 & 83," this  Sunday at 9 a.m.