Gaming Guru

Bits and Pieces from Indian Country - September 2003

California continues to dominate the Indian gaming landscape.  California has the largest population, the greatest potential for new Indian casinos, and the most challenging political environment.  Gray Davis may not, in fact it is unlikely he will be, the governor of California by the time this is published.  The next governor may or may not be willing to renegotiate new compacts.  New compacts may or may not expand the number of slots allowed per tribe or location and may or may not give the state a larger share of gaming revenue.  Stay tuned.  In the meantime, two compact have been negotiated and approved, thought it wasn't a simple process and the opposition came not from the neighboring cities, but from other tribes.

Gov. Gray Davis has reached agreement with two more Indian tribes that would allow them to open casinos in exchange for sharing 5% of their gambling revenue with the state, tribal and state representatives confirmed Tuesday.  The agreements are with two San Diego County tribes: the La Posta Band of Mission Indians and the Santa Ysabel Band of Diegueno Indians. The agreements, which are subject to approval by the Legislature, would allow each tribe to operate up to 350 slot machines.  Gregg Jones, Los Angeles Times, 9-10-03

In a stunning vote yesterday, the Assembly, persuaded by the state's wealthiest tribes, blocked gambling compacts negotiated by two poor San Diego County tribes.  Legislation that would have ratified the agreements signed this week by the La Posta and Santa Ysabel bands was defeated on 36 to 1 vote, five short of passage, shortly before midnight. The legislation will have one last chance at passage today.  …"I have received letters of 'deep concern' . . . from Soboba, Cahuilla, Cloverdale, Bear River and Robinson Rancheria," Quintana wrote in an e-mail. The five tribes, along with three others, wanted the measure to ratify the compacts "deferred," Quintana wrote.  …San Manuel tribal Chairman Deron Marquez was unavailable last night, but he had previously expressed reservations about the level of revenues the state would receive from the two compacts, as well the inclusion of binding arbitration for disputes over off-reservation impacts.  James P. Sweeney, Copley News Service, San Diego Union-Tribue, 9-12-03

In a victory for two small, impoverished San Diego Indian tribes, the California Legislature Friday approved passage of a bill granting gaming compacts to the La Posta and Santa Ysabel tribes.  La Posta was represented by the American Indian-managed law firm of Monteau & Peebles, which organized an alliance of influential tribes from other parts of California to support passage of the compacts.  … La Posta and Santa Ysabel orchestrated the support for the compact following late breaking and unexpected opposition from two larger tribes. This support came from seventeen tribes including the Barona Tribe, the Santa Rosa Rancheria, the Picayune, the Rumsey Band of Wintun Indians and the San Pasqual Tribe.  Gwen Parada, tribal chairwoman of the La Posta Band, said the members of her tribe were grateful for help from other tribes in overcoming opposition to the compact.  Scott Rose, Press Release, 9-13-03

California maybe a bit iffy at the moment, but the size of the prize, particularly those locations near the major urban population centers is still worth the risk; or so think Park Place, Station and Hard Rock and I would suspect some others that managed to keep their discussion confidential.

Park Place beat out Station Casinos and Hard Rock Hotel for the right to negotiate the final agreements to develop a $250 million destination resort in San Diego near Rincon.   Preliminary plans call for development of Caesars Pauma on more than 30 acres of tribal land on California Highway 76, off Interstate 15, just south of Temecula. It will be in the same general area as Harrah's Rincon, another tribal casino.   The resort will include about 500 hotel rooms, more than 100,000 square feet of gaming space, a full complement of restaurants and live entertainment venues and a spa.  …Tribal chairman Chris Deevers said Park Place was selected as the "preferred partner" by a vote of the tribe.   "The Pauma Tribe is excited about the opportunity to work with Park Place to create a casino resort that the tribe and the community can be proud of," Deevers said in a prepared statement.  Rod Smith, Gaming Wire, Las Vegas Review-Journal, 9-18-03

