WASHINGTON - U.S. Sen. Lindsey Graham has pulled his support for proposed federal legislation that would allow the Catawba tribe to expand its gaming operations in South Carolina.

Graham said Thursday he still wants to find a way to permit the tribe to build a second bingo hall off I-95 in Santee, but he needs to study more carefully the potential implications of the measure with Gov. Mark Sanford, who is opposed to it.

"The lawyer in me is making me ask questions," said Graham, R-S.C. "What consequences will this have for the state when I'm dead and gone?"

Graham's retreat from the measure, which would have allowed the Catawbas to operate a higher-stakes bingo hall than the one they now run in Rock Hill, was met with disappointment by the tribe.

"That's a shame," said Jay Bender, an attorney for the Catawbas. "The only reason he's putting the brakes on it is that the governor has articulated his opposition."

Graham and Sanford, also a Republican and a close friend, had come to an impasse on the measure in the past few days.

Graham supported it, and had been trying to find a Senate bill to attach it to. Sanford opposed it, and had called at least one other U.S. senator, Nevada's John Ensign, to express his concerns.

Increasing reticence about the proposal from Graham and others means the support of U.S. Sen. Fritz Hollings, D-S.C., might not mean much.

"We had been working with Senator Graham on this," said Hollings' spokesman, Andy Davis. "This is a notable setback. It makes it difficult to pursue."

At issue is a proposed law sought by the Catawbas and pushed by Graham - along with Hollings and U.S. Rep. Jim Clyburn, D-S.C - that would place the tribe under the Indian Gaming Regulatory Act.

That would allow the tribe to pursue Class II gaming, which includes a type of higher-stakes bingo currently prohibited under its 1993 agreement with the state and federal governments.

That agreement gave the Catawbas the right to open two bingo halls. They opened one in Rock Hill in 1997 and are eyeing land for a second one in Santee, off I-95 in Orangeburg County.

But Gilbert Blue, chief of the Catawba Indian Nation, said the Santee project isn't economically feasible if the tribe isn't allowed to run the sort of bingo game permitted under the Indian gaming act.

"We can't go with regular bingo," Blue said, adding that the project would require an initial $8 million to $10 million investment by the tribe.

The higher-stakes bingo Blue envisions would electronically connect the Santee operation to other Indian bingo games across the nation, raising the potential payoff for players over the $100,000 limit imposed by the 1993 agreement.

But Sanford has said he doesn't want the Catawbas to run a gambling operation any different from what's described in the 1993 accord. He is worried, he said, that placing the tribe under the Indian gaming act would allow the federal government to wrest control of gambling away from the state.

Gambling foes have expressed fears that coming under the federal act eventually could bring full-fledged casino gambling - including games such as blackjack and roulette - to the state.

Blue said he had heard that Sanford was trying to block the measure by calling on Ensign, Sanford's friend.

A Sanford spokesman Thursday said the governor called Ensign after learning that the Nevada senator had problems with the measure to expand Catawba gaming rights. In the call, Sanford expressed his own concerns about the measure.

Bender, the lawyer for the tribe, sees Ensign as a biased obstacle. "Nevada senators see their life's work as preserving Nevada's gaming monopoly," he said.

Ensign could not be reached for comment Thursday.

The Catawbas, the only federally recognized tribe in South Carolina, met with Sanford on Thursday morning to try to allay some of his fears. Blue said he was upfront with Sanford.

"I told the governor, 'Yes, we would like casino gambling, but we will do without it,'‘" Blue said, adding that he knows opposition in the state runs too high to achieve that goal.

And he promised Sanford that the legislation the tribe seeks from Congress would expressly prohibit casino gambling.

That, said Graham, is one key concern he has about the measure he was once pushing: The Catawbas could challenge a statute that placed it under the Indian Gaming Regulatory Act but prohibited it from pursuing casino gambling. Graham opposes casino gambling in South Carolina.

On the other hand, Graham said, the 1993 agreement currently governing the Catawbas' gambling rights also could be called into question. It gave the tribe the right to earn money with bingo halls, but then the state, by starting a state lottery last year, began to compete with the tribe.

Since the lottery was established, Bender said, the Catawbas' bingo revenues have dropped 60 percent.

Graham said he still believes federal legislation is the best way to address the state's gaming issue, but that it's going to take several weeks before he and Sanford decide on a strategy.

Reach Markoe at (202) 383-6023 or lmarkoe@krwashington.com