It’s no secret that California has been in a drought situation for the last four years. What may not be as well known is that the state’s tribal gaming industry is also going through a prolonged dry spell when it comes to growing casino revenue.
According to information compiled by the National Indian Gaming Commission, California tribal casinos generated $6.99 billion in combined gaming revenue in 2013, a mere 0.5 percent percent increase over the $6.96 billion revenue the market generated in 2012. And while the final 2013 revenue figure was the highest in five years, surpassing the $6.97 billion California casino collectively generated in 2009, the compound annual growth rate (CAGR) for casino revenue over this period is an anemic 0.06 percent.
Also troubling is the fact that 2013 revenue figures are still 10 percent below the $7.77 billion high-water mark the industry set in 2007, according to information compiled in Casino City’s Indian Gaming Industry Report. The CAGR for the five years leading up to 2007 was 10.3 percent.
Of course, these lagging gaming revenue numbers only tell one side of the story when it comes to the California tribal gaming marketplace. Indeed, even at the current revenue figure of $6.99 billion, California is still far and away the largest single state tribal gaming market in the United States, almost double the yearly revenue take of the Oklahoma marketplace. The state also boasts 68 tribal gaming facilities as of year-end 2012, trailing only Oklahoma in this statistic.
And while gaming revenues may be stagnant, tribal operations continue to have a major and growing impact on the overall economy of California, according to a Beacon Economics study released by the California Nations Indian Gaming Association (CNIGA) last year. The report, which focused on the totality of benefits generated by tribal government gaming operations, found that tribal gaming operations in California generated an estimated $8 billion in economic output in 2012 and supported over 56,000 jobs statewide. The 2012 operations had a roughly 7-7.5 percent larger impact on California economic activity than in 2010.
The study also showed a growing chunk of yearly economic output for tribal properties is being generated by non-gaming operations such as hotels, spas, golf courses and concert halls. Tribal non-gaming operations in California generated an estimated $2.3 billion in economic output in 2012, supporting over 14,800 jobs statewide, and adding $1.2 billion in value to the state economy.
So, going strictly by the numbers, it appears California tribal casino market has peaked and settled at roughly $7 billion, with very slow growth going forward. Meanwhile, the non-gaming businesses associated with the tribal gaming resorts appear to be on a major economic upswing.
Suffice to say this dynamic is not lost on California tribal gaming operators, many of who remain bullish on the future of brick-and-mortar casino facilities in the state and are re-investing in their properties to both protect and grow their market share. However, this expansion and renovation jag is largely concentrating on boosting the non-gaming footprints at these properties.
For example, the Pechanga Band of Luiseño Indians recently announced a $285 million expansion to their popular Pechanga Resort & Casino, all of the money devoted to hospitality offerings.
“This development will complement our current offerings, enhance the resort experience for guests, and cement Pechanga Resort & Casino as the preeminent luxury gaming destination in California,” said Patrick Murphy, president of the Pechanga Development Corporation, which has oversight of the resort and casino operations and will oversee all aspects of the proposed development. “This project will meet the demands of our guests—more rooms, a true resort-style pool experience, a luxury spa and A-list entertainment acts.”
According to company press materials, the new 14-story wing will feature approximately 550 rooms and will be located on the south side of the property’s existing hotel. Reflecting Pechanga’s reputation for continuously improving the guest experience, more than one-third of the new wing will consist of suites.
The hotel development includes 67,000 square feet of custom-designed and configurable event and pre-function space for meetings, conventions, concerts and boxing and mixed martial arts.
The new two-story, 23,000-square-foot luxurious spa, salon, and fitness center will feature 17 treatment rooms and a terrace with hydrotherapy pools.
Pechanga guests will soon be able to enjoy a proper resort-style pool complex that will span four acres and will feature three pools and five hydrotherapy pools, including a family-friendly pool and a lagoon-style pool.
Two new restaurants will be added to Pechanga’s existing 11, including a pool grille restaurant with a roof top view and a restaurant and bar in the lobby of the new hotel wing.
The design team is led by Delawie architects, the original designers of the Pechanga Resort & Casino. Lifescapes International has been selected as the pool area and landscape architects. Over the past five decades, the firm has designed iconic landscapes at world-class resorts, including the Bellagio, Wynn, and Venetian hotels. CLEO Design out of Las Vegas and Los Angeles-based KNA Design will be leading the interior designs.
Pechanga will soon be undertaking an environmental impact report and will be working with the City of Temecula and the County of Riverside to execute intergovernmental agreements.
Over the years, Pechanga has contributed $10.4 million to the City of Temecula for widening Pechanga Parkway and construction of a new bridge spanning Temecula Creek. The tribe has also provided more than $14 million to the City of Temecula to build the Ultimate Interchange at the I-15 and Temecula Parkway.
“Almost 20 years ago we started our journey toward self-sufficiency,” said Pechanga Tribal Chairman Mark Macarro. “It’s a journey that has allowed us to provide for our people and the community, improving the quality of life along the way. To continue our viability and enable our competitiveness, we announce the next leg of our journey. As our region grows and matures, we must do so as well to position ourselves for the next 20 years. We believe this project will take us there.”
