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Bits and Pieces from Indian Country - July 2006
12 September 2006
By Ken Adams
If the reports on national and international gaming trends were favorable, this
year's Indian Gaming Industry Report was even better. Indian gaming grew by 15.6
percent for the year, the 10th consecutive year of 15 percent growth. It is driven
this year in large part by the expansion in Oklahoma, although California hasn't
stopped expanding regardless of how large the casinos are already, and Mohegan
Sun and Foxwoods keep on growing.
Gambling revenue at American Indian casinos nationwide grew to nearly $23
billion last year, climbing at a rate more than three times faster than traditional
gambling operations. California tribes accounted for nearly a third of the
money, according to a comprehensive report on Indian gambling to be released
Wednesday. Nationwide, Indian gambling revenue grew by 15.6 percent in 2005,
even though no major casinos opened last year, according to the Indian Gaming
Industry Report, compiled by economist Alan Meister. It was the 10th consecutive
year in which revenues increased by about 15 percent. The report shows tribal
casinos closing in on the amount of profits taken in by other casinos, which
had $29.6 billion in revenue in 2005, a 4.6 percent rise from the previous
year. California's tribes saw revenue climb by 24 percent, to $7.2 billion,
in a state where 55 tribes operate 57 casinos. Juliet Williams, Associated
Press, New York News Day, 6-21-06
California may still be expanding, but there are some storm clouds on the horizon.
The state legislature is balking at approving the governor's latest compacts,
and Governor Arnold Schwarzenegger is threatening to close six casinos over
a definition. The tribes in California are limited to 2,000 slot machines, but,
as one can see from the expansion of the two casinos in Connecticut, if a casino
has the right market, 6,000 machines could easily be utilized and would certainly
be more profitable. The tribes in California have tried two approaches to do
an end run around the limitations. The first involves using Class II games as
the tribes in Florida and Oklahoma have done to get around state restrictions.
The second approach (the one that has the governor in a huff this time) utilizes
the multi-station game, which is often argued as being one game for licensing
purposes, but which the state terms to be one game for each seat. We will have
to wait and see how this works out.
California's tribes saw revenue climb by 24 percent, to $7.2 billion, in
a state where 55 tribes operate 57 casinos. Juliet Williams, Associated Press,
Sacramento Bee, 6-20-06
An Assembly committee rejected proposed side-by-side Indian casinos by so-called
reservation-shopping tribes hoping to lure Las Vegas-bound gamblers off Interstate
15 in Barstow. Wednesday's vote by the Assembly Governmental Organizational
Committee likely dooms Barstow casinos for the Los Coyotes Band of Cahuilla
and Cupeno Indians of San Diego County and the Big Lagoon Rancheria of Humboldt
County. Associated Press, San Francisco Chronicle, 6-29-06
Tribes limited to 2,000 slots count each multistation game as one machine
because it's controlled by one computer chip. The state contends that each
station of the game counts as a slot for purposes of licensing and calculating
the fees tribes must pay the state. Just weeks after extending an olive branch
to the state's most powerful Indian tribes, Gov. Arnold Schwarzenegger is
threatening to try to shut down six of their casinos - including two of the
largest in San Diego County - in a dispute over how their slot machine numbers
are tallied
According to the state Gambling Control Commission's latest
figures, for March, 12 casinos statewide had a total of 40 multistation machines
with a total of 348 terminals. Chet Barfield, San Diego Union-Tribune, 6-30-06
Two interesting legal issues surfaced in June. In Washington, the Puyallup
tribe has been told by the National Indian Gaming Commission that the tribe's
system of per capita distribution does not meet federal guidelines, and the
tribe has been ordered to stop those payments. One of the major misconceptions
of Indian gaming has to do with payment of gaming revenues to individual tribal
members. It is commonly believed that all of the money is distributed tax-free
to members. This case illustrates that the distribution of funds is controlled
by federal regulation and monitored. By law the majority of the funds must go
to tribal general funds and be used for the benefit of the community and not
individuals.
Every member receives $2,000 a month in "per capita payments,"
which last year used up 65 percent of the tribe's $134 million in net gambling
revenues.
Federal regulators are demanding that the Puyallup Tribe of Indians cut by
half the amount of money given to tribal members each month. The National
Indian Gaming Commission issued a notice of violation to the tribe Monday,
claiming it is misallocating its gambling profits, giving away twice as much
money as is permissible under the tribe's own rules. For the past four years,
the majority of the profits from the tribe's gambling operations have gone
straight into the pockets of its 3,450 members, rather than into social programs
The
commission ordered the tribe to "immediately cease and desist" making
the excess payments. Rob Carson; Tacoma News Tribune, 6-15-06
The second issue is at the core of Indian gaming - sovereignty. In California,
former employees of Thunder Valley Casino, operated for the United Auburn Indian
Community by Station Casinos, are trying to sue the casino over alleged sexual
harassment and discrimination. In the past, courts have held that tribes were
protected from such suits by sovereignty immunity. In this case an arbitrator
ruled the tribe had agreed to abide by the laws of the state in the compacting
process and therefore could not claim immunity. This one bears watching also;
if the ruling is upheld, it could have a major impact on Indian gaming in general.
new twist to the legal battle between Thunder Valley Casino and seven
former employees who allege sexual harassment and discrimination. The ruling
by Commissioner Margaret Wells, if confirmed, would allow the plaintiffs to
continue their case, despite the Indian casino's claim that tribal sovereignty
makes it immune from civil rights lawsuits
Wells turned the sovereign
immunity defense on its head
"Applying those laws to defendants
would not impair the tribe's interest in governing on its lands as the tribe
has committed itself to abiding by those laws," Wells wrote. Dorothy
Korber, Sacramento Bee, 6-21-06
In a way, the legal battles resemble the actions of New Jersey's Governor,
Jon S. Corzine. They illustrate just how fragile the framework is upon which
gaming is constructed. Indian gaming may not be subject to the tax fluctuations
that make gaming so difficult in some states, but it is highly regulated and
subject to regulation changes, such as the ones Congress is currently deliberating,
any of which can change the viability of an operation overnight. Well, now that
you are up-to-date on all of the current risks and problems, you can rush out
and buy some casino stocks, which just happen to be available at bargain prices,
at least for the moment.
But now, that is simply my opinion, isn't it?
Ken
Recent Articles
Best of Ken Adams

Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers. Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards. Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.
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Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.
Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.
Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.
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