Indian casinos hit jackpot
YELM, Wash. – On the Nisqually Indian reservation this week, as tribal members dismantled their seasonal plywood fireworks stands, metal workers, welders and machines were hard at work across the street, raising a building that’s much larger – and promises to be far more lucrative. The Nisqually Tribe is building a new $31 million casino complex, seven times larger than its current Red Wind Casino.
It’s not hard to see why. On Wednesday afternoon, the windowless casino was crammed with busloads of retirees. They filled the blackjack and craps tables, lined up for the $4.95 buffet, and mobbed the free Pepsi machine. They played slot-style machines with names like I.C. Money and Lucky Larry Lobstermania. The casino was filled with a soothing sound, a constant electronic gurgling.
Business was good for Indian casinos in America last year, according to the latest “Indian Gaming Industry Report” an annual study by an independent California economist. Despite a struggling national economy, report author Alan Meister said, tribal gambling revenues rose 12 percent. (Non-tribal gaming rose just 1.4 percent.)
Tribes in Idaho and Washington fared even better, Meister said. Idaho tribes’ gambling revenues rose 28 percent last year, and Washington’s rose 17 percent.
Why?
“There are a handful of new facilities. But that’s not really where the growth is coming from,” Meister said Wednesday. “It’s coming from within.”
In other words, the Nisquallies aren’t alone. Many tribes are expanding their casinos and – equally as important – are building restaurants, hotels, convention centers and other facilities to capitalize on the traffic that those casinos bring.
In fact, Meister said, the growth of “non-gaming revenue” at tribal casinos – things like food, shopping, entertainment and hotel rooms – rose 16 percent last year. It’s growing faster than the gambling.
That’s the strategy of the Kalispel Tribe, which is at work on a 60,000-square-foot addition to the Northern Quest casino at Airway Heights. The $10 million to $12 million complex will include a 300-foot buffet, an entertainment area, sports bar, lounge, deli – even a noodle shop.
“I think the majority of tribes are very close to the saturation point” for gambling, said Curt Holmes, vice chairman of the Kalispel Tribe. “You don’t really create new gamblers, per se. You just dilute the market.”
He pointed to the fact that many tribal casinos in Washington have fewer machines and fewer tables than they could have. They’re open for fewer hours than they could be. The market’s just not there, Holmes said. The exceptions, he said, are the few tribes along Puget Sound’s densely populated I-5 corridor.
Idaho’s Coeur d’Alene Tribe has also branched out dramatically from 1993, when it opened a bingo hall financed by a $2.8 million loan. Five expansions and $100 million later, the tribe has a 2,000-machine casino, 202 hotel rooms, a 300-seat steakhouse, convention facilities and a top-rated golf course.
That kind of growth has prompted a backlash in Washington from cardrooms, restaurants and bars, who say they can’t compete with the tribes, which are exempt from state business taxes, smoking laws, state environmental policies and many state employment costs.
“What gaming has done for the tribes is to provide a lot of jobs to people who might not otherwise have them. They’ve upgraded housing and health care. I have no problem with that,” said Linda Matson, executive director of the Entertainment Industry Coalition, a Washington trade group.
“What isn’t fine,” she said, “is that they can go into the restaurant business adjacent to the casino and offer a $7.95 prime rib, when the guy down the street can’t even hire a waitress to serve it for that.”
Holmes said tribes pay much more in taxes than many people realize. The Kalispels pay unemployment taxes, Medicare and Social Security on their workers, and the workers pay federal income tax like everyone else, he said. The tribe buys $750,000 worth of goods and services each month, he said, with the vast majority of that from local vendors and subject to state sales tax.
Tribes also argue that casinos are typically tribal-run, with the proceeds helping run tribal government, build health clinics, care for elders and provide similar services.
“They’re trying to portray us as if we’re private industry, and we’re not,” said Ron Allen, chairman of the Jamestown S’Klallam Tribe.
Many tribes have agreements to share some of the profits with local governments, to help offset the cost of additional traffic, law enforcement or firefighters. The Kalispels pay more than $500,000 a year to Airway Heights, Holmes said.
Some cash-strapped states, including New York and Arizona, are making deals to allow more tribal gambling in exchange for cash.
In California, Gov. Arnold Schwarzenegger signed a deal last month to allow tribes to go over the current 2,000-machine limit. In exchange, the state gets $1 billion for its budget, plus $150 million to $200 million per year.
Similarly, some non-tribal gambling companies are teaming up with tribes to run Indian casinos. Las Vegas and other non-tribal casinos still dominate the industry, earning $26.5 billion last year to the tribes’ $16.2 billion, but they clearly see a market in tribal gambling.
Tribal casinos, Meister said, have a key asset: they’re usually close. No longer do people have to go to Nevada or Atlantic City to gamble.
“They (non-tribal casinos) are definitely keeping their eye on it and, to a degree, they have their hand in it,” said Meister. “If you can’t beat ‘em, join ‘em.”