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Bits and Pieces from Indian Country - May 2008

1 June 2008

As dismal as gaming news in general may be, Indian gaming, while subject to the same economic pressures and trends, has a couple of very positive stories. The Seminole Tribe of Florida is certainly one of those stories. The tribe, with a newly approved compact, is ramping up its casinos, adding Class III slot machines and Class III table games. The slot machines are easy to buy; it just requires the money, which the tribe has, and sufficient lead time, and any of the slot machine manufacturers will deliver and install as many games as you want.

Dealers are not as easy to come by, so the tribe has gone on the road to Atlantic City and Connecticut to hold job fairs in its search for trained and experienced game dealers and supervisors.

The state's only Las Vegas-style slots outside South Florida could flash and spin as soon as next week at Tampa's Seminole Hard Rock Hotel & Casino. A public debut for 725 new machines is set for May 1. But the first few will go live a week to 10 days earlier, said casino president John Fontana. "It's exciting to not have to hold anything back and have all the tools in the tool box," he said. The Seminole Tribe of Florida won the right to operate slots at its seven Florida casinos under a deal signed by Gov. Charlie Crist and approved by federal officials in January. Tampa's casino is the largest in Florida with 3,200 Class II gaming machines. Fontana expects to have 1,675 slots, just more than half the casino's total, by the end of May. Seminole officials are in the process of hiring 3,650 dealers for their Florida casinos. The new card games should start at the Hollywood casino in June and reach Tampa by late summer or fall, according to Seminole Gaming CEO Jim Allen. (Steve Huettel, St. Petersburg Times, 4-18-08)

Traveling to New Jersey and Connecticut is not the only way the Seminole tribe has made national and indeed international news. The Tribe bought Hard Rock International to become the first truly international Indian business; although other tribes have businesses that do conduct international business, it is nothing on the scale of Hard Rock. The purchase merited an award as "Acquisition of the Year." The tribe is creating its own brand of beef, not only to further diversify its businesses but to expand awareness of the tribe and its logo. Even with all of that news, the tribe did something else that separates them from tribes that just have a casino; they invited Mikhail Gorbachev to deliver a speech on peace.

The international law firm Greenberg Traurig, LLP was recognized for its role in the Seminole Tribe of Florida's purchase of Hard Rock International which was honored with the Native American Finance Officers Association's "Deal of the Year" award for 2007 at NAFOA's Spring Finance Conference for Indian Country. The award was presented for the Seminole Tribe's reported $965 million acquisition of Hard Rock International, which marked the first acquisition of a major international corporation by a Native American Tribe. The "Deal of the Year" award, presented to the Seminole Tribe and the banking and legal team-leaders involved in bringing the Hard Rock deal to fruition, was the highlight of NAFOA's Inaugural Financial Leadership Awards Dinner. (Business Wire, 4-18-08)

The Seminole Tribe of Florida said it is partnering with other Native American tribes to offer its own brand of beef to be sold at the Seminole Hard Rock Hotel & Casino Hollywood. The plan is part of a joint venture with the U.S. Department of Interior's Office of Indian Energy and Economic Development and the Mashantucket Pequot Tribe of Connecticut, a news release said…It is to eventually be distributed to large hotel chains, U.S. military bases, retail establishments, institutions and other food-service outlets, in addition to Indian casinos and restaurants. A major buyer of the Seminole brand of beef is New York-based ARK Restaurants Corp., which operates seven fast-food facilities at the Seminole Hard Rock Hotel & Casino Hollywood food court. (Tampa Bay Business Journal, 4-18-08)

The concert hall at the Seminole Hard Rock Hotel & Casino this month features a boxing match with welterweight David Estrada, country singer Reba McEntire and rock star Carlos Santana. But the 77-year-old Russian taking center stage Wednesday night doesn't fight, sing, or play power chords. He's Mikhail Gorbachev. And he's here to talk about ``Peace in the 21st Century.' (Roberto Santiago, Miami Herald, 4-17-08)

But that doesn't mean the Seminoles are completely exempt from the normal world that the rest of us have to face. The Donald, legendary for a number of things – his hair, his wives, his ego, his hotels and his failing casinos – is also known far and wide for his litigiousness. The Donald has been suing a former agent, claiming he, Donald Trump, should have been the Seminole Tribe's development partner and reaping the rewards of his talents at this very moment. The suit finds a match in far-away Las Vegas, where Sheldon Adelson has been testifying in a comparable suit – but on the other side. His former agent is suing him for a share of his billions from Macau.

