BOSTON -- Massachusetts Gov. William F. Weld signed a bill late Tuesday that will allow the citizens of Holyoke to vote on a non-binding referendum on casino gambling.

While the governor's decision could help Holyoke's economy, it may harm the state's ability to fatten its own coffers from another casino because it violates an agreement reached between an Indian tribe and the governor this summer.

The Holyoke referendum, to be held during the spring, will ask the residents of the western Massachusetts city whether they want a casino there.

A representative of the Holyoke city clerk's office said yesterday that the city council may set the date for the referendum at next Tuesday's meeting.

The timing of the announcement from the governor's office may jeopardize revenues that the state is expected to get from a casino planned for New Bedford in southeastern Massachusetts, which will be run by the Wampanoag Indian tribe. Under a letter of understanding signed by Weld with the tribe this summer, which guarantees the state a percentage of the profits, referendums on casino gambling were supposed to have been held by the past November election.

In the letter, the state also pledged that it would allow only a total of 400 slot machines at the state's four horse tracks and would approve no more than one casino in the western part of the state.

Although the letter of understanding will have to be turned into a contract approved by the state legislature, the measure may strain the relationship between the state and the tribe, state officials familiar with the agreement say.

"The referendum itself doesn't concern me that much," said Jeffrey Madison, director of economic development for the Wampanoags. "Towns have a right to hold a referendum whenever they want."

Madison said it was premature to discuss any repercussions to the arrangement between the state and the tribe if the referendum is approved in Holyoke.

Similar measures were rejected this November in Springfield and Agawam, both of which are located near Holyoke.

During the 1995 legislative session, lawmakers expect to address the question of casino gambling. While Weld has been a backer of casino gambling since he took office, the powerful Democratic leadership has been less supportive.

Weld's support for casino gambling stems partially from the success of the Foxwoods Casino in Ledyard, Conn. During 1993, Foxwoods made about $500 million and Connecticut got about $100 million. The casino is owned by the Mashantucket-Pequot tribe.

Weld would like a casino in New Bedford because, although massachusetts' economy has improved over the last few years, the New Bedford-Fall River area continues to be the state's poorest area as it struggles with contraction of its fishing industry.

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