Casino Enterprise Management

We can’t solve problems by using the same kind of thinking we used when we created them.
                    –Albert Einstein

It doesn’t take an Einstein to recognize that these are strange times in gaming. And it doesn’t take an Einstein to realize why: increased competition, overleveraged properties, tight consumer spending and, um, the Great Recession. With declining revenues for the first time ever and even stagnant business considered a blessing, the casino industry in the United States is facing, if not a crisis, at least a wake-up call.

The days of guaranteed returns are long gone, and they’re probably never coming back, despite any signs of economic recovery. The casino industry can no longer consider itself invincible, and from state to state and sovereign nation to sovereign nation, this reality has changed how everybody is doing business—and if they are still doing business at all. Conservative strategic planning, streamlined operations and hairline margins are the new status quo, a massive departure from the bigger-is-best expansion and spending binge of the last decade and a half.

While many casinos are faring well under these new operating conditions, most are far cries from the cash cows they once were. Nonetheless, this reputation persists, and legislators across the U.S. are turning to casino gaming in search of more tax revenue for their own suffering budgets, from VLTs in non-casino locations to more available licenses and games. And that’s only one among many issues that national, state and tribal gaming associations are contending with as they educate and lobby lawmakers to protect the industry’s best interests during 2010’s legislative session.

Because the actions in one market inevitably effect the industry in many others (Pennsylvania, anyone?), CEM has compiled this update on gaming and government from most of the major gaming jurisdictions in the U.S. to help ensure that the New Year doesn’t hold any nasty surprises. After all, it doesn’t take an Einstein to know that it’s always best to be prepared—just a Boy Scout.

Editor’s Note: Although CEM’s goal was to include representatives from the state gaming association or commission for each jurisdiction in the U.S., not all were willing or able to participate.

AGA

Frank Fahrenkopf Jr.
President
American Gaming Association

President Frank Fahrenkopf Jr. of the American Gaming Association, as of this writing, reports that the health of the U.S. gaming industry is “stable.” “We have seen a leveling out of the downturn,” he said. “We have not seen the dramatic decreases that we were seeing, and we don’t see any significant advances.”

There are, of course, caveats to this stability. First is the variation in individual markets. “You really can’t look at the gaming industry in the United States as a monolith,” Frank explained. “You’ve got to look at each area of the country and look at the type of market they have to really analyze the health of the industry.”

In August 2009, for example, nationwide the industry was down just under 8 percent, while Nevada and New Jersey both had double digit declines from 2008. Some Midwestern states—Pennsylvania, Indiana, Colorado and Missouri—even saw third-quarter gains in 2009.

Frank also says that the commercial gaming industry as a whole is continuing to face two major problems: an overall lack of discretionary spending and casino companies carrying major debt loads. Combined, these factors have resulted in companies reporting decreased EBITDA and subsequent difficulty meeting loan covenants. “Historically if something like that happened with a company, they would just go their bank and refinance or go out in the marketplace and raise money by selling stock,” Fahrenkopf said. “Suddenly, the liquidity in this country froze and that necessitated them to find other ways to solve their problems. There was no place to go. There were no banks that were lending. There was no market for restricted stock. So it was a very serious problem for those companies.”

Fortunately, tax benefits in the stimulus plan and diligent CFOs appear to have assuaged the liquidity crisis. However, Fahrenkopf warns, “We still face the crisis of a downturn in consumer spending and not as many people coming to our places for as long as they used to be.”

Some of those people staying away include conventioneers. In Las Vegas, for example, several conventions, and their corresponding room reservations, have been cancelled, according to the Las Vegas Convention and Visitors Authority. This is partly due to remarks made by President Obama that were meant to dissuade companies receiving federal bailout money from spending it on lavish affairs in destination locales like Las Vegas. “It got interpreted that if you’re a public company or any kind of company, you shouldn’t go to places like Las Vegas or Orlando or resort areas to hold annual meetings and conferences,” Fahrenkopf explained. “The misinterpretation of his words really had a negative impact on places like Las Vegas, Atlantic City and other cities that have nothing to do with gaming but are resorts places. Even to this day, we still see some corporations who are afraid of the public image if they were to go someplace that people consider to be a resort community.”

“If I had a magic wand,” he added, “I would change some of the language that has come out of Washington that has created this reluctance.”

Fahrenkopf and the AGA are, however, using more conventional methods to make changes in Washington, D.C. The association is closely following the Employee Free Choice Act, which would take away the secret ballot for unionizing a business and impose required arbitration—something the AGA unanimously opposes. The association is also following the Health Reform Bill and the Energy Reform Bill to ensure it doesn’t have an overly negatively impact gaming employees and companies; is supporting legislation that deals with carrying back tax losses, allowing a company that reports losses in a year to deduct those losses back for five years on their tax returns; and is supporting legislation to extend and increase R&D tax credits, which would be particularly beneficial to gaming manufacturers. The AGA was also involved in a coalition to support a tourism bill that has already passed and, when signed, will establish a government agency to promote tourism and make it easier for foreign visitors to enter the country and spend their money here. The most contentious piece of legislation on the AGA’s radar would allow for Internet gaming, but the association has yet to take an official position on the issue.

One thing that has proven very beneficial to the AGA and our industry has been the association’s political action committee (PAC). This committee establishes relationships with elected officials who can protect the interests of the commercial casino industry and its employees. The PAC supports political candidates who support gaming.

This past September, the AGA’s board of directors flew to Washington, D.C. and met with many political leaders in the U.S., working hard to preserve our industry. It was a whirlwind of appointments, from meeting with the House democrats, then the House republicans, followed by a luncheon hosted by Harry Reid and his Senate team, and Mitch McConnell’s republican Senate team, and lastly, one of the president’s top advisors. “It gave us an opportunity to sit down with the leaders in Congress and in the White House and explore the issues of concern to us,” Fahrenkopf remarked. “One of these issues was the White House having made remarks that implied people shouldn’t go to Las Vegas anymore. We discussed the Employee Free Choice Act, the tax loss carry back and all the issues important to us.”

