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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. Those small first gaming operations have led us to a national industry that produces over $20 billion a year. Indian gaming not only provides some 350,000 jobs to tribal members (and non-tribal members), it also provides for tribal and state programs that fund everything from schools, roads, and medical care to new and more diverse businesses. The growth and expansion of Indian casinos is slowing; the day is coming when dramatic growth fueled by dramatic expansion will be over, but until that time is reached Indian gaming continues to be a very important economic factor in every state with tribes and casinos.

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… 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… 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… California's revenue growth rate was just 1.6 percent over 2006. (Howard Stutz, Las Vegas Review-Journal, 8-19-08)

Tribal casinos are not any more immune to economic downturns than other casinos; the results from the states with gaming vary widely depending on the maturity of the industry in that state, the economy in that state, and the competition from neighboring states.

This week, there's another twist: Indian gaming throughout the country is continuing to grow, though by a smaller margin… And while the state's casinos have struggled in 2008, Connecticut still ranked second in gaming revenues in 2007, earning nearly 10 percent of all Indian gaming revenues… Here, the two tribally owned casinos, Foxwoods Resort Casino, which is owned by the Mashantucket Pequot Tribe, and Mohegan Sun, owned by the Mohegan Tribe, saw revenues grow by 1.6 percent to $2.5 billion — or 9.5 percent of total Indian gaming revenue made in 2007. (Heather Allen, New London Day, 8-19-08)

Gamblers spent more than $2.4 billion at Oklahoma's tribal casinos in 2007…revenue at Oklahoma's Indian gaming locations jumped by a nation-leading 22.3 percent… The best chances for growth appear to be on Oklahoma's borders, where casinos capture gamblers from other states. Arkansas, southern Kansas and southwest Missouri have no casinos, and the only one in Texas is nearly 500 miles from Oklahoma's nearest competition. Two large new casinos — Downstream Casino Resort at the state's northeast tip and First Council Casino on the Oklahoma-Kansas border north of Newkirk — opened this year. Those two locations add nearly 3,000 machines to the state's total. Two other border casinos — WinStar at the Oklahoma-Texas line and Choctaw Casino at West Siloam Springs next to Arkansas — plan expansions that promise hundreds more new machines. (Tony Thornton, Oklahoman, 8-19-08)

Arizona tribal casinos hit their industry's equivalent of the Powerball in 2007 with revenues from gambling alone surpassing $2 billion for the first time…casino revenue – from gaming as well as the sale of food, beverages and other forms of entertainment – grew 4.6 percent, to a total of $2.28 billion last year, according to the report. Slot machine and card game revenue in Arizona alone totaled $2.03 billion. (Cathryn Creno, Arizona Republic, 8-19-08)

Total gaming revenue generated by Florida Indian gaming facilities — two tribes operate eight facilities — was about $1.6-billion, an increase over 2006 of only 2.3 percent. That puts the state at No. 18 in percentage growth among gaming states. In 2006, growth was a more muscular 21.5 percent, and 38.5 percent in 2005. (St. Petersburg Times, 9-19-08)

Revenues at American Indian casinos in South Dakota dropped by 3 percent last year… The Analysis Group indicates that the state's Indian reservation casinos had $97.1 million in revenues in 2007, a decline of $3 million from 2006. It was the second straight year of falling revenues… Alan Meister blames competition from video lottery and Deadwood casinos, as well as state-tribal compacts that restrict the number of slot machines and card tables that Indian casinos may offer. (Argus Leader, 8-26-08)

Tribal casinos in Wisconsin apparently didn't feel the pinch of a lackluster economy last year… Gaming revenue at the 27 Indian gaming facilities in Wisconsin rose 7.3 percent in 2007 to about $1.335 billion… The number of gaming machines at tribal casinos in Wisconsin rose 7.6 percent to 16,810 in 2007, the report said, while the number of table games increased 1.6 percent to 316… Neighboring Minnesota had 34 Indian gaming facilities in 2007 that generated $1.5 billion in gaming revenue, just a 0.5 percent increase over 2006, the report said. (Eau Claire Leader-Telegram, 8-26-08)

