Lottery director's new plan might not satisfy angry neighbors

Hayden Island residents will have to endure the vice-ridden “Lottery Row” retail center in their neighborhood at least three more years.

Members of the Oregon State Lottery Commission nixed in late May proposed regulations that would have allowed no more than half the establishments at Oregon retail strip centers to host state video lottery terminals.

The proposed regulation was prompted by a community outcry over a strip center opposite the Jantzen Beach Super Center that has morphed into a gambling attraction for Clark County, Wash., residents, with all 12 establishments hosting state video lottery terminals and all 12 serving alcohol.

Nine of the 12 establishments are owned by two companies, which in some cases subdivided their businesses to create clones next door, in an apparent bid to skirt the state’s limit of six video terminals per site. The terminals are essentially electronic slot machines owned by the state, with gambling profits divided among the state and the retailers that host them.

Lottery officials vowed to put the festering problem at Jantzen Beach “on the front burner” nearly a year and a half ago. The proposed remedy, a draft regulation by Lottery Director Larry Niswender that would limit the concentration of lottery retailers at strip centers, finally was nearing the approval stage, but it was roundly criticized by lottery commissioners at a May 24 meeting.

The four commissioners, who are appointed to their posts by the governor, told Niswender his proposal was unfair to retailers that built their business plans around the gambling terminals, and would have unintended consequences by causing retailers elsewhere in Oregon to lose their rights to host the terminals.

In response, Niswender said last week that he’ll submit another more narrowly tailored regulation to the lottery commissioners.

“I’m still working on it,” Niswender says. “It’s fair to say that we’re going to be looking at ways to limit the number of video lottery retailers in strip malls.”

Niswender’s new proposal will effectively reduce the number of retailers offering lottery terminals at the Jantzen Beach strip center, starting in June 2015. That’s when the state’s new master contract with lottery retailers will take effect.

“We recognize that this was a concentration of (lottery) retailers that wasn’t intended,” Niswender says. “There would be a certain limited number that would be OK, and beyond that there wouldn’t be.”

‘A slow death’

Adopting a new regulation will take at least a couple months, if not more, Niswender says.

His new plan is sure to be hotly opposed by retailers, who have found the Jantzen Beach a lucrative market for gambling because nearby Washington state lacks video lottery terminals.

The powerful Oregon Restaurant and Lodging Association, which represents most of the state’s lottery retailers, has argued that retailers’ rights to host the terminals should be “grandfathered” in, so they can even sell those rights when they sell their businesses. The association vowed to sue the state lottery if it adopted the limitations proposed by Niswender.

Dan Fischer, president of Oregon Restaurant Services, which operates six of the Lottery Row establishments, says he had no comments on Niswender’s latest proposal.

Hayden Island neighbors had lobbied the lottery commission to immediately yank some of the retailers’ contracts to host lottery terminals. They aren’t so keen on Niswender’s new proposal, which means waiting at least another three years to see lessened gambling in their midst.

“Our community is dying a slow death,” says Ron Schmidt, president of the neighborhood association for Hayden Island, often called Hi-Noon.

He lamented that “the rug was just pulled out” from Niswender’s effort to pass a new regulation.

Crime has escalated in the immediate area since gambling became more prevalent, Schmidt said.

It could be that there is an actual increase in the number of gambling opportunities in the Lottery Row area. The Denny’s restaurant chain has been talking to the state lottery about relocating its Hayden Island outlet to the empty former Newport Bay restaurant building, Niswender said.

Denny’s already has a video lottery contract. The old Newport Bay is across the street from Lottery Row.

Dottys owner has plans for store

• Former Zupans location will be warehouse space

Oregon Restaurant Services, which operates six of the 12 video lottery and bar establishments at the “Lottery Row” in Jantzen Beach, is buying a new site in the vicinity.

The company has a contract to buy the former Zupan’s grocery store at 900 N. Tomahawk Island Drive, a few blocks from Lottery Row, which is across the street from the Jantzen Beach Super Center.

“It’s under contract, and we’re going to close shortly,” confirmed Dan Fischer, president of Oregon Restaurant Services.

Hayden Island residents are abuzz about the deal, concerned that the company plans to open video lottery establishments in the 16,000-square-foot building.

Fischer, who usually doesn’t grant newspaper interviews, said he wanted to set the record straight. He plans to use the new site to relocate some of his rented office and warehouse space, not for additional video lottery establishments.

“There’s no retail going in there whatsover,” Fischer said. “It’s just office and warehouse.”

Fischer’s company owns the Dotty’s chain, which pioneered the “lottery deli” format, essentially a bare-bones cafe and bar that makes its profits from hosting six video lottery terminals. Several Lottery Row establishments copied the Dotty’s formula.

Oregon Restaurant Services is Oregon’s largest video lottery business and helped spawn Lottery Row.

The Zupan’s deal has piqued neighbors’ interest because Lottery Row is slated to be condemned eventually and torn down, to make way for a new bridge to Vancouver, Wash., known as the Columbia River Crossing.

Ron Schmidt, president of the Hayden Island neighborhood association known as Hi-Noon, suspects the Zupan’s site could become Fischer’s replacement site to attract Washington gamblers.

“I think it’s his fallback when the CRC takes out Lottery Row,” Schmidt said.

Fischer, who lives in Las Vegas, declined to offer guarantees that the property uses wouldn’t change at a later time.

“It’s zoned how it’s zoned,” he said.

The site once housed a Zupan’s grocery store, and before that a Rite Aid drug store.