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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Northern Nevada's woes likely to expand

1 February 2010

LAS VEGAS, Nevada -- Expansion plans by an Indian casino near Sacramento, Calif., signal another bad omen for Northern Nevada's beleaguered gaming market.

Casino revenues in Reno and the Lake Tahoe area have been decimated for almost three years. The recession has zapped tourism, while bad weather routinely impedes travel by casino patrons from the important San Francisco Bay Area feeder market.

But Northern California's large Indian casino community is the primary reason Washoe County hasn't seen positive gaming revenues in 29 months and South Lake Tahoe's casinos are reporting figures mirroring the 1980s.

Bay Area residents have a choice. The Red Hawk in Placerville opened a year ago with 2,100 slot machines and 75 table games. The 7-year-old Thunder Valley near Sacramento is answering with an $800 million expansion opening in July.

Now, Cache Creek is adding to the pain.

The Sacramento Valley casino announced plans last week for a 52,000 square-foot events center, a 900-space parking garage and 20,000 additional square feet of casino space. The Yocha Dehe Wintun Nation hopes to have the expansion in place by 2013.

Thunder Valley and Cache Creek each operate 2,400 slots. Both casinos can expand up to 5,000 games based on their respective tribes' 2004 renegotiated compacts with California.

Union Gaming Group Principal Bill Lerner said Red Hawk has cut into the cash flows of Thunder Valley and Cache Creek, which is one reason behind the expansions.

Imagine what the three casinos combined have done to Northern Nevada.

"The combination of high unemployment in the region along with tribal expansion has materially impacted the Reno and Tahoe gaming markets." Lerner said. "Tahoe has been more impacted than Reno (with) gaming revenues off 34 percent from 2000."

Harrah's Entertainment recently closed Bill's Casino in South Lake Tahoe and the Columbia Sussex Corp.-owned Horizon may soon follow.

Reno has seen its monthly gaming revenue total lag behind most of Clark County's reporting areas, including the Boulder Strip and downtown.

California's gaming revenues, according to the recent Indian Gaming Industry Report, were at $7.3 billion in 2008, down 6 percent from 2007 but the highest of any state. California accounts for 27 percent of the nation's total tribal gaming revenues.

The report's author, economist Alan Meister, says casino growth will again flourish in California, spelling trouble for Northern Nevada.

"What's happening in California is problematic for Reno," Lerner said.