Casino earnings thrive

Even in a sluggish economy, the Indian casino industry continues to be on a roll, especially in California, an updated, independent study on Indian gaming has concluded.

Indian gaming revenues hit approximately $14.1 billion last year nationwide, up 11 percent from $12.7 billion, primarily because of the construction of more casinos and expansions of existing ones, said Alan Meister, a manager at Analysis Group Inc., a consulting firm in Los Angeles.

Indian gaming revenue in California, which saw five new casinos open last year, got an even bigger jump in 2002, increasing 17.2 percent from $2.92 billion in 2001 to $3.43 billion last year. California Indian casinos, now numbering 51, also generated nearly $400 million in nongaming revenue last year, the study reported.

That easily put the state first among 30 states with Indian gaming. Connecticut came in a distant second, with $1.98 billion in revenue last year, up 12.2 percent from $1.77 billion in 2001.

In contrast, commercial gaming revenues in Nevada, although at the top of the heap at $9.45 billion last year, was down 0.3 percent from 2001.

The study, "The Economic Impact of Indian Gaming," was released Tuesday upon Meister's presentation of the report at a Midwest Indian gaming conference in Minneapolis.

The second annual report also said that nongaming revenue -- from related hotels, restaurants, golf courses, shopping, entertainment and so on -- also rose 11.3 percent nationally, from approximately $1.4 billion in 2001 to
$1.6 billion last year.

Meister attributed the "remarkable growth" in part to the reinvention of the Indian gaming industry.

"Over the past year, Indian gaming facilities have added more games, a wider variety of games, and more nongaming amenities, such as luxury hotels, restaurants, shopping and entertainment," he wrote. "In fact, some facilities now rival Las Vegas casinos."

There's also been a shift in where people are going to indulge in casino gambling.

The report said more people are choosing to gamble at Indian casinos closer to where they live rather than travel to traditional gaming destinations such as Las Vegas.

However, some of the growth may be due to more gambling being done because people can spend more time in casinos closer to home, Meister said.

"It means that Reno and Laughlin better watch out, because these casinos all go after the same market: the drive-ins," said Bill Thompson, a University of Nevada, Las Vegas, professor of public administration and also a well-known researcher and author of many gaming-industry books.

In defense, Reno is trying to redevelop itself as more of a destination area that goes beyond just being a gaming center, he said, "but the best they can do is hold even."

"You've got to give them credit for trying, but they're running faster and faster just to stay in place."

The Meister report also tracked growth in the Indian gaming industry nationally:

* While nine additional gaming facilities opened last year, bringing the total to 339, the total number of slot machines and table games jumped dramatically from 2001 to last year.

* The number of slots rose by 12 percent, from 184,145 in 2001 to more than 206,289 last year. In California, the number of slots increased 14 percent to 47,934.

* The number of table games rose about 13 percent, from 4,050 to 4,571. In California, table games spiked by nearly 37 percent, to 1,071.

* Directly or indirectly, Indian gaming directly or indirectly generated $39 billion in sales, 450,000 jobs with $15.5 billion in wages, and $4.8 billion in tax revenue.

Doug Elmets, a public-relations consultant representing seven gaming tribes in California, said tribes statewide are investing enormous amounts to make their casinos more attractive to patrons, in essence to compete with Las Vegas and Reno.

And all in all, Indian gaming has been very successful here, he said.

Often, the casino is the main entertainment center in that area, offering not just gaming, but excellent restaurants and fine entertainment, said Elmets, who represents the tribes that operate Cache Creek Casino northwest of Sacramento and the soon-to-open Thunder Valley Casino near Rocklin.

Thompson said there has been little opposition to the continued spread of Indian gaming in California on any grounds, and he doesn't see that changing.

"Everybody's just letting the Indians go," he said. "They don't want to be labeled racists."

At some point, though, competition among the tribes with casinos may become so intense that the have-casino tribes may start lobbying to restrict growth in order to protect their casino margins, Thompson said.

Elmets said he doesn't see any danger of overcompetition in California.

"It's not like they're all over each other," he said. "Those that operate a good business and operate smartly will continue to succeed."

Bill Eadington, an economics professor who directs the Institute for the Study of Gaming at the University of Nevada, Reno, said Indian gaming revenue in California probably was closer to about $5 billion, he said.

He doesn't see anything that seems likely to stem the growth of Indian gaming in California, with more tribes already having state compacts for casinos but not yet ready for construction.

Not only have California gaming tribes mostly developed sophisticated casinos that compare favorably with any Nevada casinos except those on the Vegas strip, they also have done so quickly, replacing, in some cases, even tents or Quonset hut gaming facilities.

"Considering all of this wasn't legal until March 2000, it's a very rapid run-up," Eadington said.

Plus, Nevada casinos still have a lot of older slot machines on their floors while California casinos are relatively new, and thus, are filled with the newest slot machines that are popular with players: better graphics, multiline/multicoin play, and game themes that range from the "Jeopardy" TV game show and the Monopoly board game to a movie-star personality or even cartoon characters.