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California Casinos Tries to Stay Afloat Despite Financial Crisis

The state of California's tribal casinos, like their gaming counterparts in Las Vegas, Nevada, have struggled as cash strapped players cut back on discretionary spending, but slot machines are still the main attraction so the effect has been less severe.

Regional gaming facilities have also benefited as some players put off trips outside of the state that they are living, instead choosing to visit a casino resort close to their home. Gaming-mostly slot machines-accounts for about ninety percent of revenue at tribal casino facilities, according to gaming industry sources.

On the Las Vegas Strip, where the pattern for the past couple of years has been extras like fine dining, high-end retail and others, gaming now represents only around forty percent of total revenue. John Momaney, the interim market manager at the Morongo Casino, Resort and Spa stated on June 22nd, 2009 said that entertainment alone does not drive the casino. He added that visitors just go home after the show if the casino does not have any additional means to keep them in.

The Riverside County area, which is known as California's Inland Empire, had been extremely affected by collapsing prices in an over constructed local housing market and consequent employment losses. Before the recession, Morongo and other casinos invested millions of dollars in amenities made to attract visitors.

Earlier this year, the Agua Caliente Band of Cahuilla Indians opened a 2,000 seat theater, named "The Show", at its 2nd casino, the Agua Caliente Casino, Resort Spa in Rancho Mirage, east of Palm Springs. Performers in the show include Jamie Foxx and Tony Bennett.

David Fendrick, the chief operating officer for the tribe's resorts said that they are more than happy if they can break even with their ticket sales. The tribe also manages a smaller casino hotel in Palm Springs. Fendrick said that most of their customers are from Los Angeles and Southern California's Orange County. Jacob Coin, a spokesperson for the San Manuel Band of Mission Indians, which manages a casino in Highland, said that gamers are still coming but they are not staying for a long time.

Indian tribes earned $26.7 billion in gaming revenue last year, an improvement of 2.3% from 2007, according to statistics from the National Indian Gaming Commission. At California's tribal casino facilities, revenue fell 5.6% over the same period and Deutsche Bank has predicted a flat revenue in 2009.

The downturn has been much bigger on the Las Vegas Strip where casino facilities won 10% less cash from gamers last year than in 2007 and their earnings fell nearly 17% in the first four months of this year. In response, Las Vegas casinos-which rely on the California gamers for about a third of their gaming business-have decreased their room rates and improved their offerings.

Morongo's Momaney stated that they are looking at different ways on what should they do in order to compete with other casinos. That includes a $49 summertime weeknight rate at the casino resort and a one percent rebate on gaming costs. Nevada's monopoly on legalized casino gaming in the US ended in 1978 when Atlantic City in the state of New Jersey launched its gambling industry. Commercial casinos now operate in twelve US states.

07/21/2009 21:44 PM

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