A Broward County Circuit judge on Thursday dismissed four of six counts in a lawsuit Donald Trump filed against Richard Fields, a former Trump confidante, over allegations Fields cheated the New York tycoon out of a lucrative Hard Rock development agreement with the Seminole Tribe. Circuit Judge Jeffrey Streitfeld ruled that allegations of deceptive trade practices, breach of fiduciary duty and other counts related to the business deal had no legal standing to proceed to trial, but he left intact the basic dispute between Trump and Fields. Trump sued Fields, Power Plant and The Cordish Co. in 2004, asking for damages that some lawyers have estimated at more than $1 billion. Trump retained Fields in the mid 1990s to help him pursue a development agreement with the Seminoles. (Amy Driscoll, Miami Herald, 4-17-08)

Las Vegas Sands Corp. Chairman Sheldon Adelson said Thursday he didn't believe a Hong Kong businessman could help his casino company win a gaming concession in Macau because, at the time, there wasn't any opportunity for casino expansion in the Chinese special administrative region. Still, Adelson said, he and Las Vegas Sands President Bill Weidner traveled to Beijing in 2001 to meet with Chinese government officials under the belief "that you never leave any stone unturned." Adelson, 74, testified Thursday in Clark County District Court on the first day of testimony in a civil trial to determine whether Richard Suen and Round Square Co. helped Las Vegas Sands win a Macau gambling license in 2002 and are owed millions of dollars. (Howard Stutz, Las Vegas Review-Journal, 4-17-08)

Oklahoma is another of those good stories in Indian gaming where the tribes are enjoying growing casino revenues and have yet to be hafflicted by the malaise that has hit most of the rest of the gaming industry. Oklahoma has a relatively small population, but Indian gaming has found a fertile home there; for years the tribes operated Class II gaming without compacts, but now they have both Class II and Class III. Some tribes have been slow to convert from Class II slot machines to Class III games because under the compact they have to share revenues with the state on Class III games. Still the casinos have grown and prospered – enough to attract Mickey Brown, who might be called Mr. Gaming given his background with the state of New Jersey and his time with Foxwoods and Seneca.

Throughout the 20th century, the state's landscape was covered with gushing oil derricks that often created millionaires overnight. Now at the dawn of the next century, those oil derricks largely have been replaced as moneymakers by the gaming industry, as Oklahoma has experienced an unprecedented growth in casinos operated by American Indian tribes. According to a report published in February by Native Nations…Oklahoma is ranked first in the nation in tribal casinos with close to 100 tribal gambling locations, many of which are casinos, with a few convenience stores and travel plazas added to the mix. There are 415 tribal casinos in the U.S., and Oklahoma makes up one-fourth of the market, said Tim Grogan, Seneca Cayuga Tribe chief financial officer. The state is also ranked second in gaming machines with approximately 57,000 machines among tribal gaming states; and in 2006, Oklahoma ranked fourth in revenue with $1.97 billion, Grogan said…Oklahoma tribes pay the state 4 to 6 percent of the revenue from Class III machines. In the first seven months of this fiscal year, that generated $37.2 million for the state. Grogan said in 2006, Oklahoma had a slot machine for every 65 adults in the state, more than five times the ratio for California, the next-leading tribal gaming state. (Sheila Stogsdill, Oklahoman, 4-21-08)

Phase one isn't complete, but the Quapaw tribe is already looking at phase two. Sean Harrison, spokesman for the tribe's Downstream Casino Resort, said that soon after the 12-story, 222-room hotel opens, construction would start on an additional 400-room hotel…The first hotel, set to open in the fall, includes 15 luxury suites and a large VIP lounge on the top floor…The first phase of the Downstream Casino Resort is a $301 million casino and hotel complex just off Interstate 44 where Oklahoma, Missouri and Kansas intersect. The casino is scheduled to open in July, with the hotel opening in the fall. Mickey Brown, casino project manager, said Downstream would have its own upscale boutique shops, and he expects additional retail development to sprout around the project. (Roger McKinney, Joplin Globe, 4-21-08)

G. Michael "Mickey" Brown hopes he can do for the Quapaw Tribe of Oklahoma what he did for the Mashantucket Pequot tribe of Connecticut…Brown, 65, is casino project manager for Downstream Casino Resort, the Quapaw Tribe's $301 million casino and hotel complex…Brown said his contract calls for him to assist in the design, financing, equipping, staffing and opening of the project. He said the job has involved identifying senior management, and developing the conceptual design, master plan and casino layout. He said his job would be over within six months of the summer opening…Brown is best known for serving as president and chief executive officer of the Pequot project, Foxwoods Resort Casino, from 1993 to 1997. He helped develop the casino for the tribe before becoming its chief executive He started out developing a casino in the Bahamas, where he worked from 1986 to 1988. Then he developed Foxwoods. After Foxwoods came the Seneca Niagara Casino in Niagara Falls, N.Y., and the Seneca Allegany Casino and Hotel in Salamanca, N.Y. He headed Seneca Gaming Corp. from 2002 to 2005. He also has developed casinos in Perth and Adelaide in Australia between those jobs. Most recently, he developed French Lick Resort Casino in French Lick, Ind. That opened in October 2005. (Roger McKinney, Joplin Globe, 4-21-08)

