Koch scandal alters gambling odds

Slots at horse tracks, a downtown casino and more will be at stake when Republicans pick a new Senate majority leader.

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Gov. Mark Dayton, front, addressed media members as GOP leaders Sen. Amy Koch, center, and Speaker of the House Kurt Zellers, right, listened during a press conference announcing a special legislative session and the possibility of getting a budget passed during a press conference Tuesday, July 19, 2011.

Photo: David Joles, Star Tribune

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In what could be the toughest backroom political fight of the year, Minnesota Republican senators plan to pick a new majority leader Tuesday, with their vote holding major consequences for the fate of gambling in the state.

"It's going to be hugely important," said former Senate Minority Leader Dick Day, who now lobbies for a group that wants to add slot machines at horse racing tracks.

The abrupt resignation of Sen. Amy Koch as majority leader a week ago upended the political landscape at the Capitol, where for the past year leaders of the House, Senate and governor's office said they were open to gambling expansion. Now lobbyists and activists on all sides of the issue are maneuvering behind the scenes for political advantage, with millions of dollars at stake.

The upheaval comes as supporters are pushing hard for plans to put slot machines in bars, build a casino in downtown Minneapolis and a new Minnesota Vikings stadium with money from expanded gambling. These forces have run up against the powerful American Indian tribal gaming interests, which have spent freely on lobbying to block such an expansion.

"Everybody is watching it," said Day, who has been contacting about six senators daily.

Several senators said privately that candidates for majority leader will be questioned about their positions on gambling, adding that the eventual outcome could recalibrate the years-long fight over expanding gambling.

Advocates outside the Senate are being forced to navigate a politically dicey landscape, at once trying to cajole like-minded senators into running for the leadership spot while at the same time trying to avoid the appearance of meddling in what has historically been an intense but secretive election process.

Gov. Mark Dayton's administration is watching closely, too. The governor has invested a lot of political capital in his push to build a taxpayer-funded stadium for the Vikings. With no political will to pull money from the general fund, Dayton and other legislative leaders have focused on a relatively modest gambling expansion that would allow electronic pulltabs in bars.

"Like everyone else, I'm waiting to see who the person will be," Dayton said. "He or she will have a major influence over the agenda for the Senate ... I'm hopeful it will be somebody who's reasonable, and somebody who can work effectively with people with whom he or she disagrees.''

As the economy tanked, gambling emerged as a tempting pot of money to pay for amenities the state can't otherwise afford. After years of back-to-back budget deficits and deep state reductions, gambling advocates have rushed to attach the potential windfall to everything from the stadium, to roads and bridges, to repaying money the state has borrowed from public schools.

Even in the state's darkest financial moments, legislators worried about the social and moral costs of gambling have beaten back an array of expansion proposals, including adding slot machines in bars and at horse tracks. The state's Indian tribes have had a lock on casino-style gambling for decades and now operate 18 casinos that generate hundreds of millions of dollars every year -- without paying a dime in gambling revenue to the state.

Other than the state lottery and charitable gambling, political leaders have kept the state out of the gambling business, even as other states have allowed new casino-style gambling ventures to relieve the pinch of budget cuts.

Koch had been open to gambling expansion. The next majority leader might not share that view.

Assistant Senate Majority Leader David Hann, R-Eden Prairie, is widely seen as a top candidate to replace Koch. Hann has been one of the Senate's most vocal critics of gambling and public financing for a Vikings stadium.

Like other possible majority leader candidates, Hann has kept quiet about his intentions as the election draws near.

Sen. Mike Parry, R-Waseca, said he called Hann after Koch stepped down to gauge Hann's interest in the leadership post.

Parry supports the proposal to add slot machines at horse racing tracks and was concerned that Hann has opposed the idea.

Parry said he came away hopeful that Hann wouldn't block a proposal if a majority of senators wanted to vote on it.

"At the end of the day, the Senate can't just be about one person," Parry said.

Other possible candidates for majority leader, like David Senjem of Rochester and Julianne Ortman of Chanhassen, have been more open to gambling expansion.

Some lobbyists say the intrigue over the new majority leader and its impact on gambling clouds an important fact -- supporters simply don't have the votes to expand gambling.

A new anti-gambling majority leader "makes anything that is already hard, harder," said a source close to the gambling issue. "Racino and stadium were already hard."

Several lobbyists and those with deep interest in the Senate leadership warned it can be dangerous to get vested in the internal race. They could help get someone elected majority leader, only to find out the committee chairmanship that person vacated has been filled by someone who doesn't share their view on a prized issue.

King Wilson, executive director of Allied Charities of Minnesota, which is pushing for gambling expansion, said he is staying out of the Senate succession battle.

"It would be a domino effect on how it might impact other things," Wilson said.

Some legislators and lobbyists said candidates for Senate majority leader will be judged on a larger issue -- whether they can help Republicans hold onto their majority. The GOP won control of the Senate last year for the first time in more than a generation.

"When you pick a caucus leader, [you] tend to look at: Can they raise money? Can they run a campaign?" said lobbyist Tom Hanson, who was former Gov. Tim Pawlenty's top budget officer.

Still, with no budget fight in the immediate future, political watchers are forecasting that 2012 will be consumed by the stadium debate and the gambling issue.

"The next Senate leader, whoever it is, will make a real difference" in those issues, said state Sen. John Howe, R-Red Wing.

baird.helgeson@startribune.com • 651-222-1288

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