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Best of Howard Stutz

Gaming Guru

Howard Stutz

Tribal casinos feeling pinch

19 August 2008

LAS VEGAS, Nevada -- American Indian casinos continued to churn out record gaming revenues in 2007 but not at the same annual growth rate seen over the past two decades.

According to Casino City's Indian Gaming Industry Report, American Indian casinos generated $26.5 billion in gaming revenue last year, a 4.9 percent increase compared with $25.3 billion generated during 2006. The study, which is being released today, was authored by economist Alan Meister of Los Angeles-based Analysis Group.

The increase was the smallest year-over-year figure experienced by the American Indian casino industry in almost 20 years. Indian gaming revenues grew 10.2 percent in 2006, 14.6 percent in 2005, 15.3 percent in 2004 and 14.3 percent in 2003.

The sagging U.S. economy, which has been cited as the primary reason for an unprecedented decline in revenues generated by the American commercial casino market, may be affecting Indian casinos. In some states, public policies that restrict gaming expansion also factored into the growth slowdown.

Still, Meister said the figure was an increase.

"Indian gaming tends to be less impacted by the general economy," Meister said. "Indian gaming tends to be more regionalized and localized."

The industry is still seeing increases in other areas. Nongaming revenues generated by the casinos in 2007 rose 9 percent to $3.1 billion from $2.9 billion. Also, the tribal casinos employed approximately 346,000 workers in 2007, compared with approximately 343,000 workers in 2006. Salaries totaled roughly $12 billion in 2007, compared with $11.2 billion in 2006.

"It's still a healthy industry," Meister said.

American Indian tribes operated 425 gaming facilities in 28 states during 2007, according to the report.

California continued to be the nation's center for Indian gaming. The state's 60 Indian casinos accounted for more than $7.8 billion in gaming revenue during 2007, 29.4 percent of all Indian gaming revenues.

However, California's revenue growth rate was just 1.6 percent over 2006, which Meister said was attributable to both a weak economy and restrictions which slowed expansion. In February, voters allowed several tribes to increase the number of slot machines they can offer above the 1999 compact limits of 2,000 machines. In exchange, the casinos will pay increased fees to the state. However, the expansions won't have an impact until later this year and into 2009.

Meister said California's sluggish economy may be playing a role in the slowing growth rate because the state's Indian casinos primarily draw upon customers from within the state.

"Expansion has been needed but it has been delayed," Meister said.

Indian casinos in Oklahoma, by comparison, saw gaming revenues grow more than 22 percent in 2007 to almost $2.5 billion. Tribes in the state added five new casinos in 2007, mainly because of a change in state law that allowed casinos to offer Las Vegas-style slot machines.

"Oklahoma draws customers from states like Texas and Arkansas, which don't have a lot of gaming opportunities," Meister said. "That's why you see their figures climb."

Connecticut, which only has two casinos, Foxwoods and the Mohegan Sun, continued to be the nation's No. 2 Indian gaming market with more than $2.5 billion in gaming revenues. Combined, Foxwoods and Mohegan Sun have 13,469 slot machines and 691 tables games. Both casinos have plans for expansion in 2008.

Tribal casinos feeling pinch is republished from