That Class II-Class III gap may be on its way to ending. Like the tribes in Oklahoma the Seminole made a very good living from Class II games for a long time – but now Philip Hogen, the chairman of the National Indian Gaming Regulatory Commission, would like to stop that. He would like to create legislation that would make clear the difference and thereby eliminate Class II slot machines as a viable option for tribes. It would give the commission and state governors more power over Indian gaming. Hogen seems to think he should be able to make the regulations without having to listen to the opinions of tribes or their members. Clearly the tribes do not support his proposed Class II game regulation, and just as clearly, he doesn't want any limits on his powers.

Philip Hogen, chairman of the regulatory commission, told the Senate Indian Affairs Committee that it's past time to draw a "bright line" between Class II and Class III gaming. "I've got to get this done." The head of the National Indian Gaming Commission said Thursday that he's determined to act on a controversial change involving electronic bingo machines, despite widespread complaints from Indian tribes that they haven't had enough input…Under the commission's proposal, "one-touch" bingo machines would be shut down after a five-year "grandfather" period for the machines currently in use, Hogen said. Technological advances have blurred the line between Class II electronic bingo machines and the Class III casino-type slot machines that are subject to state agreements — and a state cut of the profits. (Chris Casteel, Washington Bureau, Oklahoman, 4-18-08)

The chief federal regulator of Indian gaming, amid complaints that his agency is overreaching, on Thursday urged Congress not to pass legislation requiring more consultation with tribes. Phil Hogen, chairman of the National Indian Gaming Commission, told the Senate Indian Affairs Committee that tribes often don't consider consultation adequate unless federal regulators agree with them. Tribal gaming officials fired back, saying Hogen and his agency are pursuing a "top-down Washington approach to regulation" that ignores tribal sovereignty…Rahall proposed the bill after the Bureau of Indian Affairs on Jan. 3 announced a crackdown on "off-reservation gambling," in which tribes purchase real estate not located on their native land to build casinos… Hogen's agency has 104 employees to oversee tribal gaming that does not include casinos which are regulated by state-tribal compacts. Although he said he has enough employees to do the job, Hogen said the Rahall bill probably would require more federal regulators because of the lawsuits that would likely ensue. Four representatives of gambling tribes, including J.R. Matthews, vice chairman of the Quapaw Tribe of Quapaw, Okla., said the National Indian Gaming Commission does not accommodate tribal concerns. "Instead, the NIGC has a pre-determined decision that has already been made, and they tell us they are for change, but they don't listen to us," Matthews said. (Tony Batt, Stephens Washington Bureau, Las Vegas Review-Journal, 4-18-08)

Some companies may be having a good year, especially those with properties in places such as Macau or Biloxi that have not been hit by economic woes. But every jurisdiction in the United States is feeling the pinch, and most gaming companies are feeling it as well. Few observers see any change in the near future. Boyd in its results announcement said not to expect any improvement in the second quarter. Some jurisdictions are facing more problems than others. Atlantic City now has a full smoking ban, with more casinos on the horizon in Pennsylvania, and New York State is taking bids for slot machines at the racetracks in the state, and Rhode Island is expanding hours. Reno and northern Nevada can expect more casinos and expansions in California, and Las Vegas has lost a couple of airlines in a month due to bankruptcies. Illinois and Colorado are still dealing with declining revenue from smoking bans; both states have initiatives in progress to try to offset the declines. The casinos in Illinois would like to escape the ban, and in Colorado they hope to increase hours, limits and the games they can offer. But it is much too soon to predict the outcome of either. Even the world-famous Indian casinos, Foxwoods and Mohegan Sun in Connecticut, have declining revenues and both are increasing the pressure on the other by expanding, which also creates more pressure on Atlantic City. The slot manufacturers are not protected from the general malaise of the gaming industry either. Both IGT and Aristocrat are reporting less revenue, and like everyone else in gaming are blaming the economy for a lack of sales. At four months into 2008, the year looks worse than it did at its beginning, and it is difficult to see anything in the rest of the year that will change that outlook.

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

Ken

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.