New York's Indian-run casinos generated more than $1 billion in revenues last year and may have taken a bite out of Atlantic City's action… Despite a slowing economy, New York's eight Indian gaming facilities saw a 7.7% increase in revenue from 2006 to 2007, topping $1.02 billion… At the same time, revenue at New Jersey's commercially run casinos dropped 5.7%. (Glenn Blain, New York Daily News, 8-26-08)

But many tribes are aware that gaming will not continue to grow as it did in the beginning. Furthermore, Indian gaming may only be one election, one Congress, one new piece of legislation away from ending, and tribes are looking for new business opportunities. In reality, no tribe expects gaming to go away all at once, but few tribes believe that gaming alone will provide for their members into the seventh generation. So, just as they moved aggressively into gaming some tribes are exploring new ventures. The Crow tribe in Montana has signed an agreement with an Australian company that wants to develop the energy resources on tribal land.

The Crow Indian Tribe has signed an agreement with an Australian company that could eventually bring $1 billion a year to the tribe. The agreement outlined today calls for mining coal and developing energy – a deal that could create thousands of jobs for tribal members. Tribal leaders say this deal will let members realize their dreams of good homes and the best schools. And Tribal Chair Carl Venne says this project will triple the coal mining on the Crow Indian Reservation. Venne signed the agreement with Australian-American Energy Company CEO Allan Blood. The $7 billion dollar project will bring 4,000 construction jobs and 900 permanent jobs in mining and the coal to liquids plant. AAEC will provide most of the capital, and it's not known how much government money will go into the project. The Crow tribe and AAEC will split the profits which they say will add up to about $100 million annually to the tribe in the beginning. "Once the project is paid off, you're looking at over $1 billion a year. That's hard to imagine. There's a lot of things we as a tribe have to plan for the future of our kids and our grandkids. And that's why it's so important," said Carl Venne, Crow Tribe chair. (WorldNow, Montana's News Station, 8-8-08)

Not every tribe is sitting on coal, oil, or even wind and solar opportunities – so other tribes are discussing and experimenting with different possibilities. Unlike private businesses or even public corporations, tribes are not bound to a single industry, short term returns on investment, or other common business concerns and constraints; instead tribes are committed to their own continuing and to the health and well-being of their members. That means that almost any business potential is at least worthy of discussion and investigation. Indian gaming has also strengthened the relationships between and among tribes, leading them to work together to explore solutions to common problems. This month tribes in the Pacific Northwest met to discuss business and the future beyond Indian gaming.

American Indian casinos brought in $26 billion last year alone, but what if those gaming halls were shut down? That's the question tribal leaders from around the Pacific Northwest will discuss at a conference taking place today and Friday on the Tulalip Indian Reservation. Tribal-owned casinos are only successful when economic conditions and political will allows them to be, said Gabriel Galanda, the Seattle lawyer organizing the event. It's unlikely state and federal legislators will ever force the casinos to close, but tribal governments may not always reap the same profits, he said. "There might be some policy made so that Indian gaming would no longer be as economically successful and perhaps no longer provide the number of jobs," Galanda said. Entertainment-type businesses are common among tribes that have diversified, but it's unclear what the next big wave of tribal economic development will be. Tribes across the country have been experimenting in a range of ventures, including agriculture, wind energy and cigarette production. (Krista J. Kapralos, Everett Herald, 8-21-08)

So far nothing has shown the revenue and employment potential across the board in Indian Country that gaming has produced. However, we know from experience that another industry, another mega-trend – like the Internet, cellular phones, or gaming – is just around the corner. The tribes with their revenues from gaming and their flexibility are positioned to take advantage of whatever opportunities develop.

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.