Signals appear mixed in 2010 for California’s tribal gaming industry

With California’s economy in the doldrums and unemployment stubbornly hovering over 12 percent, the outlook for the tribal gaming industry in California is uncertain.

“California is in a recession like the rest of the country,” said Vin Narayanan, managing editor of Casino City, a national gaming industry news site and publishing company. “Gambling is a leisure activity. People are still going to gamble, but in a recession they are going to gamble less bvecause they can afford to lose less.”

Total tribal casino revenues in California were about $7.3 billion during 2008, down about $500 million from the previous year and about $300 million less than in 2006, according to the annual Indian Gaming Industry Report, a nationally recognized study that tracks tribal gaming across the country. California is the top tribal gaming state, followed by Oklahoma, and together the two states account for about 38 percent of tribal gaming revenues nationally.

Nationally, tribal casinos’ revenue growth was about 1.5 percent during 2008, the smallest increase in its reported history – but still an increase. The figures for 2008 – the latest period for which numbers currently are available – are an indication that even in the midst of a severe economic downturn the gaming industry remains viable and potentially strong.
But the growth was uneven, split between the states: Nearly one-half of the states with Indian gaming experienced declines in gaming revenue, while the other half experienced growth. The two most rapidly growing states in tribal gaming were Florida and Oklahoma; the latter passed Connecticut.

“This growth was respectable given the downturn in the economy and the decline in the commercial gaming segment of the gaming industry,” the report noted.
Another positive sign is attendance.

The  Casinos throughout California still are attracting crowds, even though the per-capita spending may be down. In part, the problems in the economy are beneficial to casinos because customers are more likely to stick closer to home than go to neighboring Nevada to do their gambling. The same phenomena is true in other states, too, as gamblers cut back on going to destination gambling towns like ego destination casinos in Las Vaegas, Reno or Atlantic City.

“We have the same amount of people and they come in as frequently, but they are just spending less,” Mike Hiles, a tribal information officer for the Soboba Band of Luiseño Indians, recently told the Los Angeles Times. The tribe operates a casino with 2,000 slot machines, 20 gaming tables and two restaurants in San Jacinto.

Revenue declines also crimp investment, and in a difficult economy, investing in hundreds of slot machines can be a big gamble.

The 9th U.S. Circuit Court of Appeals recently turned down the Schwarzenegger administration’s request to block the increase of slot machine licenses for tribal casinos. The court rejected the administration’s argument that expanding the slots would lead to traffic congestion and a spike in crime, reported Gambling Planet.org.

“Given the state of the economy, especially in a state beset by budget problems like California, the increase in slot licenses may not be such a boon. Each slot license costs the tribe US$1,250. With gaming revenues down all over the world, any tribal casinos themselves that are looking to expand their banks of slot machines may be in for a big gamble themselves,” Gambling Planet reported.

The case involved the Valley View Casino, where the tribe wanted to add slot licenses “as soon as possible.”  As of November, the casino began offering 2,000 slots.

Statewide, there are about 58,000 slot machines in use, according to a 2007 report by the Legislative Analyst’s Office. The tribes pay more than $300 million annually into several state accounts. Most of the money goes into accounts that were set up to provide grants to tribes that do not own or operate casinos. Local governments also receive funds.

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Editor’s Note: This story corrects the number of slot machines offered by Valley View Casino to 2,000.