Pechanga hopes to break ground on the project in the first quarter of this year, with construction expected to last approximately two years.
Of course, the Pechanga are not the only California casino tribe pursuing non-gaming amenity expansion. Last year, the Rincon Band of Luiseño Indians finally completed a $160 million, multi-phase renovation and expansion to its Harrah’s Rincon Casino & Resort, which was re-branded to Harrah’s Resort Southern California. The goal of this investment was to improve the Southern California gaming and resort experience and the array of amenities for guests, according to company press materials.
“We’re thrilled for the next chapter at the resort, and with this property-wide transformation, our focus on service and the guest experience at Harrah’s Resort Southern California will far surpass expectations and bring the resort to the next level,” said Janet Beronio, regional president for Caesars Entertainment and general manager for Harrah’s Resort Southern California, last April.
The renovated Harrah’s Resort Southern California boasts 1,065 rooms, including a brand new 403-room hotel tower. The new tower contains 52 additional suites, bringing the resort’s total suite inventory to 152.
The hotel addition joined existing resort amenities such as The Spa at Harrah’s, a trifecta of pools complete with SoCal’s only swim-up bar, an events center, a 53,221-square-foot state-of-the-art non-smoking convention and entertainment venue that seats up to 2,200 in concert-style seating or 1,200 banquet-style, and a large number of eating and bar options.
These new additions were undertaken to ensure Harrah’s Resort Southern California would become a 1.2 million-square-foot, all-season casino and resort; all coinciding with the brand new name.
“The Rincon Band is very excited about the many positive changes taking place,” said Bo Mazzetti, chairman of the Rincon Band of Luiseño Indians, at the time of facility’s grand re-opening. “The name change ensures that guests throughout the country will know that when they visit this resort owned by the Rincon Band of Luiseño Indians, they will enjoy the kind of world class experience they expect from a nationally-branded destination.”
A number of smaller scale amenity expansions are also taking place at tribal gaming operations throughout the state:
The Santa Ynez Band of Chumash Indians are undertaking a $112 million expansion of the Chumash Casino Resort in Santa Ynez. The scope of work for the project includes construction of a hotel tower that will add 215 more rooms, a 20,000-square-foot pool deck, a parking garage, expansion of the existing gaming floor, and additional food and beverage venues, according to company literature. Tutor Perini Building Corp. and Delawie and Summit Project Management will be in charge of the project.
Construction is scheduled to begin in October 2014 with substantial completion anticipated in 2016.
The United Auburn Indian Community has added Illusions, a new $3 million ultra-lounge to its very successful Thunder Valley Casino Resort in Lincoln. Located in the center of the casino, Illusions offers guests an upscale venue with elite and luxurious appeal, according to a property press release. The modernized space provides two stories of lounge seating in addition to a food menu and a wide variety of flavorful signature beverages. The Illusions drink menu will feature the most recent trend in mixology: cocktails that are infused with flavored smoke. Guests will also be able to enjoy four levels of VIP bottle service packages.
The Viejas Band of Kumeyaay Indians is considering an expansion to its hotel and casino on its reservation near Alpine, according to local reports. The tribe is looking to add 128 rooms to its Viejas Casino & Resort.
BREAKING NEW GROUND
In addition to casino renovation and expansion projects, a number of tribes have either opened new casino resorts or are seeking recognition and the rights to develop new gaming properties in the state.
The last major, new resort to open in the Golden State was the Graton Resort & Casino, which was officially unveiled in late 2013. The $800?million facility, owned by the Federated Indians of Graton Rancheria, is the closest full?service casino to the Bay Area, and ushers in a new level of sophistication and excitement to Northern California, according to company press materials.
Within an hour’s drive of San Francisco, the Graton Resort & Casino gaming mix includes 3,000 slot machines and 144 table games offering blackjack, baccarat, and pai gow; the Poker Room, which is a non?smoking area, features 18 tables and popular games including Limit Hold’em, No?Limit Hold’em, and specialty games such as Mexican Stud; and the High Limit Casino Area for guests who prefer a more intimate gaming atmosphere. The area includes a dedicated table games room featuring blackjack and baccarat, plus six additional private?gaming salons. The High Limit Slot area offers 48 high?denomination slot machines.
The resort also features 13 new restaurants, thee specialty lounges and a 600-seat events center.
Tribes seeking or recently awarded compacts to establish gaming operations include:
The Karuk tribe recently had its gaming compact ratified by the State Senate, clearing the way for the tribe to construct a casino in the Northern California community of Yreka. Plans call for a 1,500 slot machine operation in exchange for providing the state with 10 percent of its gaming revenue.
Jackson Rancheria Band of Miwuk Indians have signed off on a compact with Gov. Edmund G. Brown Jr. that may eventually lead to the construction of a casino resort in Amador County.
The Tejon Tribe, which was recognized by the federal government two years ago, has purchased land in the community of Mettler with the goal of developing a casino.
The desire of these nascent gaming tribes to develop casino resorts in the less than ideal gaming conditions that currently exist in California gives an idea of just how vibrant the gaming economy has been in the state, and will hopefully be again going forward.