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Recession is in play at California's tribal casinos

Visitors are still streaming in, but they've cut back on spending, operators say. Analysts say the casinos aren't likely to see a pickup in revenue until the middle of 2010.

November 20, 2009|By Hugo Martín
  • A player feeds a slot machine at the Morongo Casino Resort and Spa in Cabazon in 2008.
A player feeds a slot machine at the Morongo Casino Resort and Spa in Cabazon… (Wally Skalij / Los Angeles…)

This is what a recession looks like at Southern California's tribal casinos: Nearly every seat at the 25-cent slot machines is filled. Gamblers wait three deep around the cheapest blackjack tables. The reels on the penny slot machines spin almost without interruption.

The Saturday night crowd at the San Manuel Indian Bingo and Casino in San Bernardino County reflects what gaming operators say is the new reality of tribal casinos: The visitors are still streaming in, but they have cut way back on spending.

"We have the same amount of people and they come in as frequently, but they are just spending less," said Mike Hiles, a tribal information officer for the Soboba Band of LuiseƱo Indians, which operates a casino with 2,000 slot machines, 20 gaming tables and two restaurants in San Jacinto.

Analysts say tribal casinos have been hurting for more than a year and are not likely to see a pickup in revenue until the middle of 2010. California's tribes are so cautious about the future that most have yet to add thousands of new slot machines approved under a controversial agreement negotiated with the state in 2005.

"Everything around us is so depressed, so the tribal gaming is depressed," said Deron Marquez, former tribal chairman of the San Manuel Band of Mission Indians.

Tribal representatives say the casinos are surviving the recession, in part, by attracting gamblers who are forgoing trips to Las Vegas and Reno to save money. As a result, the Indian casinos have avoided the huge drop-off in tourist traffic in those cities, which have seen gambling revenue declines of as much as 20% in the last year.

At the California casinos, the most visible sign of tough economic times is the size of the crowds gathered at the lower-limit slot machines and card tables. Crowds are considerably smaller at the higher-limit slot machines and card tables.

At San Manuel on a recent Saturday, gamblers were gathered around the $15-minimum blackjack tables, waiting for seats to become available. Empty seats were also hard to find at the 5- and 25-cent slot machines.

Cigarette smoke and noise filled the air as waitresses, balancing trays of drinks, maneuvered through the boisterous crowds.

On a recent weekday at the Morongo Casino Resort and Spa in Cabazon, crowds were sparse. Still, the gamblers clearly favored the $15-minimum blackjack tables and the 5- and 25-cent slot machines.

Winnie Ng of Los Angeles brought her grandmother to the casino for a few hours of entertainment. But she said the recession forced her to keep her bets small.

"When you lose now you are thinking about it more," Ng said as she left the casino.

Jessica Schilling of Long Beach said she visited the Morongo Casino because she got a $30 coupon that she thought she could spend on the buffet. Instead, Schilling found that the coupon could be used only for gambling and had to be matched with her own money. She did so and lost.

"I just came here for the free food," she said.

California tribes are not required to publicly disclose gambling profits, but under federal law the nation's tribes must submit regular financial reports to the National Indian Gaming Commission, which releases aggregate state numbers for revenue only. The figures combine California's 58 Indian casinos with data from one operation in Northern Nevada.

Based on the most recent numbers, the tribes running those casinos collected nearly $7.4 billion in 2008, down 5.6% from $7.8 billion in 2007. Figures are not yet available for 2009, but operators say the trend has continued since then.

After years of growth, the first major layoff at a California Indian casino came in August 2008 when the Pechanga Resort & Casino in Temecula laid off 368 workers. Three months later, the Morongo Casino laid off 95 people because of the slumping economy.

Despite an agreement negotiated with the administration of Gov. Arnold Schwarzenegger that would allow California's tribes to operate 62,000 slot machines, the tribal casinos currently operate 58,000 machines.

California's tribal casinos are not alone in feeling the recession's pinch. In Connecticut, the Mohegan Tribe in Uncasville ordered salary cuts in January for all employees and suspended raises and contributions to 401(k) accounts.

Inside the Indian reservations, the drop in casino revenue means that tribes must cut the social service programs and infrastructure projects primarily funded by gambling revenue, said William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

Such cutbacks often lead to internal turmoil among the tribe's leadership.

"It's not happy times in tribal councils," he said.

hugo.martin@latimes.com

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