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."

Mashantucket Pequot Eliminates Per Cap Payments to Members

Burdened with more than $2 billion in debt, the Mashantucket Pequot tribe in Connecticut, owner/operator of Foxwoods Resort Casino, has decided to eliminate per cap payments to its members, according to a piece published on July 13 by The Day of New London, Conn. Payments are scheduled to stop at the end of 2010.

The article said it was not clear if it was a totally voluntary move by the tribe as it strives to restructure its debt or if it was pressured to do so by its senior lenders: Kien Huat, a Malaysian group that financed construction of Foxwoods, and a syndicate that provided a $700 million credit line, which matured on July 13.

A year ago, the monthly per cap payments, received by about 450 adult members, ranged from $7,500 and $10,000.

IRS Investigates Miccosukee and Tribe’s Former Chairman

The IRS is investigating allegations that the Miccosukee Tribe in Florida distributed millions of dollars in cash from its gaming operation to its tribal members, who never reported it as taxable income, according to a Miami Herald story published yesterday.

The Miami Herald reported that every quarter the tribe used armored vehicles to deliver the cash, totaling up to $10 million, to around 650 members, each receiving approximately $61,000 per delivery. The paper did not say how long the tribe had been doing this.

The tribe has never submitted a plan for distributing casino profits to members to the federal government, which is required under the Indian Gaming Regulatory Act, the paper said.

In a related probe, the IRS is investigating the Miccosukee’s former chairman, Billy Cypress, who allegedly misappropriated millions of dollars from tribal coffers for personal use and never reported it as income.

Report Alleges Quapaw Officials Misused Funds

A report issued by the Quapaw Tribe’s Grievance Committee alleges that tribal officials misused funds, as reported by Tulsa World yesterday.

The report, based on complaints from several tribal members, alleges that three Business Committee officers — Chairman John Berrey, Vice Chairman Willis Matthews Jr. and Treasurer George McWatters Jr. — had profited from their involvement in the Downstream Development Authority, the entity that manages the tribe’s casino, Downstream Casino Resort.

Specifically, it alleges that the three were paid excessive salaries, benefits and bonuses through their positions with the Development Authority; misused Development Authority credit cards; and used funds for expenses like comp services, a $225,000 donation to the University of Arkansas Razorback Foundation and skybox leases at the University of Arkansas without showing proof that these expenses promoted the casino.

Berrey, who is up for re-election this year, says the allegations are false.

Tribe Sues State of California Over Lost Profits

The San Pasqual Band of Mission Indians, which owns Valley View Casino in Valley Center, Calif., has filed a $115 million lawsuit against the state of California for lost profits, according to a press release issued by Stephen Warren Solomon, the law firm representing the tribe.

The damages are alleged to be a consequence of Governor Schwarzenegger's refusal to allow the California Gambling Control Commission to issue all of the slot machine licenses to which the tribe is entitled to under its 1999 contract with the state.

The tribe contends that the state breached its contract and is illegally interfering with its ability to provide slot machine play for its patrons, the release said.

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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Class II Regs More Costly Than Tribes Led to Believe

National Indian Gaming Commission Regulations on Class II bingo will cost tribal casinos millions of dollars more than a flawed economic study predicted, charges the Oklahoma Indian Gaming Association. 

The regulations are meant to bring more clarity and integrity to electronic bingo games.

One of the new regulations deals with the physical and communications security of the Class II games and the control of the money and operational systems. A second, the Technical Standards, pertains to the certification of the equipment and ensures the systems operate properly and remain resistant to tampering. 

OIGA Chairman David Qualls charges that the regulations were imposed without congressional oversight. Rep. Tom Cole, of Oklahoma said he too was "deeply concerned about the NIGC's ongoing reliance on flawed and incomplete data to justify irresponsible and unnecessary regulations on Indian tribes.”   

Read more here.

Federal District Court Rules Fair Labor Standards Act Applies to Tribal Casino

The United States District Court for the Eastern District of Washington has ruled that the Spokane Tribe of Indians must comply with a subpoena issued by the U.S. Department of Labor. The subpoena requires the casino to provide information regarding payroll records in order for the DOL to conduct an investigation regarding a complaint by an employee.

In its opinion, the court separates tribal business activities from tribal government activities and finds that, although the law might not apply to tribal government operations, it does apply to business activities.

Judge Vacates NIGC Decision Allowing Buffalo Casino

A federal judge yesterday ruled against the Seneca Nation's Buffalo Creek Casino, saying that casino gambling cannot legally take place on the nine-acre site in Buffalo, NY.

According to the Buffalo News, U.S. District Judge William M. Skretny, in a 127-page decision, vacated the earlier decision by the commissioner of the National Indian Gaming Commission to allow gambling.

It was not immediately clear whether Skretny's ruling will halt construction on the $333 million permanent casino, but it is clear that the temporary casino no longer has the legal right to operate.

Mohegan Sun at Pocono Downs’ Project Sunrise Set to Open Next Week

Project Sunrise, Mohegan Sun at Pocono Downs’ $208 million Phase II casino and entertainment complex, is scheduled to open to the public following a grand opening ceremony on July 17.
The grand opening date is pending approval from the Pennsylvania Gaming Control Board following a test night scheduled for July 15.

Groundbreaking for the 300,000 square-foot complex, owned and operated by the Mohegan Tribal Gaming Authority and the state’s first casino, occurred in May 2007. The announced opening date is two weeks ahead of schedule.

Mohegan Sun at Pocono Downs President and CEO Robert J. Soper said, “Project Sunrise has been designed to celebrate the people, history and natural resources of northeastern Pennsylvania."

The new Mohegan Sun at Pocono Downs will feature 2,500 slot machines and electronic virtual table games. It also will offer nationally recognized restaurants, including Ruth's Chris Steak House and the Rustic Kitchen Bistro and Bar, and 7,000 square feet of retail space, with shops such as Brookstone, Marshall Rousso and Misura.