Departing gaming director touts Hayden Island changes

by: TRIBUNE PHOTO: JONATHAN HOUSE - A closed sign denotes one of the four lottery bars that have been shut down at Hayden Islands Lottery Row.Todd, a Clark County, Wash., resident who works on Hayden Island, headed to the island strip mall known as Lottery Row after work last Thursday to celebrate his birthday.

“It used to be a lot more fun,” said Todd, gesturing to four empty storefronts amid eight surviving lottery bars. “It’s not the same place it used to be.”

Oregon State Lottery Director Larry Niswender agrees. And he took pains last week to let the public know he’s addressed community outrage about the once vice-plagued strip mall, as he prepares to retire at the end of this month.

When Niswender assumed his job in 2010, the tiny strip center had morphed into a gambling mecca for Clark County residents, with all 12 shops selling alcohol and hosting the maximum six state-owned video lottery terminals.

Washington doesn’t offer the electronic slot machines. And Lottery Row retailers also offer cheap beer and cigarettes to lure gamblers, and to meet a state requirement that more than half their sales come from nongambling sources, lest they be deemed illegal casinos.

Niswender touted a deal he struck in May with the owner of the Dotty’s lottery deli chain, which agreed to close three of the 12 Lottery Row establishments, and commit to employing two security guards during peak evening hours. Crime is down at the strip center and security is improved, Niswender said. The state lottery now consults regularly with the Portland police, state liquor regulators, and Hayden Island neighbors about the strip center, he said. And, under a new state regulation Niswender championed, the number of Lottery Row retailers with state-owned video lottery terminals must drop to six by 2015, perhaps forcing two of the remaining retailers to close.

“I feel good about what we’ve accomplished there,” Niswender said, as he prepares to hand the reins of the state lottery to Jack Roberts, former state labor commissioner.

Hayden Island residents offer mixed reviews of his efforts.

“I do think having the security guards has definitely made a difference,” said Jeff Geisler, the public safety chairman for Hi-Noon, the Hayden Island neighborhood association. But the parking lot still seems to be full of gamblers whenever he passes by, Geisler said.

Todd, who declined to give his last name, agreed the strip center is safer, noting the “tweaker problem” has subsided, a reference to drug users.

Hi-Noon Chairman Ron Schmidt still wonders what kind of retailers would want to fill the vacant storefronts next to gambling-oriented bars. And he’s scratching his head over the deal struck by Niswender, because it left Oregon Restaurant Services Inc., the Dotty’s owner that helped spawn Lottery Row, smelling like a rose.

In the deal, Oregon Restaurant Services got Niswender to back off the lottery’s decision to terminate its contract at the Anchor Bar, one of the company’s six Lottery Row businesses, which faced a string of liquor and other violations. In exchange, Oregon Restaurant Services agreed to close another of its outlets instead, and not renew subleases it held with the owner of two other Lottery Row retailers, the Galley Sports Pub and JB’s Deli.

Oregon Restaurant Services wound up closing Rachel’s Kitchen, but the chain then secured a liquor license to relocate it to Wilsonville, according to Oregon Liquor Control Commission spokeswoman Christie Scott.

Eliminating competitors

The Galley Sports Pub and JB’s Deli actually were owned by a competitor. Oregon Restaurant Services managed to get control of their leases from landlord Gordon Sondland, whose investor group owns the strip center.

“Something stinks there,” Schmidt said. “We just don’t understand how the main tenant ended up with the leases of their competition.”

A former Lottery Row manager, who asked not to be identified, said Oregon Restaurant Services has been seeking for years to control more spaces at the strip center.

“They worked very hard to get all the bars,” the former manager said.

The fourth Lottery Row establishment to close was Island Pizza. Its owner died recently and her family wasn’t able to get her liquor license renewed. Without a liquor license, the family lost the right to host lottery terminals, and thus couldn’t pay the high rents based on the lucrative profits from hosting such terminals. Sondland has sued the family for more than $400,000 for not paying its rent.

Neither Sondland nor Dan Fischer, the Nevada-based owner of Oregon Restaurant Services, returned calls for comment on this news story prior to deadline.

In a related event, Oregon Restaurant Services won a recent decision by an administrative law judge that dismissed the Oregon Liquor Control Commission’s proposed license suspension or civil penalty against Bradley’s Bar & Grill, one of its Lottery Row businesses. The company has maintained that much of the reported crime at Lottery Row was due to outsiders in the parking lot, and not patrons of the establishments. The judge’s decision buttresses that claim, and shows that the Portland Police Bureau and OLCC’s targeted enforcement actions against the company were “deeply flawed,” said Len Bergstein, a consultant for Oregon Restaurant Services.

As a result, Oregon Restaurant Services now runs five of the eight Lottery Row businesses and has only one competitor, C.J.’s Eateries. The Eugene company copied the Dotty’s model and opened three tiny lottery delis at a former Mongolian restaurant at Lottery Row.

Bergstein and Will Rasmussen, an attorney for Oregon Restaurant Services, also suggested that Niswender’s rule limiting the concentration of lottery retailers at Lottery Row will be revisited next year. There’s no pending legal challenge of the rule, Rasmussen said, but there may be.

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