Pair Betting on a Huge Payoff from casinos

[chickwithapen]

Pair betting on a huge payoff from casinos
Ilitch, Malik raise stakes in Indian gaming
November 25, 2007

BY TODD SPANGLER

FREE PRESS WASHINGTON STAFF

WASHINGTON -- Marian Ilitch and Michael Malik are spending big money to navigate political hurdles for their plans for American Indian casinos on both coasts and in Michigan.

Ilitch is one of Michigan's most powerful and wealthy women as owner of the MotorCity Casino and co-owner of the Detroit Red Wings with her husband, Mike, who also owns the Detroit Tigers. Malik is a big-time real estate developer, casino entrepreneur and, in at least a couple of ventures, Marian Ilitch's partner.

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Together, they have spent more than $1 million on lobbyists for their casino proposals and made more than $400,000 in political contributions during the last five years.

Money has gone to Northeastern Democrats, West Coast Republicans and many key races and causes in between. A few months after a fund-raiser for Sen. Carl Levin early this year, the Detroit Democrat agreed to support a casino project in Port Huron, despite opposition from some city officials and its congressional delegation.

So far, the investments have not led to approvals for the casino proposals, but the potential payoff is enormous.

"It could mean as much as $100- to $200 million a year for the Ilitches. ... So it's certainly worth their while," said Roger Gros, publisher of Global Gaming Business, a trade magazine. Whatever they're spending, he added, "is peanuts compared to what they could take in."

Their bets are still long shots, having run into a stretch of bad luck. In California, where Ilitch and Malik are working with two tribes for a casino in Barstow, on the road from Los Angeles to Las Vegas, the legislature let a compact expire.

In New York, where they are working with the Shinnecock Indian Nation, a federal judge has ruled against the tribe's land claim in Southampton.

Last week, a House committee abruptly delayed a hearing on the plan for an Indian casino in Port Huron. Unlike the other proposals, Malik and the Bay Mills tribe from the eastern Upper Peninsula are working without Ilitch. Though it has her tacit support, she can't be directly involved because of her casino ownership in Detroit.

Tom Shields, a spokesman for Ilitch and Malik, said the proposals all are in play.

"You can't get into this thing unless you're going to be in it for the long haul," Shields said. "If you are successful, obviously, the investment pays off."

And then some.

A contract to run a tribal casino can be worth up to 30% of net revenues each year, under federal law.

Last year, Michigan's Saginaw Chippewa tribe -- which runs Soaring Eagle Resort and Casino in Mt. Pleasant -- paid local governments 2% of net revenues or about $8 million.

A 30% management contract would have been worth $120 million.

How big are Ilitch and Malik in the casino business? Noteworthy, not huge, Gros said.

In part, that's because of their success in outlasting anti-gambling foes at home and finally -- after Windsor got gaming -- winning public support in a Detroit vote in 1994 and statewide two years later.

Standing investments

It was during that time that Malik and Marian Ilitch became acquainted. Now, said Gros, "whenever you go to a new jurisdiction, you expect to see them there," riding their success in Detroit. (Malik is no longer associated with MotorCity Casino.)

Since they're not running multiple casinos, they are better positioned to shower attention on communities and tribes they work with, Gros said.

That goes for politicians, too, though, as Shields noted, their competitors often can afford to spend more on politicians and lobbyists.

Take, for instance, Michigan's Saginaw Chippewa tribe.

Since 2001, the tribe, which opposes the Port Huron project, has spent more than $900,000 on campaign contributions and to many of the same people Ilitch and Malik have supported, like Alaska Rep. Don Young, a former Republican chairman and now ranking member of the House Natural Resources Committee, which hears American Indian-related issues.

It is the cost of doing business, Shields said. And it is one other metro Detroiters in the game have paid, including:

• Don Barden, who is working on a casino in Pittsburgh and has spent more than $300,000 on campaign contributions since 1997, according to records of the Federal Election Commission.

• Herb Strather, who has given financial considerations to a Massachusetts tribe which recently won federal recognition. He has contributed more than $70,000 to politicians and causes since 1998, according to federal records.

Spending money on lobbyists and politicians is all "part of the investment," Shields said.

"We're relatively small players considering the others' size," he added.

Over the years, contributions from Ilitch and Malik have run the gamut. They've contributed to both parties. They've funded well-known national campaigns (George W. Bush, Rudy Giuliani), key state and local races (Mark Raymond Kennedy, a Minnesota Republican who lost a bid for Senate last year) and some candidates in their back yards, including Sen. Debbie Stabenow and Rep. Candice Miller -- but not Detroit Reps. Carolyn Kilpatrick or John Conyers, who have received contributions from the Saginaw Chippewa.

Dating to 2002, Marian Ilitch has given $178,403 -- $44,900 in the current two-year cycle. Her husband, Mike, has given $142,797, dating to 1997.

Malik has given at least $264,575 since early 2003.

Political contributions

In 2004, the three each contributed $24,000 to Sen. Harry Reid, a former chairman of the Nevada Gaming Commission who became the Senate minority leader that year, or they gave to the leadership political action committee, or PAC, he controls.

Despite the support, Reid remains opposed in principle to the Port Huron proposal.

The Ilitches and Malik have contributed more than $30,000 to Charles B. Rangel, a New York Democrat, or his leadership PAC.

Although he doesn't sit on any of the committees tied to Indian gaming, Rangel, chairman of the powerful House Ways and Means Committee, could be critical to getting federal recognition for the Shinnecock tribe, which in turn could help them get the Long Island casino Malik and Ilitch want.

The partners also have targeted state politicians -- especially in California.

In 2006, Malik gave $37,200 to races and issues in California, including $20,000 to a group which successfully opposed a referendum which could have hurt the casino proposal. Two years earlier, Barwest LLC -- the Ilitch/Malik venture trying to develop the casino -- contributed $26,600 in California to the San Joaquin Republican Victory Fund.

San Joaquin is about 300 miles from Barstow, where Malik and Ilitch want the casino.

Still, their money was trumped by the San Manuel Band of Mission Indians -- which owns a casino in Highland, Calif., and opposes the Barstow casino. The band made $2.3 million in campaign contributions in 2005 and 2006.

Controversial giving

Some of the Ilitch/Malik political giving has been controversial. In 2005, the partners made news for a political fund-raiser held at the Fox Theatre in Detroit and in their box at Comerica Park during Major League Baseball's All-Star Game in Detroit.

It was for Rep. Richard Pombo of California, just days before his committee heard legislation affecting the Shinnecocks. This year, a fund-raiser for Sen. Carl Levin at Joe Louis Arena drew attention. Levin is seeking re-election next year. The Ilitches, their son Christopher and Malik were hosts. Before then, Levin had only received a single donation from the family -- $500 from Mike Ilitch in 2002.

The Bay Mills tribe, partners with Malik in the Port Huron casino proposal, also sent money Levin's way, as did other supporters of that casino and their lobbyists. All together, the contributions were worth about $50,000.

A few months later, Port Huron's mayor sent Levin -- who until then had been neutral on the project -- a letter asking for his support, talking about the double-digit unemployment in the city, its struggling economy and the casinos across the Blue Water Bridge in Canada.

Levin offered his support then, calling the mayor's arguments persuasive. He declined to speak for this article. His office said he preferred to let his letter speak for itself.

Politics being politics, however, there is a footnote.

A few months after the fund-raiser, Mike and Marian Ilitch each gave $28,500 to the National Republican Senatorial Committee. Its goal: defeat Levin and other Senate Democrats to retake control of the chamber next year.