CALIFORNIA ALBUM : Tribe Tosses the Dice With Its Own Casino : Unlike other Native American tribes, the rich Agua Caliente Band for years disdained opening a casino. But in April the tribe quietly opened the Spa Casino, complete with video slots.

When casinos began sprouting on tribal lands throughout California a few years back, the Agua Caliente Band of Cahuilla Indians were the most notable holdouts.

Owning much of the land in this tourist Mecca, the Agua Caliente were the state’s richest--and most cautious--tribe. “We don’t need it--and we don’t want it,” one of its leaders said of gambling.

The Agua Caliente thus stood in contrast to nearby tribes such as the Cabazon Band of Mission Indians, which opened one of the first tribal gambling halls in the country and fought legal battles with local authorities--leading to the Supreme Court decision that gave Indians the right to offer any type of gambling legal in their state.

The Agua Caliente softened their stance in 1992, announcing that no less than Caesars World Inc. would build a $20-million gambling hall for them. Yet, even then, tribal leaders exhibited caution: Their casino would feature only games clearly legal in the state, they said--meaning none of the slot machines that were being introduced by other tribes.

“We’re going to take a more conservative approach,” vowed tribal chairman Richard M. Milanovich.

That was then. This is now.

In April, the Agua Caliente quietly joined the gambling age, opening--with virtually no public notice--the Spa Casino next to the historic Spa Hotel, set on tribal lands atop the mineral hot springs that gave this city its name.

And there, right inside the entrance, were rows of video slots. So were a dozen blackjack tables, another form of gambling considered illegal in California by state and federal officials.

The great holdouts weren’t holdouts any longer.

“We weren’t getting anywhere,” Milanovich said. “We kept biding our time, hoping the state was going to come around” and agree that tribes could offer slots and other classic casino games. Meanwhile, “we were not taking advantage of . . . opportunities that were available,” he said.

Over Memorial Day weekend, radio ads began touting June as the official “grand opening” of “Palm Springs’ only casino.”

So do the Agua Caliente now regret waiting so long while other tribes raked in the cash?

“You know, hindsight is hindsight,” Milanovich said.

But did he regret holding out?

“Sure.”

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Opened though it may be, the Spa Casino is far from the facility envisioned when the tribe announced its deal with Caesars.

Planned then was an 80,000-square-foot complex of restaurants, stores and entertainment facilities, in addition to the casino. But the lingering California court fight over the legality of slot machines--which are the key to profitability for casinos--made it difficult for the nation’s giant gambling companies to carry out joint ventures on tribal lands in the state. Such companies risked losing their lucrative Nevada licenses if they conducted illegal gambling, even outside the borders of that state.

This spring, Caesars parted with the Agua Caliente--and the tribe opened the casino on its own April 10, hiring managers trained in Indian gambling halls in Arizona and New Mexico.

For the time being, the facility encompasses merely 10,000 square feet off the Spa Hotel’s swimming pool. But that’s enough room to create a miniature version of a diverse modern casino.

Much of the atmosphere comes from 165 video slots, beeping and flashing away, between clusters of blackjack and poker tables. There’s a cash window, an ATM machine and a small bar--a bank of TVs above it showing sports events, as they would in Vegas.

On one Sunday, most of the slots were occupied by 10 a.m., the gamblers a mixture of retirees, golfers and locals.

“We put this place together in 21 days,” marveled one of the managers, Nick Kolich, “and we have been packed.”

The Agua Caliente view this as a first step, well aware of the three huge tribal casinos recently built, or expanded, on other reservations in the Coachella Valley along Interstate 10: Morongo to the east, and Twenty-Nine Palms and Cabazon to the west, next to each other in Indio.

Cabazon’s Fantasy Springs Casino covers 93,000 square feet, with another 53,000 in final design stages, said the tribe’s chief executive officer, Mark Nichols. The Cabazons already offer a Vegas-style floor show and occasional name entertainment (such as comedian Paul Rodriguez), with a goal of becoming “a destination resort,” he said. The next step? “An amusement park for children.”

On a philosophical level, at least, Nichols enjoys seeing the Agua Caliente join the gambling game after years of seeming to be above it--and he applauds them for doing it without Caesars.

“I never quite understood the need to bring Caesars into their equation to appease a limited element that, for whatever reason, thought an outside company might be able to run it better,” the Cabazon executive said. “Our approach has always been it made no sense to give away the lion’s share [of profits]” to outside managers.

On a practical level, though, Nichols sees the move of the Agua Caliente as a sobering reminder of burgeoning competition in areas such as this, or San Diego County. Although the cash may pour in now, the bottom line could shift if state Atty. Gen. Dan Lungren prevails in his campaign to have slots ruled out in California--and tribes are limited to poker, off-track horse betting and the old mainstay, bingo.

“We never viewed the market as strong enough to support three places or five places,” Nichols said. “Without electronics [slots] and some Vegas-style gaming, this is not a good business. . . . This becomes a marginal business.”

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Even if it’s last to open, the small Spa Casino already has earned one distinction: In spirit, it’s the closest thing in California to a Vegas casino. For among the state’s two dozen tribal gambling halls, this is the only one in a location that’s a natural for walk-in trade.

To be sure, there’s valet parking offered at the entrance off Indian Canyon Drive. But many gamblers simply wander in from the Spa Hotel or several others in the surrounding blocks.

“It’s jammin’ over there,” observed Herb Rafetto, general manager of the 200-unit Hyatt Suites on Palm Canyon Drive, a two-minute walk from the casino.

“I think it’s taking a little business out of my bar, but I don’t mind,” Rafetto said, “because in the long run, I think it’s going to help my guest room occupancy.”

Indeed, Rafetto plans to use the casino in promoting his hotel to groups. “It’s another toy for the tourists,” he noted. “And it’s an inside toy. It’s air-conditioned.”

Of course, no place stands to gain more than the Spa Hotel, where--as on the Vegas Strip--one family member can sun poolside while another gambles inside glass doors yards away.

Because of the new casino, Milanovich said, “on a given night, we get about 35 walk-ins at the hotel, [and] the dinner and lunch trade has increased.”

The hotel recently offered its first discounted room to an avid gambler--a step toward Vegas’ legendary “comp” system.

And just this past Wednesday, officials of a professional marketing firm arrived to craft long-term strategies for the casino.

Still, there are ample reminders that this is the realm of the cautious Agua Caliente, who said they reluctantly reversed their stand on gambling because of uneasiness about sagging Palm Springs tourism and a desire to help younger tribe members who don’t have the plum land allotments--like the ones sprouting hotels and condos--that made others rich.

The slots hardly were set for the high-roller crowd, requiring as little as 5 cents per play.

Signs at the door warn that no one under 21 will be allowed inside, even to watch.

Although members of the tribal council visit daily to monitor the games, they are not allowed to gamble, either--so visitors will never see them carting off jackpots. “It just wouldn’t give a good impression,” Milanovich said.

And despite the small size of the casino, the tribe has hired 240 employees, all in neat uniforms with name tags. Included are an astounding 45 security guards.

“That’s almost triple what we had in mind,” Milanovich said. “But we want our guests to feel comfortable. And we wanted to feel comfortable.”