The relationship between Nevada’s major casino operators and California’s Indian tribes wasn’t always so cozy. Two decades ago, Las Vegas-based gaming companies spent millions of dollars to try and stop a burgeoning tribal casino industry before it left the starting gate.
Times have definitely changed.
Both Caesars Entertainment and Red Rock Resorts continue to reap benefits from the companies’ joint operations with Indian casinos in California, a state that’s produced more than $8 billion in gaming revenue at last check.
Now Boyd Gaming Corp. is getting into the game, as is Hard Rock International. Hard Rock, which is owned by the Seminole Tribe of Florida, is partnering with the Enterprise Rancheria of Maidu Indians on a $440 million resort in Yuba City, 30 miles north of Sacramento.
Meanwhile, Boyd Gaming and the Wilton Rancheria of Miwok Indians are expected to break ground later this year on a $500 million complex in the Sacramento suburb of Elk Grove.
“We share (the tribe’s) excitement for the potential of this project,” Boyd Gaming CEO Keith Smith said on the company’s first quarter conference call last month. “Once complete, this resort will be a significant… step toward the tribe’s vision of self-sufficiency.”
Customers pack the soft opening of Harrah’s Northern California
Last week, Caesars launched its second Indian casino in California. The company and the Buena Vista Band of Me-Wuk Indians held a soft opening April 29 for the $168 million Harrah’s Northern California, 30 miles east of Sacramento.
Caesars also operates Harrah’s Southern California for the Rincon Band of Luiseño Indians, as well as Harrah’s Cherokee in North Carolina for the Eastern Band of Cherokee Indians, and Harrah’s Ak Chin near Phoenix for the Ak Chin Indian Community of the Maricopa Indian Reservation.
“Caesars has a long-standing relationship with various Native American communities across North America dating back 20 years. We believe we’re the only gaming operator to have renewed agreements with tribes multiple times,” Caesars CFO Eric Hession said on last week’s first quarter conference call.
Teamwork hasn’t always been the case, however.
In 1998, California voters were deciding on Proposition 5, an initiative that would allow tribes and the state to enter into gaming compacts for slot machines and card games. Nevada gaming companies, fearful of competition from a key feeder market, were the top 10 contributors of the $25.4 million raised in opposition to the measure. More than $6.6 million was contributed by the Steve Wynn-controlled Mirage Resorts, while Circus Circus Enterprises and Hilton Hotels eached kicked in $6.5 million.
The San Manuel Band of Mission Indians alone donated $27.7 million of the more than $63 million raised in support of Proposition 5.
The measure passed with 62.4 percent of voters in favor.
Gaming companies quickly adopted an “if you can’t beat them, join them” mentality, and many Nevada operators subsequently signed management deals with tribes. Most of the agreements were for seven years and constructed with the idea of the tribe taking over operations at the end of the term, rather than paying out management fees.
For example, Station Casinos – now a subsidiary of Red Rock Resorts – and the United Auburn Tribe opened Thunder Valley near Sacramento in 2003. The casino company’s deal was not renewed in 2010.
But the company still has a piece of the action. Station Casinos helped build, and now manages, the Graton resort north of San Francisco for the Federated Indians of Graton Rancheria, which opened in 2013.
The company has also been working with the North Fork Rancheria Band of Mono Indians on a $350 million casino complex in the town of Madera, roughly 42 miles from the tribe’s reservation and just 30 miles north of Fresno.
A referendum on off-reservation casinos was rejected by state voters in 2014, but it doesn’t have any binding power. The project is currently tied up in the California Supreme Court, and Station Casinos CFO Steve Cootey said a similar case involving another tribe is ahead in line.
“As we’ve previously noted, the California Supreme Court has granted the tribe’s petition for review with respect to a key lower court decision involving the project,” Cootey said on the company’s quarterly conference call. “We continue to (make) progress with the few remaining pieces of litigation related to the project.”
Most tribes want control of their own destiny in regard to gaming, which is one reason the Jamul Indian Village near San Diego ended its contract a year ago with Penn National Gaming after just 19 months.
“From day one it was always our intent to control our future by managing our property and economic ventures,” said Jamul Tribal Chairwoman Erica M. Pinto. “It took us more than two decades to open and operate our casino. We are very proud that with tribal gaming, we have been able to create new opportunities for our people and the entire state of California.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
