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Bits and Pieces from Indian Country - October 2008

3 November 2008

By Ken Adams

It is difficult to consistently write a separate column on Indian gaming. It was easy years ago, when everything about Indian gaming was new and to some extent different from conventional gaming. There was less competition, a very different system for contributions to local governments – as a tax per se levied by a non-tribal government is against federal law – and even financing was very, very different in Indian Country. Over the years, the differences have diminished dramatically. Certainly most Indian casinos face as much competition as any other casino faces. And while taxation is still not legal, most states have negotiated a share of the tribal gaming revenues under some other category. But whatever it is called, it generally mirrors the amounts non-tribal casinos pay in taxes. And now even financing is pretty much identical. This month Mohegan Sun announced a postponement – as did many other Indian and non-Indian casinos in the country – of the next phase of its latest $900 million expansion. Mohegan Sun was also a losing bidder in Kansas, while its in-state competitor had withdrawn its bid for a license in that state. But each tribe has other locations or possible locations – places where they will operate as any other licensee and not in the category of Indian gaming.

Trouble with the nation's economy has forced the Mohegan Sun casino in eastern Connecticut to delay the final projects of its $925 million expansion plan. The Mohegan Tribal Council decided Monday to suspend construction of a 39-story hotel, a House of Blues music hall, a spa and additional retail and restaurant space, which were to be completed by the fall of 2010. The remaining parts of the expansion, which have a budget of about $734 million, will be delayed a least a year and re-evaluated. It was just last month that Mohegan Sun opened the new 64,000-square-foot Casino of the Wind. (New York Newsday, 9-23-08)

The Dry Creek Pomo tribe in Alexander Valley announced plans in January to seek up to $600 million from investors to build a resort beside River Rock Casino and pay off existing debt. What exists: The 62,000-square-foot facility, which attracts between 2,000 and 3,000 guests a day, has 1,600 slot and video poker machines, 22 table games and a restaurant. What's planned: The Tuscan-themed project includes a permanent casino and 255-room hotel with a spa, meeting rooms, restaurants, shops, gardens and terrace plaza. Shrinking U.S. credit markets and slipping casino revenues are putting a crimp in River Rock Casino's plans to build a $300 million Tuscan-themed resort in Alexander Valley. River Rock, owned by the Dry Creek Pomo tribe, has shelved plans to raise $600 million for the expansion, saying it's "not practicable" to finance the entire project now. River Rock hopes to raise money in smaller amounts and build the project in stages. Earlier this month, casino officials told investors they will seek $126 million for the first phase of the resort near Geyserville. But even that plan is coming under scrutiny on Wall Street. Two influential credit rating agencies recently raised questions about the riskiness of the project, citing the massive debt already incurred to build River Rock's temporary casino amid a decline in gaming revenue…Standard & Poor's, placed River Rock on its credit watch "with negative implications" on Sept. 10, saying it may downgrade the casino operator's debt. "We expect that weak operating conditions in the gaming industry will continue into the first half of 2009 as economic weakness leads to lower consumer discretionary spending," according to Standard & Poor's report. River Rock's leverage -- or reliance on borrowed money -- will rise with its proposed financing, increasing the risk of default, Moody's said. (Steve Hart, Santa Rosa Press Democrat, 9-29-08)

However, there are still places where Indian gaming is different. There are some very remote locations where the conditions are unique and not at all like most conventional casino locations. Tribes in those locations struggle just to break even, pay off the construction debts, provide employment to tribal members and hope to put some money in the tribal general fund. The Blackfeet in Montana are an example or how difficult operating a remote casino can be.

Glacier Peaks Casino officials here have reshuffled the deck and as a result say their $7 million facility has rebounded from a turbulent debut…Officials are confident they can pay off most of their $7-million-plus debt when they renegotiate their private lender loans in 2012…In the interim, the casino continues to be one of the largest employers on the Blackfeet Reservation, employing 114 people with a $2.5 million payroll…A slow start first forced officials to borrow money from the Blackfeet Tribe to make up for poor cash flow…While the casino has not yet met its intended obligation to serve as a revenue stream for the tribe, Fitzpatrick contends that the casino is on its way to getting there. (Travis Coleman, Great Falls Tribune, 9-24-08)

The other way that Indian casinos can be different is in the way traditional tribal values can influence the way the tribe operates a casino. The Eastern Band of the Cherokee in North Carolina have Harrah's as an operator – so you might expect that the casino would look and behave the way Harrah's casinos look and act. However, there is a difference; the tribe thought serving alcohol was inconsistent with tribal values. That may change as it has at some other tribal casinos, but even if it does change, the casino operated for years without serving alcohol – an act that would, according to Principal Chief Michell Hicks, shame their forefathers. I have been to many board or executive committee meetings at many different casinos and that is a phrase and a concept I have never heard expressed.

