By Rob Ollikainen
Peninsula Daily News
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By Stephen Singer
The Associated Press
HARTFORD, Conn. — Native American casinos brushed off weak consumer spending in a sluggish U.S. economic recovery to post a modest increase in revenue in 2011, an industry study has reported.
Not only did revenue rise 3 percent, to $27.4 billion, but tribal casinos are holding onto their share of total casino gambling revenue, competing closely with commercial casinos, according to the report, “Casino City’s Native American Gaming Industry Report.”
The top five states — Washington, Florida, Connecticut, California and Oklahoma — accounted for about 61 percent of total gambling revenue.
The top 10 states, which include Arizona, Michigan, Minnesota, Wisconsin and New York, account for 86 percent of total Native American casino revenue.
The revenue increase is the second in as many years following a first-ever drop in tribal casino revenue in 2009 as the worst recession in decades took its toll on consumer spending.
The back-to-back increases in revenue are encouraging, the report said.
“The question is how much further can Native American gaming grow?” author Alan Meister said.
Native American gambling was slowing before the start of the recession in late 2007 due to legislation, regulations and court decisions that restricted the types of games offered by tribal casinos, the number of states where gambling is permitted and other limits, he said.
Ironically, the weak economy has helped spur casino growth among states seeking more revenue, Meister said.
The outlook for Native American gambling now appears healthy because the economy is expected to continue improving, restoring consumer spending, Meister said.
In addition, many tribes are upgrading, expanding and replacing casinos.
Native American-run casinos such as those in Alabama and Nebraska, he said, enjoy the advantage of being closer to consumers than many commercial casinos.
“They’re a good alternative to Vegas that’s closer to home,” he said.
But the long-term outlook for Native American gambling is uncertain, Meister said.
Potential threats include continuing legal challenges — such as a land-dispute court case in Michigan that Meister said increases the likelihood of other legal challenges to gambling projects — and state regulations that restrict Native American casinos and limit expansion.
Native American casinos face “a lot more” restrictions than their commercial counterparts, he said.
“That, in some ways, holds back Native American gaming from what it could potentially be,” Meister said.
Other potential challenges include increasingly saturated markets, rising competition and Internet gambling.
Native American gambling generated about 43 percent of U.S. casino gambling revenue in 2011, the report said.
Revenue at commercial casinos was 45 percent, and revenue from “racinos” — casinos that operate at race tracks — accounted for the remaining 12 percent.
That’s unchanged from 2010 but represents a huge gain from the Native American casino share of less than 20 percent in 1993.
Both Native American and commercial casinos could lose business to racinos, he said.
State approval of gambling is easier at race tracks where betting already occurs than establishing new casinos, Meister said.
Revenue growth varied from as much as 26 percent in Alabama to minus 3 percent in New York.
After Alabama, the fastest-growing states were Mississippi, Montana, North Carolina and Oklahoma.
Following New York, the steepest decline in revenue was in Oregon, North Dakota, Connecticut and Idaho.
Revenue at Native American casinos continued to be concentrated in certain states.
California generated more revenue at Native American casinos than did any other state, producing $6.9 billion in 2011. Casinos in California accounted for more than 25 percent of Native American casino gambling revenue nationwide.
The casino posted double-digit growth from about 1999 to 2009, followed by 8 percent to
9 percent growth in subsequent years, said Jerry Allen, chief executive officer.
“We’ve been very fortunate around here,” he said. “Our market is a little more stable.”
7 Cedars’ senior-based market kept the chips rolling in when most tribal casinos began to struggle in 2007 and 2008, Allen said.
“We were a little bit of an anomaly,” he said.
Revenue for the other casino on the North Olympic Peninsula, the Elwha River Casino on the Lower Elwha Klallam reservation, was not available, tribal spokeswoman Brenda Francis said.
The 7,000-square-foot, all-slots casino at 631 Stratton Road opened in March 2009 with more than 100 slot machines and the River’s Edge Deli.
Nationally, tribal casinos posted a 3 percent gain in revenue to $27.4 billion in 2011. It was the second straight year that the industry posted gains following the recession.
Allen could not provide revenue data beyond the growth percentage.
“Our growth has been modest, in the high single-digits in the last two years,” said Allen, brother of Jamestown S’Klallam tribe Chief Executive Officer Ron Allen.
Last December, the Jamestown S’Klallam tribe opened a new slot machine room, Napoli’s Restaurant and the Rainforest Bar in the former bingo hall in the south wing of 7 Cedars Casino.
Slots are the casino’s main source of revenue.
The $7.5 million, 3,500-square-foot expansion increased the slot capacity of the casino, which opened in 1995, from 550 to 750.
It was also a prelude to the tribe’s grand plan to build a $60 million to $75 million hotel and resort adjacent to the casino at 270756 U.S. Highway 101.
The tribe plans to build the infrastructure for the resort this year. A target date for the resort has not been announced.
Jerry Allen said the new slot room at 7 Cedars has been well-received, especially by guests who prefer a quieter gaming environment when the traditional casino floor with its table games and surrounding bars and restaurants is bustling on weekends.
Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 5072, or at firstname.lastname@example.org.