California casinos increasing threat to Nevada

Jul 23, 2001 11:14 PM


Northern Nevada gambling revenues could dip as much as 21 percent in the next few years as a result of California’s rapidly growing Indian casino industry, the research director for the National Indian Gaming Association says.

“Tribes are becoming something powerful,” said Kate Spilde, who’s also an anthropologist. “There’s power in being unified, organized and having a long-term vision. Investors have been watching California Indian tribes for a while.”

Spilde said a Bear Stearns study suggests that by 2004, Reno-Sparks casino revenues could plunge 21.6 percent, or $231.6 million a year.

“I don’t think there are going to be too many more new Indian casinos,” Spilde said. “But there will be more expansions and upgrades, such as cashless machines, the latest equipment.”

Currently, there are 108 federally recognized tribes in California and 44 of them operate casinos. Indian casinos are operating in 28 states.

Californians contribute more to Nevada gambling than any other state ”” roughly 35 percent of the state’s gambling revenues come from its neighbor to the west. By 2004, California’s Indian gambling revenue could be as high as 10.3 billion.

“California will become about half of the entire Indian gambling market in the United States,” Spilde said.

A Merrill Lynch report estimated that there were 39 tribal casinos operating before California voted in March 2000 to legalize Indian gambling.

“It looks like the market is there and the next five years will be full of expansions,” Spilde said, noting that California Indian tribes must be federally recognized to engage in the business of gaming.

Spilde said that most newspaper articles about Indians used to be in the culture or local sections. Nowadays, she said, they are generally in the business pages.

Indian nations have spent about $70 million to accomplish this transformation, according to Spilde.

Spilde said Indian gaming has come under fire from people, who believe the industry is loosely regulated and will exploit the environment, invade urban areas and increase problem gambling.

Currently, California’s Indian gaming facilities can only have 2,000 slot machines because of proposition 1-A.

“We have a lot to learn from the evolution of the Indian casino,” said Daryl Drake, a commercial real estate broker. “Their unification led them to be organized.

Catskills talks alive

New York Gov. George Pataki said talks are continuing between his administration and Mohawk Indians over bringing casino gambling to the Catskills, but he denied that an agreement is imminent.

Assembly Speaker Sheldon Silver said he has heard from sources outside the Pataki administration that the governor is close to sealing a deal on a plan to bring casino gambling operated by Mohawks from the St. Regis reservation in north New York to the once-thriving Catskills.

The deal would be similar to the one Pataki reached last month for Seneca Indians to operate casinos in Buffalo and Niagara Falls.

Silver, a Democrat from Manhattan, also said he wants the Legislature in Albany to consider Catskills casinos along with the Seneca proposal.

Park Place officials have said previously they believe Pataki’s support for the western New York casinos should help their cause.

Sunny results

The Mohegan Sun Casino in Connecticut reported third quarter income of $68.1 million, a 4.4 percent increase over the previous year’s quarter.

Mohegan Sun generated gross revenues of $218.9 million and achieved a gross slot win per unit per day of $466. Management attributes the solid third quarter operating performance to the excitement created from the opening of the Hall of the Lost Tribes and the outstanding levels of service by its 6,000 employees.

Net revenues for the quarter were $200.5 million, an increase of $15.7 million or 8.5 percent over the same period last year.

Trop fined $140Gs

Tropicana Casino and Resort in Atlantic City was fined $140,500 for three gambling law violations, including one in which it mistakenly returned a $20,000 marker to a gambler without his redeeming it.

The latter stemmed from a June 13, 1999 incident in which an unidentified gambler used $30,000 in casino chips to redeem a marker in that amount.

The New Jersey Casino Control Commission fined Tropicana $90,000 for sloppy record-keeping and violations of the casino’s own internal accounting policies.

Louisiana compromise

The Coushatta Tribe and the state of Louisiana came to an agreement last Thursday and signed a compact that allows the Grand Casino Coushatta to operate for the next seven years.

The agreement includes a requirement that local governments keep track of tribal payments and how they are spent. The deal also includes a specific list of what each payment may be spent on.

The compact also provides the tribe with an annual opportunity to dispute the spending of its payments. The tribe is a sovereign nation and cannot be taxed by local, state or any other government.

The federal law that controls gambling on Indian reservations requires tribes to sign compacts with states in which their reservations are located. The states are allowed to collect, on behalf of local governments, a portion of casino proceeds to reimburse them for expanses incurred because of the gambling halls.

Under the agreement, the tribe will contribute $49 million to local governments over the next seven years.

Resort seeks permit

Greenbrier President Ted Kleisner said the resort plans to seek a license for some of the video poker machines that soon will be legal in adult-only settings.

Kleisner said he had a “change of mind and heart” and that the resort plans to submit an application for a video lottery license by Aug. 1. A West Virginia law that goes into effect Jan 1 limits the number of machines to 9,000 statewide, no more than five at each bar or club and 10 at each fraternal or veterans facility.

With a maximum bet of $2 and a limit of five machines per location, the video gambling machines “will not help The Greenbrier attract the business meetings and conventions it is looking for during its low winter months,” Kleisner said.

Casino ship seized

The United States Marshal’s Office seized the Talisman Casino ship last week in Galveston, Tex.

The casino cruise ship was seized on behalf of American V Ships, the company that had a contract with Talisman to provide a maritime crew and manage operation of the vessel.

American V claims it is owed more than $102,500. The total includes management fees of about 18,000 per month dating to mid-April and crew travel expenses of about $11,400 accrued since May. The company also claimed it is owed $18,500 for start-up fees and the development of an International Safety Plan.

The seizure came just days after Galveston attorney Larry Tylka threatened the same action. Tylka represents the former Talisman electrician Daniel Ginther, who was laid off last week. Ginther claims Talisman owes him more than $8,600 in unpaid wages.

Tribe gains financing

The Barona Band of Mission Indians announced in San Diego that the tribe has secured $200 million in commercial bank financing to fund the construction of the Valley Ranch Resort & Casino.

The resort is a premier destination scheduled for completion in late 2002 on the Barona Indian Reservation.

Bank of America and Wells Fargo served as co-underwriters in the financing, and nine national banks and financial institutions participated in the syndication.