SBJ/November 10 - 16, 2003/This Weeks Issue

Magna will lobby for slots in California

Magna Entertainment Corp., owner of Santa Anita Park, will lobby California Gov.-elect Arnold Schwarzenegger to allow slot machines at racetracks as part of a plan to increase state tax revenue and revive the state's economy.

"Our goal will be to educate the new governor as to the revenue potential of slots [at racetracks] in California," Magna CEO Jim McAlpine told investors and analysts on a conference call late last month. "And I am pretty optimistic. [Schwarzenegger] looks like a reasonable guy and hopefully we will get some positive results."

Schwarzenegger, who ran campaign ads this fall attacking California's Indian tribes for spending millions on political contributions but not paying their fair share in taxes on Indian casino profits, is scheduled to take office Nov. 17.

McAlpine's comments came on a conference call in which he admitted he was disappointed with Magna's third-quarter results — a loss of $15.4 million, or 14 cents a share, compared to a loss of $9.7 million, or 9 cents a share, for the same period a year ago.

California, where Magna operates Bay Meadows and Golden Gate Fields in the San Francisco area and Santa Anita in the Los Angeles area, is just one place Magna is eyeing slots. McAlpine told investors that Magna is "aggressively pushing" for slot machines at the tracks it owns in Pennsylvania, Oklahoma, Maryland, Michigan, Texas, Ohio, Florida and California.

McAlpine said, too, that if there is favorable legislation in states, Magna has positioned itself to get the machines up and running quickly. "I don't think it would surprise you ... to know we have already designed the physical facilities," he said.

Schwarzenegger spokesman H.D. Palmer said the governor-elect has not made any statements on the future of horse racing in the state.

Roger Gros, editor of Global Gaming Business Magazine, said Magna has "a good shot" at getting slots in its racetracks in states like Pennsylvania and Maryland, where it owns Pimlico, host of Triple Crown race the Preakness Stakes, but gives the company almost no chance of getting slots in California.

Gros allows there is a small chance that Schwarzenegger could turn to a plan to put slots in at racetracks if negotiations to get more revenue from the Indian tribes fail. But he said the Indian tribes donate many millions to other state legislators and those politicians would not agree to such a plan.

Howard Dickstein, attorney for a number of California Indian tribes, said a constitutional amendment would be necessary for California racetracks to get slots. "You can be certain the tribes would ... put up all of their resources necessary to defeat an initiative of that kind," he said.

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