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Vol. 7 No. 3, March 2008, Dateline
DATELINE...Tribal
Californians give OK for 17,000 new slots
Fifty-five percent of California voters on February 5 let stand state gaming compacts that allow four thriving Indian casino operators 17,000 new slot machines. Secured with $110 million worth of advertising by the Agua Caliente, Morongo, Sycuan and Pechanga tribes, the vote means:
• The Big Four tribes will sooner or later run 25,000 slots, a third of 77,000 that will then be in the Golden State gaming market. They have 8,000 of almost 60,000 slots that brought the state’s 58 tribal casinos more than $7 billion in 2006. The four tribes’ slots each brought in an average $489 per day that year.
• The state will garner $3 billion to $9 billion in shared gaming revenue by the time the pacts expire in 2030.
• Californians support some versions of expanded tribal gaming. The 55 percent rejection of the referendums seeking to undo legislative ratification of the pacts was nearly uniform statewide. Only a few north-state and San Francisco-area counties narrowly voted to reject the compacts.
• Morongo and Pechanga could lay claim to the world’s largest casinos, surpassing Connecticut’s 7,000-slot Foxwoods tribal casino as the record-holder. Those tribes can have 7,500 slots if they want the full allotment. Agua Caliente and Sycuan can have 5,000.
• Governor Arnold Schwarzenegger has been buoyed in his plan to allow more tribes more slots through renegotiated compacts. “There will be approximately $22 billion that we will get over the next 20 years,” he said. He didn’t explain, saying “we’re not finished” with negotiations.
Other California tribes are likely to soon meet or continue meeting with Schwarzenegger over compacts similar to the four that are now officially in effect, having received federal approval in December. An early visitor reportedly has been the Shingle Springs tribe, now building a $250 million casino southeast of Sacramento.
Shingle Springs competition is one reason the United Auburn gaming tribe joined with the Pala gamers, the UNITE-HERE union and racetrack owner Terrence Fancher to oppose ratification of the compacts in last week’s election. Auburn owns a successful casino northeast of Sacramento operated by Station Casinos of Las Vegas. The four opponents mounted the petition drive that got the questions onto the ballot last year, then spent $34 million on their campaign.
One of Agua Caliente’s first moves was ordering about 1,000 new slots it expects to install at the Agua Caliente Casino in Rancho Mirage by April 1. The tribe also will add 200 machines at its Spa Resort Casino in Palm Springs.
Some observers speculate that several thousand new machines will be running this summer or fall. The Big Four have said they will make measured additions to their slot inventories, depending on factors such as market conditions and available space.
Sycuan in fact is allowed to build a second casino under its version of the four amended 1999 compacts, and Agua Caliente gets a third casino. They will be the only California tribes with more than one casino, although older compacts allow 2,000 slots to be split between two structures and some tribes are considering that approach.
The new compacts call for immediate revenue sharing on each tribe’s existing machines, payments they have not had to make since their casinos opened almost 10 years ago. Pechanga will pay $42.5 million a year for 2,000 slots, Morongo $36.7 million, Agua Caliente $23.4 million and Sycuan $20 million.
For the next 3,000 machines they add, the Big Four pay the state 15 percent of those units’ net win annually. The two tribes in line for 7,500 slots pay 25 percent of net win for the final 2,500 units.
Last month’s results may suggest a calm climate for future tribal gaming in California, especially in the south of the state. But tribes may face rough seas around the negotiating table, predicts Scott Crowell, an attorney for the Rincon gaming tribe.
“If we wake up on February 6 and these compacts are approved, we expect Schwarzenegger to view it as a mandate to try to extract as much blood as possible from every tribe that comes to his office,” Crowell said before the public cast its votes.
MGM Foxwoods to open May 17
The $700 million MGM Grand at Foxwoods in Mashantucket, Connecticut is looking to open May 17, according to a spokesman for the casino.
There had been some confusion on the exact date because a later one had been on the casino’s website. This will be a companion casino to the existing Foxwoods casino, although the two will be connected by a walkway.
The second casino owned by the Mashantucket Pequot Tribal Nation will also include a 26-story, 825-room hotel and 4,000-seat entertainment center, restaurants and retail.
The nearby rival Mohegan Sun’s even more expensive expansion Casino of the Wind in Uncasville, which includes a second hotel with 1,000 rooms, restaurants, retail and entertainment will follow suit by this fall. This phased development, which will open through 2010, will cost an estimated $925 million.
Both casinos are already contributing to employment in the region. Foxwoods will be hiring 2,000 additional workers before May for the MGM Grand. There won’t be any shortage of applications. Typically there are 100 applications a day for casino jobs. That has doubled as the casino nears completion, according to Foxwoods. But just to make sure, the casino is running a recruiting campaign throughout the region.
Staff writers for Global Gaming Business magazine. Las Vegas, Nevada.
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