NIGA

Ernie Stevens Jr.
Chairman
National Indian Gaming Association

“The right of tribal government gaming comes within our rights as governments, and a status that is recognized in the United States Constitution. The economic exchange had gone on between tribes long before there was a United States government. Ours really is about economic development.” These words from Ernie Stevens Jr., chairman of the National Indian Gaming Association, summarizing the essence—and essentialness—of Indian gaming.

Economic development, however, is not as easy to achieve as it once was, and Stevens reports that Indian country is seeing its fare share of the recession “We’re hit hard, just like anyone,” he said. “Some of our folks are struggling.”

Luckily, it isn’t an across-the-board slump, with some folks doing well, too. The new Wild Horse Pass Casino in Arizona, for example, recently put 300 people to work, not including the 1,000 jobs created during the construction phase. “There’s good things happening, but we’re not so quick to say that everything’s rosy,” Stevens noted.

Even if Indian country is faring better than many other casino markets, the down economy is still troublesome—when a tribal casino is in a rough patch, it literally hits close to home. “When we struggle, it’s really about our health care, our delivery of our education benefits, taking care of our elders, things like that,” Stevens explained. “Our resource is about taking care of our community.”

Stevens does, however, remain optimistic that recovery is on the way. “We’re expecting that our economy will be getting on its feet soon,” he said, “and we’re anticipating and working toward that.”

Stevens says that rather than thinking about potential threats to the industry, gaming tribes should look at it as being prepared, as the strength that comes with tribes coming together on a regional, state and national level is crucial to building a better industry. “This is about our elders,” he said. “This is about our children getting a quality education. This is about being able to provide good living conditions for our members and adequate governmental services to our communities. We’re ready because we have to be, because our communities are first and foremost.”

Stevens says one way to serve these needs is to make Indian casinos more like resort destinations that include a cultural experience. “I think it’s important that we always try to be very direct about the fact that we don’t believe that we’re a competitor of mainstream gaming or other non-Indian gaming,” Stevens said. “We’re unique unto ourselves.”

NIGA’s longstanding, recently reorganized committee called the American Indian Business Network, is helping achieve this. “The AIBN is a very important part of what we do for the betterment of our future, and not just in the gaming industry, but the future of our economy as a whole,” Stevens noted.

Whether that future includes Internet gaming remains to be seen, although the issue is on NIGA’s radar. “We’ll coordinate with tribes regarding their respective positions on that proposed legislation,” Steven said. “We did coordinate some dialogue about that in our gaming subcommittee at NCAI. We’ll coordinate that again at our NIGA meeting and we’ll continue to be on topic of our agendas when coordinating with tribes at the western gaming show. We’ll work toward developing a position.”

Beyond gaming, Stevens is also excited about the passage of the Native American Heritage Day bill. “The Native American Heritage Day gives us an opportunity for people to work together to continue to rebuild America’s viewpoint of Indian country, to understand our history, understand our legacy, our past and where we come from,” he commented. “It gives us a real opportunity to provide understanding that Indians are not just about cowboys and Indians or ruffling some feathers around the turkey at the table. It really gives us opportunity to talk about it and educate America, away from some of the negative viewpoints and stereotypes that impacted our nationality forever.”

NIGA AT A GLANCE
Year Founded: 1985
Member Tribes: 184
Status: Nonprofit
Mission: To protect and preserve the general welfare of tribes striving for self-sufficiency through         gaming enterprises in Indian country.

Arizona

Sheila Morago
Executive Director
Arizona Indian Gaming Association

Arizona is hurting. Between sky-high unemployment and entire neighborhoods abandoned in the burst housing bubble, the economy has not been kind to the Grand Canyon State. So far the gaming industry has escaped the worst of it, but it’s not out of the woods yet: The state legislature is circling its wagons around expanded gaming in an effort to boost its budget.

“We have lots of people who have ideas of how to expand gambling throughout the state,” said Sheila Morago, executive director of the Arizona Indian Gaming Association. “But we know from past experience in other states that expanding gaming is not the answer for tribes or for Arizona. We are trying to explain that is not the best answer because it will not provide the state stability in revenues that we need.”

Morago explained why allowing off-reservation gaming is not an option for tribes. “We have an agreement with the state and an agreement with each other that we expect to uphold,” she said.

That compact does not expire until 2023, but it stipulates that if gaming is ever allowed off tribal lands in Arizona, all limits are off for gaming on Indian lands within the state. “This means that instead of the highly regulated and limited gaming environment that Arizona voters approved in a statewide vote in 2002, if slots were allowed at racetracks, gaming on tribal lands would become unlimited in terms of games offered, numbers of machines and properties. It would be a huge game-changer,” she said. “So we are watching the conversation very closely.”

Morago continued, “In addition to changing the landscape of Arizona, expanded gaming off tribal lands would have a particularly negative effect on rural tribes. People do not realize that rural casinos are often the primary and even only source of employment for tribal people.”

If some state legislators see dollar signs in expanding gaming off tribal lands, Morago sees disaster. “When the bulk of your state revenues are generated by an industry that’s built on disposable income, there is no guarantee that the amount of that revenue stream will produce. Discretionary dollars are always an unstable source of revenue.”

She cites Arizona’s recent statistics as proof. “Our industry has seen downturns for the last seven quarters straight. Depending upon disposable income for revenue is a shaky proposition when you’re looking for really solid money coming in to handle a budget crisis,” Morago stated. “It’s our job to explain that an expansion of gaming does not mean there is an expansion of revenue. Like any other business, even in good times there is a point of market saturation. When that happens, everyone suffers.”

Despite the difficult economy, she pointed out that a few tribes are opening new properties that offer a greatly expanded entertainment experience. The Gila River Indian Community recently opened the Sheraton Wild Horse Pass and the Salt River Pima-Maricopa Indian Community will open Talking Stick Resort in the spring. Both are in the Phoenix metro area. “Since we are currently limited as to the number of machines, tables and size of our facilities, these tribes are reaching out to complement their gaming offerings with great amenities and entertainment options,” Morago noted. In addition, the Navajo Nation is about to open its first casino in Arizona.

