Indian casino growth slows, but revenues set record
Published: Thursday, June 28, 2007 at 3:44 a.m.
Last Modified: Wednesday, June 27, 2007 at 9:00 p.m.
California Indian casinos experienced a slower rate of growth last year but still managed to rake in a record $7.7 billion, according to an independent financial analysis released today.
While the 57 casinos experienced slower growth in 2006 than in previous years, the market is far from saturated, according to Alan Meister, an economist with Analysis Group, a Los Angeles consulting firm.
"Don't be fooled, Indian gaming has all these potential growth opportunities already in progress," Meister said Wednesday.
Meister's "Indian Gaming Industry Report," which tracks tribal casinos across the country, found gambling revenue in California increased 10 percent from $7 billion in 2005. That was half the 20 percent growth of the previous year.
Overall Indian gaming, which exists in 28 states, continued to show strong growth, generating about $25.5 billion in gambling revenue in the United States, along with supporting 301,000 jobs and $10.4 billion in wages, according to his analysis.
Meister's study looks only at economic impacts of Indian gambling and not its social impacts, which are the subject of debate.
People in California tend to gamble more than in other states, spending per person is higher, and tribal casinos are conveniently located, he said.
The biggest casinos are in Southern California, within close range of the Los Angeles and San Diego areas.
More recently, big tribal casinos have opened or expanded in Northern California -- Thunder Valley in Lincoln, northeast of Sacramento, and Casino San Pablo in the East Bay.
Sonoma County's only Indian casino, River Rock, is owned by the Dry Creek Band of Pomo Indians.
It opened in 2002. The Geyserville casino reported $131 million in revenue for 2006, placing it among the 30 largest businesses in the county.
Another tribe, the Graton Rancheria, has proposed a large casino next to Rohnert Park in partnership with Station Casinos of Las Vegas. But those plans have been delayed by an extensive federal environmental review.
The land for the casino still must be taken into federal trust and a state gaming compact must be obtained before the casino can be built.
There are also smaller Indian casinos on the North Coast, including three in Lake County and three in Mendocino.
The strong and steady growth of Indian casinos shows "more and more people will gamble if you put the opportunity in front of them. I don't think California is saturated yet," said Bill Thompson, a gambling analyst and professor at the University of Nevada in Las Vegas.
Thompson said tribal casinos have had a mixed impact on Nevada. Californians and others still flock to Las Vegas, where he said gambling revenue has had steady growth of about 10 percent.
But Reno's and Lake Tahoe's gambling revenues have been flat, according to Thompson.
While there has been "monumental growth" in the number of California casinos over the past decade, Thompson believes the future will involve the expansion of existing facilities and a few new ones.
Meister agrees. His report said a number of tribes are awaiting approval by the state Legislature of new and renegotiated compacts, some allowing tribes to more than double the number of slot machines in their casinos.
"If these new and renegotiated compacts are ultimately ratified, particularly those of the large, very successful tribes in favorable geographic locations in Southern California, they would lead to a significant increase in the supply of gaming, which should translate into strong growth for the state's Indian gaming," he said.
And that in turn could lead other tribes to seek renegotiated compacts as well.
Currently, almost 63,000 slot machines operate in California Indian casinos, along with 2,000 gaming tables.
If the Legislature ratifies pending, renegotiated agreements with the bigger Southern California tribes, they would be entitled to add another 22,500 total slots, according to Cheryl Schmit, director of Stand Up For California, which monitors casinos and other gambling.
The renegotiated agreements were approved by Gov. Schwarzenegger and the state Senate, but have been stalled in the Assembly.
Labor unions and the horse racing industry have been among those opposed to the new compacts.
Among other things, critics complained the compacts lack casino employee protections and funding for problem and compulsive gambling programs, Schmit said.
Schwarzenegger on Thursday announced he had signed agreements with four of the tribes that address some of those concerns.
The agreements establish comprehensive programs to address problem gambling and include other issues such as requiring tribes to submit to audits.
The influence of tribal campaign contributions and politicians' fear of stirring up tribal opposition in future campaigns will probably ensure the compacts are passed, Schmit said.
"These tribes, I believe, will get their compacts ratified," she said.
The state is also counting on revenue-sharing agreements with the tribes that are projected to bring in approximately $300 million for the coming fiscal year.
But analysts don't foresee casinos sprouting up across the landscape.
Meister's report noted that in 2006, there were significant legislative and regulatory efforts to curb the expansion of Indian gaming.
They included proposals to limit lands eligible for gaming and restrictions on off-reservation gaming.
"While none of these legislative or regulatory changes were ultimately enacted, it seems likely that the same or similar attempts to restrict Indian gaming will resurface in the future," Meister wrote.
There are also other constraints.
"We've reached the number of tribes that have marketable locations. Some are simply not marketable," Schmit said, adding that some tribes don't have a water source to build casinos.
You can reach Staff Writer Clark Mason at 521-5214 or clark. mason@pressdemocrat.com.
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