Recession Not Over for Tribal Casinos

The recession ended in June 2009. That’s what economists at the National Bureau of Economic Research announced last week. But for the many tribal casinos that are still experiencing revenue decreases, it’s far from over.

At the Mohegan Sun in Connecticut, owned/operated by the Mohegan Tribe, revenues dropped so much that it had to do something it had tried so desperately not to do since the economy started going downhill: It had to layoff workers. As reported by the AP on Sept. 14, 355 employees will be let go, and another 120 will be reassigned.

Mohegan Sun blames the job cuts on a drop in slot revenues. During the fiscal year ending in Sept. 2009, the casino reported gross slot revenues of around $780 million, almost a 9 percent decrease from the same month last year.

With more than 8,500 workers, Mohegan Sun is one of Connecticut’s largest employers. This is the first time it has ever had to layoff workers since opening its doors in 1996.

In addition to shedding jobs, the casino plans to shut down one of its buffet restaurants and use more third-party operators for its eateries, according to the AP article.

Nearby Foxwoods and the MGM Grand at Foxwoods, owned by the Mashantucket Pequot, are also reporting declines. On Sept. 15, Foxwoods issued a press release stating that slot revenue in Aug. was $59.2 million, a decrease of 6.3 percent in slot win and a decrease of 3.2 percent in total slot handle as compared to Aug. 2009.

“Our August results are a reflection of prolonged economic conditions and the challenges they present to our, and just about every other, business,” said Mashantucket Pequot Gaming Enterprises President William Sherlock in the release.

Foxwoods was forced to layoff workers in 2008, reducing its workforce by approximately 6 percent.

In California, Cache Creek Casino Resort, owned by the Yocha Dehe Wintun Nation, recently decided to suspend a big expansion project, one that included a 2,200-seat event center, 900-car parking garage and other amenities.

"The outlook for the economy, both locally and across the U.S., just made this decision necessary," tribal spokesman Greg Larsen was quoted as saying in an article published by Sacbee.com on Sept. 16.

The project is not the first one to be put on hold by the casino. Last fall, it put the brakes on a bigger project, which included a 10-story hotel tower, also due to the bad economy.

In June, the National Indian Gaming Commission released data showing that revenues generated by the Indian gaming industry (233 tribes in the United States engaged in gaming) in 2009 totaled $26.5 billion, a dip from the $26.7 billion reported in 2008.

In 2009, 58 percent of tribal gaming operations reported a decrease in revenue, with about half of those showing decreases of less than 10 percent from 2008. Nearly 40 percent, however, reported an increase, with about 15 percent showing a 50 percent jump. NIGC credits those increases for the most part to casinos opening in 2008 and recognizing the first full-year revenue impact in 2009 and to casino expansions.

Casinos across the country, from Los Vegas to Atlantic City, are seeing revenue drops. Nationwide, revenues fell to $30.74 billion in 2009, a 5.5 percent decrease from 2008, according to a report released by the American Gaming Association in May.

And it does not look like 2010 will be much better. In addition to what the Connecticut casinos are experiencing, tribal operations in Arizona, Wisconsin and other states are still reporting fewer dollars coming in.

City to Sue Pechanga over Costs Associated with Additional Slots

The city of Temecula plans to file a lawsuit against the Pechanga Band of Luiseno Indians in effort to get the tribe to pay millions of dollars to cover the costs associated the 2,000+ slot machines the tribe has added to its casino over the last few years, namely the costs of increased traffic and calls for police officers, Californian.com reported yesterday. The suit, approved unanimously at a city council meeting held yesterday, will be filed in around 45 days.

Under a new agreement with the city, signed earlier this year, the tribe agreed to pay $2 million annually for the next 21 years to offset the effects of the additional slot machines. The tribe did not make the first payment, which was due on June 30, as it says that there is a clause in the agreement that states the payment does not go into effect until a separate agreement is made with the county.

Tribal Chairman Mark Macarro had this to say in a statement issued after the meeting: "At a time when real leaders work together to solve problems, the Temecula City Council chooses a path of conflict, litigation and uncertainty. The absurdity of their action is beyond comprehension and jeopardizes millions for services that benefit the entire community. We will consider our options and proceed accordingly."