Overall, Morago says, “The current gaming environment exactly reflects what people in the state want. It is balanced, well-regulated and limited. We hope that the state recognizes this and honors its compact with tribes and keeps gaming limited and regulated and on tribal land. But ultimately the voters will decide whether to change this agreement. Meanwhile, we will continue to work well with the administration, the legislature and the department of gaming to make sure our industry continues to provide employment for Arizonans and generate revenue for our state. At the same time we will look for opportunities to improve our product so we can enhance the gaming experience for our customers. The bottom line for us is that when our industry prospers, so does Arizona.”

California

Anthony Miranda
Chairman
California Nations Indian Gaming Association

The unemployment rate in the U.S. was 10.2 percent in October and was even higher in California. Then there’s the state’s busted housing bubble and ever-growing budget deficit. In other words, the economy is less than ideal in California. For the state’s Indian gaming tribes, however, it’s a little less dreary.
“California has been hit pretty hard,” said Anthony Miranda, chairman of the California Nations Indian Gaming Association . “We’ve always had a problem with states trying to cherry-pick jobs from California. And with the government looking to raise more revenue, they’re always looking to tax businesses. So we have a tough row to hoe in terms of developing the economy back where it needs to be and developing jobs.”

But Miranda says the current state of gaming in California seems to be stabilized in terms of government relations, and state and local governments are headed in a positive direction—finally. When the original tribal-state compacts were signed in 1999, tribes believed that there were more licenses available. The state disagreed, causing several tribes to file lawsuits. The judge ruled that there were 10,000 more licenses than the state said there were, and the California Gambling Control Commission (CGCC) conducted a license draw. The result was 3,547 additional licenses issued to 11 tribes. “Now this only really affects the tribes that are operating under the 1999 compact,” Miranda explained. “There are several tribes that renegotiated their original compacts for unlimited slot machines, thus removing the need to draw additional licenses. But for those tribes that needed the licenses, this was a very good thing.”

Another positive for California has been the Indian Gaming Revenue Sharing Trust Fund, enacted in 2001—the first such fund in the nation. An estimated 84 tribes qualify for assistance, and $25 million was distributed within its first week. “It’s just been fantastic for the tribes,” Miranda noted. “The tribes have been able to inject that money into their economies. Some tribes are looking at diversifying and getting into businesses. I just can’t say anything bad about it.”

As far as the state’s legislative future, Miranda expects the card room industry to push for bills beneficial to them and the horse racing industry to seek new revenue. If the Unlawful Internet Gambling Enforcement Act (UIGEA) falls, talks of moving forward with Internet gambling have been reported in California. Miranda believes it’s a bill that is going to be presented this legislative session, as it came up last session. “We’re trying to get California to opt out of that,” he said. “It’ll be an interesting year in terms of the Internet and gambling, not only in the state, but also nationwide.”

The tribes have also been working closely with the CGCC regarding minimum internal control standards. “Regulation is of utmost importance to the tribes in California,” he added. “We feel that a well-regulated gaming industry is beneficial to all facets of the industry. I’d like to see the CGCC establish a more even-handed regulatory plan with the entire gaming industry in California—charities, racetracks, card rooms and so forth.”

CALIFORNIA AT A GLANCE
Types of Gaming: Racetracks, commercial card rooms, tribal, state lottery
Tribal Casinos in Operation: 58
Tribal Casino Employees: 58,100
Issues to Watch: Internet gambling
Smoking: Permitted on tribal land

Colorado

Lois Rice
Vice President
Colorado Gaming Association

Nearly two decades after limited-stakes gambling was approved to preserve Colorado’s history, casinos in the state’s three commercial gaming towns, Black Hawk, Central City and Cripple Creek, are enjoying some new freedoms. The original 1990 legislation that allowed for limited-stakes gaming was loosened in November 2008 with the passage of the ballot initiative, Amendment 50. Now, Colorado casinos can offer craps and roulette (previously only slots, blackjack and poker); raise bet limits to $100; and stay open 24 hours per day. In addition, the state is home to two Indian-owned casinos.

Amendment 50 also forged a new partnership between the state’s casinos and community colleges, effective July 2, 2009. Seventy-eight percent of revenue generated by the higher bet limits, new games and longer hours are benefiting those colleges. Lois Rice, executive director for the Colorado Gaming Association, explains: “We’re pretty excited about being able to do something for higher education in the state. We’re hoping that, during the first year these changes are in effect, we’ll be able to generate about $30 million in additional revenue for the community college system.”

Taxes from gaming in Colorado are also continuing to support another issue close to Coloradoans’ hearts—its history. Since 1992, more than $300 million has been provided to the Colorado State Historical Fund, which is the richest such fund in the nation. Of those taxes, 80 percent is spread across the state for preservation projects, and 20 percent is returned to Black Hawk, Central City and Cripple Creek to refurbish their buildings and streets.

Gambling taxes also go toward economic development projects such as tourism promotion, the DOT, Clean Energy Fund, New Jobs Incentive Cash Fund, State Council on the Arts Fund and the state’s general fund.

Despite the economic downturn, Colorado casinos have seen a 6 percent to 7 percent increase in revenue in the past few months. “I think we’re probably doing a little better than the other states in the sense that our market is primarily local,” Rice noted. “We’re not a destination resort, so we’re not feeling some of the more severe effects that some gaming destinations are facing. One of our large properties, Ameristar, just opened a 536-room hotel, and they’ve started attracting group meetings. That should help us mitigate some of the economic conditions.”

Still, Rice says Colorado’s casinos are not quite where they’d like to be. “The industry is still feeling the effects of a casino-wide smoking ban that went into effect Jan. 1, 2008. It’s going to take some time for us to recover from that,” she said.

Rice also says gaming expansion will likely be a topic during January’s upcoming legislative session and that the association feels strongly about blocking any such efforts. “There have been seven attempts to expand gambling geographically since gaming was originally approved in 1991,” she said. “And all of those attempts were soundly defeated by voters. We don’t feel that the public’s position has changed, and if there are any attempts to expand gambling, they’ll be defeated as well.”