Despite being edged out in its initial bid, Hard Rock Hotel President Kevin Kelley said Friday his company will continue to pursue deals to manage California tribal casinos.  "Clearly, the Indian gaming market in California is something you can't turn your back on," said Kelley, who cited likely changes to the compacts that would expand current slot machine limits for tribal gaming operators in the Golden State.  "As that happens, the gaming market is going to continue to grow and California will be, one day, the largest gaming market in the world," Kelley said.  Kelley's comments came two days after Hard Rock lost out on its nearly 8-month-long effort to secure a deal to run an approximately $300 million to $350 million resort near San Diego on 30 acres of land controlled by the Pauma Tribe.  Chris Jones, Las Vegas Review-Journal, 9-20-03

The opinion issued by the National Indian Gaming Commission declaring Multimedia's games Class II could lead to another major expansion in Indian country.  Class II games are not governed by compacts, in fact do not require compacts; that opens the door in many jurisdictions where tribes have had difficulty reaching an agreement with the state.  At least, that is what is being said at the moment.  In any case, it was a good time to own stock in Multimedia.

Multimedia Games, Inc. announced today that the National Indian Gaming Commission (NIGC) has issued an advisory opinion letter late this afternoon designating the Company's Reel Time Bingo(TM) Version 1.2 gaming engine (RTB 1.2), with certain modifications, a Class II game. Business Wire, Yahoo Business, 9-24-03

"The thing that surprised me the most was how much money these machines were making.  And the number of people who are playing them who had never played a standard slot machine," said Charlie Lombardo, senior vice president, gaming operations, for the tribe's casinos in Tampa and Hollywood and three other casinos.  Class II games are bingo, pull tabs or similar games of chance, and nonhouse-banked card games, all with or without the use of technological aids. Class II gaming on Indian lands is regulated exclusively by tribes and the federal government through the National Indian Gaming Commission.  Marian Green, Slot Manager, September 2003

Gambling devices that look and play like slot machines are not slots but a version of bingo, the National Indian Gaming Commission has ruled.  That distinction means American Indian tribal casinos can offer the slot like machines to the public without state consent or oversight. The long-awaited ruling blurs the line between categories of federally licensed tribal gambling activities and could trigger the explosive growth of tribal slot parlors nationwide.  "The ramifications of this decision are far-reaching," Merrill Lynch gaming industry analyst David Anders said Wednesday.  Rick Alm, Kansas City Star, 9-25-03

And just as a reminder for those wondering why Indian gaming has become such a big topic, even a major issue in the recall election in California, here are the numbers from just two Indian casinos. 

Slot machine players fed record amounts of money into the machines at Foxwoods Resort Casino in August, giving the Mashantucket Pequots their highest ever monthly slot "win" of $77.3 million.  Gamblers also left $75.8 million in the machines at Mohegan Sun, enabling the Mohegan Indians to improve their slot machine win by 4.6 percent over the same month last year.  The Mashantucket Pequots "won" $77,312,590 for the month at Foxwoods, keeping 8.2 percent of the record $940.8 million "handle," which is the total amount wagered in their 6,651 slot machines. They turned over $19.3 million to the state, setting another record. Their win was 5.4 percent better than last August and their handle 2.2 percent higher. The casino's average daily win per slot machine unit was $375.  Karen Florin, New London, Connecticut Day, 9-16-03

Granted Mohegan Sun and Foxwoods are as big as a casino gets, but the potential for casinos nearly as large exists on the fringes of every major population center in the United States.  Indian gaming is complex; the rules change in every state.  A tribal-state compact sets the rules; take away the tribes need to negotiate with the state and you take away those rules.  A national "Class II" game that produces revenues equivalent to regulated "Class III" slots would make Class II, non-compacted, gaming profitable in a way it has not been up to this point.  The NIGC's opinion goes a long way to radically alter the landscape, and, dare I use the word, revolutionize the entire industry.