In Oregon, a Bid for Urban Casinos Threatens a Gambling ‘Arms Race’

As the franchise owner of an Elmer’s family restaurant in southern Oregon featuring German pancakes “almost as big as Crater Lake” and omelets stuffed with local Tillamook Cheddar cheese, David R. Thomason has always tended to his customers, even before they walk through the front door.

But these days, he is more worried about the ones who come in the side entrance, which leads to a bar lounge where customers can bet on slotlike machines operated by the Oregon Lottery until 2 a.m.

Like many of the state’s 3,800 video lottery retailers who pump almost $1.7 billion into the state’s coffers, Mr. Thomason is waiting for the U.S. Department of Interior to decide whether two Oregon tribes will be allowed to claim a much bigger stake in state gambling revenues by opening casinos in urban areas, far from their reservations along the coast.

“I’m adamantly opposed to the tribal expansion,” Mr. Thomason said on a recent weekday morning, when four of six gaming terminals were in use, and a few customers were nursing drinks. “My belief is that we would see as much as a 25 percent drop in volume.”

Mr. Thomason’s worries illustrate growing concerns that an expansion in tribal casino operations could upend the gambling economy of a state where lottery revenues have backed billions of dollars in public bonds for education, economic development and more.

The proposals have also pitted tribes against one another in a relentlessly negative and expensive lobbying campaign that some fear may strain tribal relations for good.