“There’s always at least one attempt, either through the racetracks or some other means, to expand gaming to the major metropolitan areas of the state,” Rice added. “We’re always cautious about that, because our casinos are located in remote old mining towns. If voters or the legislature were in a position to expand gambling to the Front Range, it would have a very severe, adverse impact on our gaming towns.”

One other issue the association is watching is a movement by the Poker Players’ Alliance to loosen prohibitions regarding private poker games in the state.

 Colorado’s future, however, does remain bright. The association hopes the state’s casino cities become known as destination locations, either through group meetings or other means, and feel the Ameristar Black Hawk Hotel has sparked that interest for groups. “We hope that we’ll have return business through the increase in hotel rooms,” Rice said. “We hope to be on a more level playing field to compete with some of the other gaming destinations, such as Las Vegas, the Midwest or the Gulf Coast.”

COLORADO AT A GLANCE
Types of Gaming: Commercial land-based casinos in Black Hawk, Central City and Cripple Creek; tribal
Year Legalized: 1990
Casinos in Operation: 47
Casino Employees: 9,000
Issues to Watch: Expansion
Smoking: Not permitted

Illinois

Thomas Swoik
Executive Director
Illinois Casino Gaming Association

After a drawn-out legal circus and plenty of related drama, Illinois’ long-embattled 10th casino license will finally have a property to call its own. Midwest Gaming recently won initial licensing approval from the Illinois State gaming Control Board, and its new property will soon join the nine existing riverboat casinos in the state. The property will be located in Des Plains, near O’Hare International Airport and next to the Des Plains River. While Midwest hasn’t received its final approval yet, the company hopes to break ground in March 2010.

But in even bigger gaming news in Illinois this year was the passage of the Video Gaming Act (VGA), which authorized VLT terminals in restaurants, bars, fraternal organizations, veteran organizations and truck stops. Since the VGA passed in May 2009, the Illinois Gaming Board has drafted a set of emergency rules to deal with the newly created market. It has or will issue RFPs to select a company to be responsible for the regulation and approvals of those machines, as well as a company to supply a centralized computer system to monitor the various VLTs for regulatory purposes.

However, the VGA was pushed through the legislature so quickly that some of its language was problematic for regulators. “It didn’t allow the gaming board any additional staff or additional funds to get this new market up and running,” noted Thomas Swoik, executive director of the Illinois Casino Gaming Association. “Since its passage, during the fall veto session the legislature approved a bill to allow the board additional staff and funds. My guess is that we still may be close to a year away from seeing the VGA in action.”

Besides concerns about the regulation of this new video poker market, there are other major issues that still need to be addressed. The VGA allows local counties to opt out through a local referendum, and according to Swoik, about 200 communities have already taken advantage of that stipulation. This is a concern because there is no language in the bill that addresses a time limit during which counties may exercise their opt out option; if local establishments invest in video poker infrastructure, there is no guarantee that down the road the community will not decide to abolish it.

Also of concern is that the VGA states that gaming establishments cannot be located within 1,000 feet of a school or church, but it doesn’t address what will happen if a new school or church is built near an already established video poker facility. “My guess is that all the remaining concerns will be resolved when the legislation session begins again in January,” Swoik said.

Swoik also believes the VGA’s impact on riverboat casino operations will be minimal. “We think it may have some effect on us, but we believe it won’t be substantial,” he says—and hopefully not, as the industry is not in an ideal position to ride out another blow to business. The 2008 passage of a smoking ban and the down economy have already contributed to an almost 30 drop in revenue for the state’s casinos.

Swoik is, however, optimistic for the future of the Illinois gaming industry. “I think we have some fantastic companies running some really great facilities,” he said. “Almost every one has been renovated and expanded. Plus, with the recent approval of downloadable credits and couponing at the slot machines, our properties will have more ways to market themselves. … I think there is a potential to start rebounding next year, but it will take a long time to get back where we were.”

Indiana

Mike Smith
President
Casino Association of Indiana

Like most states, Indiana has had its fair share of economic turmoil in the last year, but according to the Casino Association of Indiana’s President Mike Smith, it’s not so bad for the Hoosier State, all things considered. “We’ve had a new opening this year that’s faired fairly well,” he said of the Indiana Live! Casino that opened in March. Still hindering the industry in Indiana, however, is a complex tax structure.

Between the admission taxes, wagering taxes and local development agreements, the revenue stream that the casinos bring in for the state is right at $1 billion a year. And Smith said those tax rates are a major concern for operators throughout the state. “We are one of the highest taxed commercial gaming states in the country,” he said.

Another issue for the association has been the deductibility of promotional play and downloadable credits. “We’re also still burdened with a wagering tax,” Smith explained, “which we cannot deduct from our income when figuring Indiana income tax. That’s another issue we’re addressing. We’d like to, in some fashion, roll our admission tax into the wagering tax.”

Currently, operators in Indiana pay a $3 tax for every person that comes through the turnstile. Although the two racetrack casinos in the state aren’t required to pay that admissions tax, one land-based casino—French Lick—pays $4. “We have a variety of different tax structures,” Smith said.

Add to that a $250 million fee each operator has to pay upfront for the ability to add slots to their race tracks, and you have what some operators have called an unprecedented burden. “In 2007, the state approved the House Enrolled Act 1835, which allowed each of the state’s horse racing tracks the ability to place up to 2000 slot machines at their properties,” Smith explained. “But to do that, both Hoosier Park in Anderson and Indiana Downs in Shelbyville had to pay the state $250 million for a slot license and agree to invest at least $100 million in their facilities. From their standpoint, they kind of walked into a perfect storm, if you would: Around that time the credit market started to fall apart, so the timing probably couldn’t have been any worse.”

Of course, the state’s taxpayers have reaped the benefits of those licensing fees and the high tax structure. “Originally gaming taxes were implemented to do just a few things,” Smith said. “Today, it’s morphed, and the money goes to a lot of things that support the state government. Gaming money cut the auto excise tax in half, which includes money from the lottery; helped shore up teachers’ retirement funds; and went to local community programs and initiatives. Plus, we’ve probably saved people a couple of billion dollars in property taxes.”

