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The State | COLUMN ONE

Indian Casinos on a Roll

The number and quality of the California establishments are up markedly, and they're poised to give Nevada a run for its money.

November 22, 2002|Scott Gold | Times Staff Writer

PALM SPRINGS — Cinder-block shacks, bad lighting and bottom-shelf booze. Lounge lizards with long ashes clinging to the tips of their cigarettes, placing nickel-and-dime bets on one-armed bandits and one-eyed jacks.

Not all that long ago, that was the image Native American casinos had in the eyes of the heavy rollers in Nevada. The notion that "rez gambling" would ever offer real competition to the neon palaces of Nevada was tossed aside with a contemptuous chuckle, like a short stack of $1 chips.

But the shacks are becoming sophisticated resorts. The lounge lizards, according to California casinos' internal surveys, have become wealthy gamblers from Beverly Hills and Orange County. And that short stack of chips has turned into a steady stream of profit.

So last month, when gaming and entertainment giant MGM Mirage announced a deal to design a $95-million Native American casino in downtown Palm Springs, the partnership, far from setting the gambling world abuzz, was greeted with a shrug.

It wasn't a sign of indifference -- far from it. Instead, it was an indication that, two years after California voters guaranteed Native Americans the exclusive right to operate Vegas-style casinos, the gambling halls are coming of age and now pose a significant challenge to Nevada's business.

When voters approved Proposition 1A in 2000, analysts understood that the number of casinos in California would rise rapidly -- and it has, from 38 to 50. What they didn't fully appreciate is that the quality of casinos would rise just as quickly.

Before passage of the measure, Native American casinos operated in a legal never-never land. More often than not, they were confined to spartan structures whose only allure was betting.

"Tribes didn't know if they were going to be open from day to day," said Michael Lombardi, a tribal gaming consultant and former general manager of the Chumash Casino in the Santa Ynez Valley and Casino Morongo near Banning. Proposition 1A's assurance of legality brought California's Native American bands a new economic viability.

Today lenders, including Bank of America and Wells Fargo, are opening their vaults for unprecedented financing of new resorts, analysts say. Gambling bigwigs such as Donald Trump and Harrah's Entertainment Inc. are on an if-you-can't-beat 'em spending jag, forming a series of partnerships with Native Americans to build casinos.

And, in another sign of Native American economic might, some bands are insisting that they can and should develop casinos on their own.

The result: huge, glitzy casinos that offer upscale dining, shopping and entertainment as well as gambling. They may never approach the excessive splendor of Las Vegas, but they promise an "experience," not just a gambling excursion.

Californians, who account for 35% of Nevada's gaming revenues, now have a viable gambling alternative at home. California casino operators' winnings have ballooned from $1.4 billion to more than $4.3 billion since the passage of Proposition 1A, surpassing New Jersey and making the state second only to Nevada's $9.3 billion.

Analysts on both sides of the state line say California casinos are beginning to eat into Nevada's take, particularly in the Reno area, which some have predicted will lose a fifth of its revenues to California.

Nita Helmick, a Riverside County retiree relaxing recently in a Palm Springs casino lounge, was pleased to report the tidy $54 she had just won at the slot machines. But she said her favorite local casino attractions these days are the Vegas-style shows, including one that featured Elvis impersonators.

And when you get right down to it, some would say, if you can see Elvis impersonators in California, why go anywhere else?

"I wouldn't drive all the way to Las Vegas again," she said. "Why would you?"

*

In the big Palm Springs deal, the Agua Caliente Band of Cahuilla Indians has enlisted MGM Mirage executive Ken Rosevear to assist in the design and construction of a $95-million downtown casino.

The Agua Caliente, a band of 388 members, already operate two casinos in the area. One of them, the Spa Resort Casino -- much of which currently operates under a semi-permanent tent -- will be replaced by November 2003 with an upscale 119,000-square-foot, three-restaurant casino that could eventually contain 50 table games and 1,400 slot machines.

The design, said Richard M. Milanovich, chairman of the Agua Caliente Tribal Council, is "understated and elegant." And it's just the first phase, he said.

The band plans to expand the new Spa Casino within five years into a $400-million complex stretching across several blocks of downtown Palm Springs. With the publicly owned Palm Springs Convention Center within walking distance and scores of golf courses nearby, the Agua Caliente want to build a one-stop getaway.

The Agua Calientes' pact with MGM Mirage follows similar deals elsewhere.

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