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Native Americans Bet the Farm on Gaming
Gambling on Gaming

By N. T. Amur
From Hotel & Motel Management magazine

Fantasy Spring CasinoThe great Native American exodus from the farm to gaming started nearly two decades ago; except the Indians have never left their reservations. Instead, they turned their farmland into card rooms, bingo parlors, and casinos. The turning point for the Indian tribes came when the U.S. Supreme Court affirmed their sovereignty over the Indian country and allowed them to open gaming facilities on their reservations.

Since then about a half of the 500 federally recognized Indian tribes introduced some form of gaming. Subsequently, Indian gaming has grown by leaps and bounds into a multi-billion dollar industry in the U.S. In California alone the Indian gaming impact has reached nearly a billion dollars. It has also created a unique entertainment venue attracting a niche market well underserved by the major gaming destinations such as Las Vegas and Atlantic City.Fantasy Springs at night

However, Indian casinos have not yet reached their full potential as major entertainment destinations. The old saying 'location, location, location!' is part of the Indian gaming woes. Most casinos are off the beaten path on reservations several driving hours away from the center of gravity of their market areas. Because of this distance many visitors increasingly turn to tour companies to find their way to these remote casinos. This forces the competing casinos to give back a hefty part of their earnings as commissions to travel companies and tour operators to lure them to their properties.

What is clear, however, is gaming revenues have been slowing down and the future revenue growth is uncertain. The revenue problem may even get more pronounced once the novelty of Indian gaming wears out over time. Stagnated growth, costly marketing, and the future of Indian gaming as a whole has the Indian tribes scratching their heads thinking of new ways to extend visitor stay and find new revenue streams. Some Indian tribes have been looking to Las Vegas, Atlantic City, and other gaming venues to see what works and what does not.

Now, Indian gaming officials, tour operators, and industry analysts agree the lack of overnight accommodations is the Achilles' heel for future growth. They believe building lodging and offering additional entertainment venues on gaming properties would provide some of the answers.

"Indian gaming venues have not yet become a full-fledged destinations. Overnight accommodations could change that. We would easily double the hours our visitors now spend at the casinos," said Kathy O'Connor with Good Times Tours & Charters (www.goodtimestours.com), a major tour company in Fountain Valley, Calif. "Right now we are there for about four to five hours each trip."

Barona Casino (www.barona.com) Director of Sales Sheldon Johnson agrees with this assessment. "We are planning to build a hotel here. This would not only attract more visitors from major markets like Los Angeles and extend their stay, but it would also allow me to integrate with other venues in San Diego," he said.

Mindful of pending problems and to hedge their bets, nearly all casinos have developed plans to build major hotel accommodations and other entertainment venues besides gaming. One of the most ambitious such plans is the new Entertainment District in Coachella, Calif., at the intersection of Interstate 10 and State Rt. 86, widely referred to as the NAFTA highway. Also importantly, this site is only twenty miles east of Palm Springs, a major international meeting and resort destination in its own right.

Spread over 2,300 acres of Indian land, the $200 million development calls for five casinos, three golf courses with two more added later on, a water park, and several varying size hotels. Cabazon Indians and 29 Palm Indians jointly own a large portion of the land.

"The time has come for the tribes to take the next step," said Harrison A. Price with the recreation consulting firm Harrison Price Co. "This place could easily become the next Branson," he said. He should know. He came up with the idea of putting Disneyland in Anaheim, Calif. back in the fifties. "Coachella Valley commands six million visitors annually and the existing entertainment venues here fall far short of the demand," he noted.

A new twist in the picture is the free trade agreement with Mexico. Recently, Palm Springs and the surrounding areas in Coachella Valley found themselves at the crossroads of major economic activity. Already, State Rt. 86 has become the major artery for the U.S.-Mexican trade. About 100 miles to the south on the Mexican side, Mexicali with a population of one million and a healthy number of Pacific Rim manufacturing plants is already an important source of visitors and income for the region.

This well-documented potential has not escaped the Cabazon Band of Mission Indians (www.cabazonindians.com). The Tribe owns the successful Fantasy Springs Casino, one of the first ever to open on an Indian reservation. The casino is located on Interstate 10, California's gaming alley. Recently, the tribal officials announced a $100 million entertainment complex adjacent to the casino. It will include a 4-star, 200 room hotel, a water element, a cultural museum, and a bowling alley.

The tribe is planning to build on the success of its Las Vegas-style casino. "We have about sixty percent of the gaming market share. Also, we host Pay-per-View championship boxing events, big ticket concerts (recently LeAnn Rimes), and weekly comedy shows by the popular Los Angeles comedian Paul Rodriguez," said Tim McIntire, Director of Marketing of Fantasy Springs. "Overnight accommodations would mean a dramatic increase of visitors here," McIntire said.

However, the State of California has been throwing cold water on all the enthusiasm for new Indian hotel and entertainment construction plans. Governor Pete Wilson has been openly hostile to Indian gaming with the State Attorney General threatening to intercept any shipment of slot machines to the reservations.

It is a classic Catch-22 case. The Indian Gaming Regulatory Act (IGRA) requires the states and the tribes to agree on the number of slot machines (if any) allowed in Indian reservation, but Governor Wilson is slow to negotiate. Seeing no results the U.S. Attorney has threatened to shut down the existing slot machines unless the Tribes finalized an agreement (called compacts) with the Governor for their use.

Considering the slot machines represent sixty to seventy percent of casino income the tribal governments are taking the threats quite seriously. Buckling under the state and federal pressure Barona Casino has recently shut down six percent of its slot machines voluntarily, with another ten percent to follow.

For now, the quagmire with the State and the federal government effectively pushed the wary investors to the sidelines. While the sides are trying to find a way out of this dilemma, all the major development projects and perhaps the future of Indian gaming are on hold.


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