Also, with increased competition coming online in Michigan, Illinois, Ohio and possibly Kentucky, the state’s casinos and the association are doing their best to remain competitive. “We’ve had legislative committees that have met three times this year already studying all facets of gaming in the state, including increased competition from surrounding states,” Smith noted. “The state, which I refer to as our ‘preferred partner,’ obviously wants to make sure that we have a viable industry going forward not only for our benefit but for the state’s revenue stream as well, since we provide such a significant amount of it. Hopefully we’ll be able to address some of our concerns in the next legislative session.”

Smith also hopes to discuss the fairness of the tax structure, the deductibility of wagering taxes, and the ability to use promotional credits and not have to pay taxes on them. “I think those are our main issues,” he said. “I would like to see tax credits for non-gaming investments as well. If we can show the state that we can grow revenues by capital investment, when and if the markets ever turn around, that would certainly put us in a good competitive position.”  

While Smith admits that, given the number of licenses in Indiana today and the state’s current tax structure, Indiana may have reached its saturation point, that doesn’t necessarily mean stagnation or limitations for the state’s gaming industry. “If you look at some of our surrounding states and how their legislation has affected us, like Illinois’ smoking ban, it’s probably benefited Indiana,” he says. “We want to make sure that whatever happens in the state we can continue to make money. The state holds a lot of the cards, like how competitive we can be through our tax structure. It should be a win-win for the entire partnership, for the operators and the state.”

INDIANA AT A GLANCE
Types of Gaming: Riverboats, racetracks (with slots), state lottery, charitable
Year Legalized: 1993
Casinos in Operation: 13
Casino Employees: 16,000
Issues to Watch: Increased competition; changes to the tax structure or capital investment policies
Smoking: Permitted

Iowa

Wes Ehrecke
President
Iowa Gaming Association

“We’re not recession-proof.”

These words from Wes Ehrecke, president of the Iowa Gaming Association, reflecting a decline in year-to-year gaming revenues statewide, layoffs and plant closings that have closed the wallets of many gaming patrons, and a trend among casino operators to cut back on expenses.

But, with true Iowa pragmatism, Ehrecke also acknowledges that Iowa’s gaming industry is much better off than others—after all, gaming is still the state’s top tourist attraction, cutbacks are not coming at the expense of entertainment amenities, and while some markets may be down, others are up. “Overall,” he said, “I think it’s been pretty good.”

And the Iowa Gaming Association is fighting to keep it that way. Iowa’s commercial casinos are annually a billion-dollar industry, and convincing legislators to protect that industry is a top priority. “We are a stable, reliable source of revenue year in, year out,” Ehrecke said. “The tax revenue goes to a lot of visionary purposes and is earmarked for a variety of things and has been very beneficial for the state.”

Nonetheless, facing a $400 million shortfall this fiscal year, legislators are toying with the idea of allowing VLT machines in taverns—potentially without any of the same strict regulatory safeguards that casinos must adhere to­. Other issues that may arise in the future include the possibility that the budget deficit could temp lawmakers to change the gaming tax environment, which Ehrecke reports is currently “fair and competitive,” and the possibility that casinos could lose their smoking ban exemption, which would carry up to an estimated 25 percent drop in lost tax revenue for the state, a total that could be more than $75 million per year.

“We’re hoping to educate legislators and the public alike that we have 17 viable businesses of the state that each year provide a $1 billion impact with wages, purchases of Iowa-based products and services, charitable contributions and taxes paid,” Ehrecke said. “We do want these businesses to thrive versus just survive, to not hamper them with adverse competition or regulation.”

The Iowa Racing and Gaming Commission recently conducted a study of the state’s gaming environment to determine if any of the five counties currently vying for a casino license are in underserved areas where a new venue would minimally impact existing casino properties. The commission has decided to accept an application from each of the five counties, but no decisions are expected until mid-2010. “They indicated it’s not going to be just a gaming floor,” Ehrecke said. “These proposed projects have got to be pretty comprehensive in what they would do for economic development and being a catalyst for creating jobs and generating tourism.”

Although it may be a dream piece of legislation, the Iowa Gaming Association is also working to repeal a referendum that requires counties where casinos are located to vote every eight years on whether to continue to allow gaming. Ehrecke would rather have the issue go to vote twice, and if it passes successfully both times, then the county’s citizens are no longer required to bring forth the ballot question. During the 2002 election, all 11 gaming counties voted to keep their casinos, with an average of 74 percent of voters in favor. “It really deters from ongoing investment opportunities when you have to hammer things out with the lenders over eight years rather than 20,” Ehrecke explained. “Trying to repeal the referendum might be an issue, as it’s a matter of opening up our gaming chapter to potential other adverse legislative provisions considered. We like to think we’re doing great for the state and hopefully the state will do us no harm.”

“We want to try to strive to continue to have a viable gaming industry,” he added. When gaming was first legalized 20 years ago, lawmakers “wanted it to be a catalyst for economic development, to generate tourism dollars and to create good jobs. In Iowa, we’ve exceeded those expectations in each of these areas where they’re located in an extraordinary way. We want to strive to continue to have the right legislative and regulatory environment by which they can continue to do so for the next 20 years.”

IOWA AT A GLANCE
Types of Gaming: Racetracks, riverboats, land-based commercial, tribal, charitable
Legalized: Pari-mutuel 1983; riverboats 1989
Casinos in Operation: 17 commercial, 3 tribal
Issues to Watch: Referendum votes, new casino license applications, VLTs in taverns
Smoking: Permitted on casino floors

Louisiana

Wade Duty
Executive Director
Casino Association of Louisiana

Louisiana, like Mississippi, not only has the economic downturn to cope with, but is still trying to rebuild from the major hurricanes that have slammed its shores in recent years. Both have been major blows to the state’s gaming industry.

