Casino revenue growth slows

California Indian casinos experienced relatively flat growth last year, but still managed to pull in a record $7.8 billion, according to an independent financial analysis being released today.

The revenue from the state's 60 tribal casinos grew significantly less in 2007 than in recent years, partly as a result of the weak economy, according to Alan Meister, an economist with Analysis Group, a Los Angeles consulting firm.

But Meister said the market for tribal gambling in California, as well as the rest of the country, appears far from saturated and the outlook for Indian gaming as a whole remains positive.

"The economy will improve in time, bringing back consumer confidence, disposable income and spending on casino gambling," he said in his report.

Meister said the fact tribal gaming revenue was up only 1.6 percent in California overall from 2006 to 2007 can be blamed somewhat on high gas prices and the uncertain economy.

"There is no doubt in my mind the market is not saturated and there is demand there when the economy returns," he said Monday.

But he said the flat growth also was the result of something more pervasive -- namely existing and proposed legislation, regulations and tribal state gaming compacts that restrict the supply of Indian gaming.

Overall, Meister's report appears encouraging not only for existing casinos, but for tribes planning to build new ones, or expand.

The only Indian casino in Sonoma County, River Rock near Geyserville, is planning a major expansion, although it reported $33.7 million in sales for the quarter ending June 30, down about $1 million from the same period last year.

And the Graton Rancheria is planning a large Indian casino and hotel resort next to Rohnert Park. It has been slowed by a lengthy environmental review. The tribe also must secure a gaming compact from the governor before construction can begin.

Experts interviewed Monday expressed varying opinions on the impact the political and regulatory climate has on the growth of tribal casino revenues.

The lackluster growth "has to do more with the downtown in the economy and in the cost of gas in going to rural locations than anything to do with the restriction on gaming machines," said Cheryl Schmit, a casino watchdog and director of Stand Up for California.

But there is consensus that gas prices hurt.

"There's always been a correlation between the price of gasoline and the revenues from casinos," said I. Nelson Rose, a Whittier law professor and an authority on gaming law.

"If you're worried about losing your house, you don't go gambling," Rose added.

But he also said the market for Indian casinos remains robust.

"The market is not saturated. There is demand," he said, noting that the individual slots at Indian casinos average a profit of about $300 a day, about three times what a slot machine in Las Vegas averages. That indicates there is a pent-up demand for more slots at tribal casinos, according to Rose.

"If you look at markets that are saturated -- Las Vegas, parts of Australia and Spain -- you have thousands and thousands more slots than California," Rose said.

He said the amount that is bet per capita in those places is also much greater, indicating potential for growth in California.

So he expects revenues will increase.

"There's a saying that everything in business is cyclical. Either the price of gas will come down, or people will get used to paying the prices the Europeans have been paying for years," he said.

William Thompson, a gambling expert who teaches at the University of Nevada in Las Vegas, isn't as convinced about the capacity for growth of California tribal casinos.

But he said there is no doubt that the economy has hurt casinos, both in Nevada and California.

As to when things will get better, he said it's largely dependent on the cost of a gallon of gas. For most people to visit a casino in California, it's a 50-mile round trip or more, Thompson said.

"Will the cost of gas be $2.50 (a gallon) or $4.50? That's the answer to the whole question," he said.

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.

com.