Eastern Band of the Cherokee Indians Principal Chief Michell Hicks has vetoed a referendum that would have allowed the tribe to vote on allowing alcohol at Harrah's Cherokee Casino. Hicks announced his decision Aug. 27 in a letter to Tribal Council Chairman Mike Parker. The council had voted on Aug. 7 to hold the referendum. Hicks said allowing the vote would be out of line with the Cherokee's traditional stance against alcohol on the reservation. "It is my belief that an affirmative decision to open the door for alcohol would shame our forefathers for their efforts on this issue," Hicks stated. At one point in the letter he pondered, "I just wonder how proud Yonaguska would be with this decision," referring to the revered Cherokee chief who stayed behind with members of the Eastern Band who eluded the Trail of Tears. "This decision has a potentially disastrous effect on our people that I couldn't live with the results," he added. (Julia Merchant, Smoky Mountain News, 9-3-08)

Another moral issue that has impacted Indian and indeed the rest of gaming is still playing itself out – the final stages of the Abramoff scandal. Abramoff is in jail and his testimony is still sending to jail with him some of those who took his money and gave their influence in return. Abramoff may have scammed several tribes, but he didn't keep them from understanding that contributing to politicians and their campaigns was useful. That is another thing that has changed since the National Indian Gaming Regulatory Act first passed; tribes have significantly more political influence than they had in the early days. The influence comes from the importance gaming has to local and state economies and from the amount of money and effort that tribes have learned to put into political campaigns.

The Jack Abramoff lobbying scandal may have given the Indian tribes he was convicted of defrauding plenty of reason to check their participation in the political process. But they really haven't. Aside from a brief pause in campaign contributions during the 2006 election cycle, the tribes have continued to flex their muscle by giving millions to candidates and are on pace now to possibly break previous contribution levels. In 2006, the tribes that were one-time clients of Abramoff gave $1.2 million to candidates and parties, a drop of $700,000 from their 2004 contributions. They had already matched that $1.2 million as of the end of July this year, and could possibly reach 2004 levels by the end of the election. Overall, Indian tribes have reported more than $8.9 million in contributions so far this election. Although they were victims of Abramoff's influence peddling schemes, the scandal led to intensified scrutiny of Indian tribe money flowing into Washington and prompted many lawmakers to return tribe contributions. Still, not all the tribes that were tied up in the Abramoff affair have resumed their participation. For example, no donations have been reported this election from the Tigua Tribe of Texas, or the Coushatta and Chitimacha tribes of Louisiana. (Emily Cadei, Congressional Quarterly, 9-10-08)

Abramoff did something important for the country besides exposing others who were as corrupt and unprincipled as he was – he exposed a form of racism. Abramoff treated his tribal clients with disrespect and contempt. He thought of them as primitive and stupid, and as prime candidates to be exploited and then laughed at. Abramoff thought about tribes the way many people have thought of them. If Indian gaming has done anything, it has made significant inroads into that attitude. Tribes are now very often seen as important community members, astute business operators, and members of a distinct culture that deserves our respect, not contempt.

But now, that is simply my opinion, isn't it?

Ken

 

Quick-takes: The month's trends in a glance - October 2008

3 November 2008
TAKE ONE Gaming is going to the polls again this November with Maryland, Maine, Ohio, Missouri, and Colorado all having a gaming question on the ballot. There is even a move in Florida for a casino in Miami; it is not likely to be an issue this year, but gives us something to look forward to next year. ... (read more)
 

Quick-takes: The month's trends in a glance - September 2008

1 October 2008
A war may be brewing – a slot machine war. The slot machines themselves will not be dueling; instead the management of slot companies and the management of casino companies will be the duelists. We all know that casino revenues are down and operators are doing everything they can to reduce expenses and preserve their margins. ... (read more)
 

Bits and Pieces from Indian Country - September 2008

1 October 2008
Indian tribes are often noted for being very aggressive in pursuing business opportunities; it was, after all, tribes that pushed the gaming envelope that led to Indian gaming. Tribes in California, Florida, and Michigan were operating bingo games and small casinos in the hopes of gaining funds and jobs for tribal members and tribal programs. ... (read more)

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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.
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.