Hurricane Katrina’s damage—combined with Rita rolling in 29 days later—took eight of the state’s 15 riverboat casinos out of commission. Today, four years later, two remain offline. Then, last year in September, Hurricane Gustav tore through Louisiana. The lasting impact of these storms is a noticeable loss of population in the New Orleans area, which has taken its toll on the state’s economy. According to economist Loren Scott, the storms essentially reset New Orleans’ economy to where it was in 1976; he also projected a 25- to 30-year timeline to rebuild completely. A silver lining—although macabre—was a quick rebound for gaming revenues, due to the obliteration of Mississippi’s casinos in the storms. “For about eight months we were the only gaming opportunity between Florida and Texas,” said Wade Duty, executive director of the Louisiana Casino Association. “So we enjoyed a big spike then.”

Today, the threats to the industry are less catastrophic—but still troubling. When the legislative session resumes in March, Duty expects another attempt to ban smoking on casino floors. A statewide ban is already in place, but there is currently an exemption for casinos—an exemption that Duty feels is vital to the health of the industry. “[If a complete ban passes] the immediate loss in revenue would be felt,” he said. “It’s hard convincing legislators. Many think it’s all smoke, mirrors and lies by the gaming industry. Despite every other state that’s passed it, and that you can show them the losses in revenue, they just refuse to believe it.”

The association is also working with a new gaming control board chairman, who has taken a real interest in acquiring an expanded knowledge of the industry. “They haven’t always been as well-versed as perhaps the regulatory board should be,” Duty said. “But I think we’re seeing a new willingness to learn some of the finer aspects and to learn that things do impact the gaming industry when you have 10 percent unemployment.”

Looking to the future, Duty says he doesn’t expect changes to the state’s water-based casinos only policy, although other changes may be needed to stay competitive. “I think we’re going to keep water-based gaming in the state, which always presents challenges when your competitors in Oklahoma and Mississippi have evolved to different formats,” he said. “Hopefully we can clarify to the legislature that we need to make some changes other areas, in terms of either tax offsets for non-gaming entities or more favorable tax treatment for some of the things like our marketing expenditures, because, frankly, we get a lot of pressure from Mississippi because of its much lower tax rate.”

Mississippi taxes gaming at 8 percent; Louisiana at 21.5 percent. Duty says a big priority is convincing the legislature—a group that is accustomed to revenues it receives from that larger tax rate—that “if they’d like to continue to receive it at those levels, they need to help protect the industry a little more than they have.”

Staying competitive with its gaming neighbors when it comes to server-based gaming will also be key. Unfortunately, Duty says, “We’re just really slow moving, trying to get these folks to realize that you do get squeezed hard by Mississippi and hard by Oklahoma, and you’re clinging to a gaming format that is perhaps outdated now.”

Minnesota

John McCarthy
Executive Director
Minnesota Indian Gaming Association

Although Minnesota may not be what most would call a “destination resort area,” the state’s tribal casinos have nonetheless proven to be a major tourist attraction. In fact, after the Mall of America, casinos are the most visited locales in the state. And considering the nation’s economic troubles, the number of visits isn’t down too significantly. Spend per visit, however, is another story, according to John McCarthy, executive director of the Minnesota Indian Gaming Association (MIGA). He estimates tribal casino revenues to be down 5 percent to 15 percent, depending on location. Unfortunately, it could get much worse, with several threats to tribal gaming revenues looming on the legislative horizon.

Minnesota’s constitution mandates that every two years the state’s budget must be balanced. Currently, there is a sizable deficit, which could swell as high as $7 billion in the next few years. “Our concern is that all the elements are here for a perfect storm scenario, where legislators are proposing gambling expansion to fund a variety of things such as a new Vikings stadium, health care, education or for tax relief. The expansion would include slots and other casino games at local racetracks, a state operated casino, an airport casino or allowing five to 10 slot machines in more than 6,000 area restaurants and bars,” McCarthy explained. “As in so many other states the proponents for these proposals project a very high rate of return that has not been verified by any independent source. We’ve been checking actual revenue numbers from states like Florida, Pennsylvania, Delaware, and Maryland, in relation to what was proposed in those states, versus two years down the road what they actually produced. Interestingly none of them have produced near what they said they would.”

McCarthy says that states tend to view gambling as free money—which we all know isn’t the case. “Every industry has a saturation point, and we believe that we’re more than at that here in Minnesota,” he said. “So to open up these other venues is not going to create new revenue or jobs. It’s just going to shift revenue from places where it’s really needed like rural Minnesota to places where it will have little or no impact. The jobs that these proposals will eliminate from rural economies far outweighs any benefits they can produce.”

On the federal level, MIGA is warily watching land-into-trust issues. “Our association is opposed to off-reservation gambling,” McCarthy said. “We don’t believe that’s what the Indian Gaming Regulatory Act was really directed toward when it was passed, and we’re concerned with border-state issues that occur.”

It isn’t just tribal casinos facing an uncertain future—Minnesota’s two race tracks are struggling too. “They both have the option of doing card clubs and that, to some degree, has kept them moving forward,” McCarthy noted.

But even this may come at the expense of the state’s gaming tribes. “The poker craze seems to be slowing down some, and so now there are proposals to turn these facilities into full-blown casinos, or racinos as they call them. If this happens, it will just be opening a door that will never close.”

So even though it might sound counter-intuitive, the usually dreaded status quo might be the best possible outcome for Minnesota’s tribal casinos. “My sense is if the status quo is maintained … we’ll slowly get back to where we were, and may see some moderate growth,” McCarthy said. “If things stay the way they are, things will kind of be the way they are. If they change, then I’m concerned that we’re going to see a disruption of revenue streams to these small rural communities, seriously impacting both the reservations and the communities surrounding these reservations.”

MINNESOTA AT A GLANCE
Types of Gaming: Racetracks, tribal, state lottery
Casinos in Operation: 18
Casino Employees: 30,000
Issues to Watch: Card clubs, VLTs
Smoking: Permitted on tribal lands

Mississippi

Beverly Martin
Executive Director
Mississippi Casino Operators Association

If your jurisdiction is reeling from the effects of the down economy, try recovering from the recession while continuing to rebuild from one of the worst natural disasters this country has ever seen. Damage from Hurricane Katrina forced some casinos to close, and not all were able to rebuild, a lingering problem that compounds any other ill effects of the recession.