Member and Employee of Tulalip Tribe Sentenced for Theft of Rewards Club Points

Employed by and an enrolled member of the Tulalip Tribe, Walter Anthony Moses was sentenced to time in prison and supervised release. Moses was a Rewards Club Supervisor until it was discovered that he had withdrawn Rewards Club points from casino customers’ accounts. He then distributed vouchers totaling almost $20,000 to family and friends.

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State Budget Crunch Could Mean Gambling in PA

Here's a story in the Pittsburgh Post Gazette that legislation in the Pennsylvania house would allow table games and slots as a way of raising revenue to support state programs. Such measures have always failed in the past, but the state's severe budget crunch -- a projected deficit of $3.2 billion this year -- has generated renewed interest in the possibility of expanded gaming.

With so many states in such dire need, this could be a trend around the country and that could mean trouble for Indian casinos in the form of more competition.

Indian Casino Jeopardized by Credit Crunch

The credit crisis is hitting Indian Country, according to a report in the San Diego Union Tribune. Fitch Ratings has downgraded $155 million in bonds issued for the new Quechan casino in California and is warning that the tribe may face default on the bonds if it is unable to secure a final $25 million source of external funding for the project. The tribe hopes to financing secured by the end of the week.

Foxwoods Must Bargain with Union, Labor Board Rules

In a ruling issued on Sept. 30, the National Labor Relations Board has ordered Foxwoods Resort Casino, owned by the Mashantucket Pequot in Connecticut, to bargain with the United Auto Workers union for its dealers and assistant floor supervisors.

The NLRB had rejected Foxwoods’ argument that it is exempt from NLRB jurisdiction because it is a sovereign nation. It found that by failing and refusing to recognize and bargain with UAW as the exclusive collective-bargaining representative of the employees, the casino-resort has engaged in unfair labor practices, specifically violating Section 8(a)(5) and (1) and Section 2(6) and (7) of the National Labor Relations Act.

Report Cites Indian Gaming Revenue

California and Connecticut generated 39 percent of the total gaming revenue nationwide from Indian casinos, according to a report released this week by Casino City Press. The report, authored by Dr. Alan Meister, an economist with Analysis Group, Inc, provides calendar year 2007 nationwide statistics and state-by-state statistics. Gaming revenue in 2007 grew by approximately 5 percent in 2007, down from 10 percent the previous year, a slowdown the author attributed to economic conditions. Read more about it here.

Moody's: Tribal Casinos Down But Not Out

A combination of competition and a drooping economy could spell trouble for Indian casinos, according to a recent economic report. Moody's Investor Services released a report Wednesday that says American Indian casinos are impacted by the nation's economic downturn, but most have a strong financial profiles that will see them through. Read more about it here.

Economic Woes Hit Gaming Industry

Once thought immune from the symptoms of a troubled economy, casinos are now feeling the pain as well, according to South Coast Today. “It's ugly,” one analyst said of the revenue losses and declining stock prices. "There's an overall uncertainty in the economy and gaming is feeling the impact. It's really bad."

BIA Limits Casino Locations

The Bureau of Indian Affairs Friday published a rule that says casinos should be located within 25 miles of a reservation headquarters. However it did allow for exception. Tribes may seek reservation status and permission to operate casinos on newly acquired land away from a reservation if tribes can show that a significant number of tribal members live nearby, can demonstrate a current connection to the property or if other tribal government facilities have been located on the land for at least two years before an application is filed for new reservation land. Read more about it here.

Revenue Declines at Atlantic City Casinos

Last year, for the first time ever, revenue declined at Atlantic City casinos -- down from more than $5 billion the year before, to just below $5 billion, reports National Public Radio’s Morning Edition. The problem is competition, including the Foxwoods and the Mohegan Sun. But other sources of competition for Atlantic City may one day prove problematic for tribes – non-Indian gambling operations such as casinos at racetracks and slots only parlors. As cash-strapped states become more desperate to raise revenue, tribally owned casinos will likely see more and more competition from these smaller gaming operations.