“Any time you have fewer properties, you’ve got less revenue,” explained Beverly Martin, executive director of the Mississippi Casino Operators Association. “There are also fewer hotel rooms, because after the storm, casinos moved on shore and took up some of the hotel and meeting space.” This lack of space limited the number of conventions the state could attract, further affecting tourism. Another blow: Mississippi received federal funding to be used for recovery from Katrina, but none of that money was allocated to the gaming industry.

In another blow, albeit relatively minor, Alabama’s growing number of bingo machines poses a potential threat to Mississippi’s market. “Or they certainly consider us competition,” Martin remarked.

However, it’s not all bad news for Mississippi. “We’ve had a couple of casinos that have actually expanded and a couple that added new restaurants,” Martin said.

Dockside, or floating, casinos have been legal in Mississippi since 1990. In 2005, a bill signed by Gov. Barbour paved the way for land-based casinos in the state, though they must be built within 800 feet of the shore.

Another positive: Mississippi’s university hospitality and tourism programs are faring well, indicative of a nationwide trend that show enrollments often rise during tough economic times as people who have lost their jobs go back to school.

Meanwhile, Mississippi will continue to stay its course. “We would like to be treated as any other industry, but I think right now the legislature and the gaming commission have really done things right for gaming in Mississippi,” Martin said. “We’d like to maintain what we have and the business climate that we’re in. And I think we’ll continue to try and come back from not only the economy but the storm as well.”

Missouri

Mike Winter
Executive Director
Missouri Gaming Association

Gaming is looking good in Missouri. A new Pinnacle casino is on the horizon for 2010 in the St. Louis area. Gaming revenues are stable, if not increasing slightly. And the long-standing, much-hated $500 loss limit was repealed in November 2008—which, according to Mike Winter, executive director of the Missouri Gaming Association, has helped shield the state’s casinos from the worst of the recession.

The state as whole, however, has not been quite so lucky. Budget-wise, Missouri has taken a hit. The governor announced $205 million in additional withholdings from the current budget, which went into effect July 1. Additionally, tax revenues are down 11 percent—considerably worse than what the governor and the general assembly had projected. Unless the economy turns around quickly, there is the possibility for another round of withholdings or budget cuts early next year.

Missouri currently has a 21 percent tax rate on gaming, of which 2 percent stays in the community and 19 percent goes to the state, earmarked for education. The state also charges an admission fee of $2 for each patron that enters a casino. That money is split between the community and state for National Guard scholarship programs, early childhood development and veterans programs.

“We’re optimistic that the economy is going to turn around and we’ll begin to see more and more patrons continue to visit our properties,” Winter said. “We’ve been very good in Missouri about investing in our existing facilities, and I think that will continue to happen. ”

Next year will likely also bring some old issues back in the legislature, including a proposed smoking ban. “Last year, we saw a smoking ban, both a legislative bill as well as a proposal which would have gone to the people, but neither one of those passed,” Winter explained. “I would expect the people who filed those last year will re-file them again next year.” St. Louis county also has a smoking ban effort at the local level, but it does have an exemption for the casino floor.

Also on the 2010 agenda is continuing to work with the Missouri Gaming Commission to rewrite the state’s regulations and internal controls.

New Jersey

Joe Corbo
President
Casino Association of New Jersey

Layoffs. Cutbacks. Sliding revenues. These words are all too familiar in recent headlines about New Jersey’s casinos. For years, New Jersey, specifically Atlantic City, has been building a reputation as a “resort destination.” Unfortunately, the consensus seems to be that this is exactly why its casinos have been hit so hard by the down economy. And that’s not even to mention the competition from new casino openings in nearby Pennsylvania—or the looming threat of those casinos soon offering table games.

“It is the most challenging time in our industry’s 31-year history, with the dual negative impacts of declines in consumer spending and increasing regional competition,” said Joseph Corbo Jr., president of the Casino Association of New Jersey. “On the other hand—and what often is lost in all of the negativity—New Jersey’s gaming industry remains the second largest jurisdiction in the United States, second only to Nevada, and remains a critical economic engine of the state in terms of jobs, tax revenues and purchases of goods and services.”

Since its creation in 1984, the Casino Reinvestment Development Authority has invested more than $1 billion in economic and community development projects throughout the state. Each casino in Atlantic City pays 1.25 percent of its annual gaming revenues to CRDA. Additionally, Atlantic City casinos generate approximately $4 billion in gross gaming revenue annually. And since 1978, an 8 percent gaming tax has generated billions for senior citizens, a high priority group for New Jersey, through the Pharmaceutical Assistance to the Aged and Disabled program (PAAD). The program is funded by the Casino Revenue Fund.

Another bright spot for the state is its advantage of offering diverse products for both gaming and nongaming services. “We need to continue to evolve as an industry to leverage this significant advantage,” Corbo said. “I am confident we will do so.”

Meanwhile, New Jersey casinos have avoided an additional challenge, at least for now. The Atlantic City Council took action last fall to rescind a 100 percent smoking ban in favor of a compromise that allows for casinos to permit smoking on 25 percent of the floor. “We firmly believe, as has been borne out in other jurisdictions that have imposed smoking bans, that a total smoking ban in Atlantic City casinos would affect our ability to compete with our regional competitors that permit smoking, notably Pennsylvania and Connecticut,” Corbo explained. “The diversion of Atlantic City customers to these other gaming jurisdictions where smoking is permitted would result in the loss of thousands of jobs citywide, both in casinos and other businesses that support casinos, as well as further declines in tax revenues and other key economic indicators.” And that is something that the state can’t afford to let happen.

Corbo says that, without a doubt, for New Jersey to recover from the recession, the casino industry in Atlantic City will have to play a big role. “Fortunately, this belief is shared by our state’s government leaders who believe that it would be beneficial for the state’s leaders and business leaders to continue to coordinate and work cooperatively to meet the challenges that we currently face,” he said. “While there is no silver bullet, there certainly is an opportunity to make some significant mutually beneficial changes that might not be possible without the impetus of the economic crisis that is impacting both the private and the public sectors.”

NEW JERSEY AT A GLANCE
Types of Gaming: Commercial land-based casinos
Year Legalized: 1976
Casinos in Operation: 11
Issues to Watch: Online poker, economic recovery
Smoking: Permitted on 25 percent of casino floor

Oklahoma

David Qualls
Executive Director
Oklahoma Indian Gaming Association

Gaming in Oklahoma got off the ground in 1983 when pari-mutuel betting was legalized. In 1986, the Oklahoma Indian Gaming Association (OIGA) was established with 26 Indian nations. The state’s next biggest gaming milestone came in 2004, when the State-Tribal Gaming Act was passed, establishing a state lottery and allowing EGMs at horse tracks. Also that year, the Oklahoma Education Lottery Act and Oklahoma Lottery Commission made way for lottery proceeds to be used for education purposes in the state, and the state legislature established a model gaming compact—essentially a “pre-approved” offer to allow tribes to operate Class II and Class III machines. Today Oklahoma’s Indian tribes contribute more than $1 billion to Oklahoma’s economy annually.

According to David Qualls, chairman of OIGA, “Oklahoma gaming, for the most part, is at its growth peak. Many facilities are finishing their expansions. However, there aren’t any new expansions planned as the state’s marketing areas are established and mature.”

Additionally, the state’s gaming industry seems to be coping with the economic downtown less severely than others are. Qualls says this is because Indian gaming is a solid economic base for not only the tribes but also for the communities they serve. The health oil and gas industry also contributes to Oklahoma’s resilience against this downturn.

Likewise, the NIGC’s new MICS don’t seem to be causing any problems. According to Qualls, the Oklahoma tribes welcome effective regulatory procedures that solidify the integrity of operations for tribes and their patrons.

The industry, however, is not without a few issues. Qualls said the state, because its casinos are primarily Indian-owned, still contends with the misconception that tribal operations may not be as secure or as professional as non-tribal operations. Qualls also expressed concern over the Oklahoma Supreme Court’s recent ruling that the state court system has “competent jurisdiction” over tort claims arising from casinos that have Class III compacts, a ruling that is detrimental to tribes’ ability to exercise their sovereign rights in their own jurisdiction.

Nonetheless, Qualls says: “Gaming in Oklahoma has a stable future because of the positive community relationships that have been fostered between the tribes and the communities they operate within. Additionally, the tort claims legislation in the compacts with the state must be addressed and clarified to protect the tribes’ rights as primary benefactors of Indian gaming as directed by Congress through the Indian Gaming Regulatory Act.”

Pennsylvania

Gregory Fajt
Chairman
Pennsylvania Gaming Control Board

Pennsylvania’s young jurisdiction is still very much in growth mode, according to Gregory Fajt, chairman of the Pennsylvania Gaming Control Board. Nine casinos have already opened their doors, three of them in 2009, and two more may be on the way for 2010. “We’re in a growth mode, and things have been going very well for us,” Fajt said.

This trend may continue as legislation to allow table games in this slots-only jurisdiction continues to wind its way through the state Senate and House. If the bill is passed, which is likely, Fajt said it will be about six to nine months before the games will be up and running in the state’s casinos. During those months, the PGCB will write and approve regulations; approve additional employees, equipment vendors and manufacturers; approve and oversee the change of the casinos’ gaming floors; and hire additional staff for its own offices.

But even without table games, Pennsylvania’s slots have been holding their own, generating $3 billion for the taxpayers of the Commonwealth. According to Fajt, the gaming industry has also generated 16,000 additional jobs in Pennsylvania—8,000 permanent living wage jobs at the casinos and another 8,000 construction jobs to build the casinos. “We think with the advent of table games the operators will be adding another 6,000 employees,” he predicted. “At the end of the day, we’re going to have 14,000 full-time casino employees in the Commonwealth of Pennsylvania. In this [economic] environment, we think that’s a win-win for both the Commonwealth and also the citizens of the Commonwealth.”

The down economy certainly hasn’t affected Pennsylvania casinos as much it has other jurisdictions, and Fajt reports that its revenues are actually increasing, including a growth of 32 percent in gross terminal revenue from October 2008 to October 2009. “Truth be told, as we’re adding casinos, you would expect that revenue number to go up because you have more casinos on line this year than you had last year,” he said. “But even when you dig a little deeper and look at casinos that were open a year ago versus how they’re doing now, those casinos continue to show an increase, which we find very encouraging.”

“I always say that the dirty truth about Pennsylvania is that Pennsylvanians like to gamble,” Fajt added. “I think that Gov. Rendell realized that very early on and made the tactical decision that we should open up casinos in Pennsylvania to keep our folks who like to gamble in Pennsylvania. And I’ve always said I’d rather build roads and bridges and reduce property taxes and support economic development plans in Pennsylvania with Pennsylvanians’ money than send that money out of state. That’s exactly what we’re doing.”

In this regard, gaming in Pennsylvania has been a rousing success. Fajt said that state legislators had been talking about lowering property taxes for 30 years—literally—without being able to find a workable solution. Until casinos got the go-ahead. Now, in just the three years since the first casinos opened their doors, the average Pennsylvania homeowner has saved $200 per year on property taxes—with more relief expected as more properties open for business.

Casino revenue has also contributed to supporting the horse racing industry; economic development, including a new hockey arena for the Pittsburgh Penguins and an addition to the Philadelphia convention center; to local and county governments where a casino is located; and to the Commonwealth’s volunteer fire departments.

As the market continues to mature, Fajt said the board’s biggest task is to ensure continued growth and to make the addition of table games as smooth as possible, if and when the legislature gives the OK.

PENNSYLVANIA AT A GLANCE
Types of Gaming: Land-based Commercial, racetracks, slots
Year Legalized: 2004
Casinos in Operation: 9
Casino Employees: 8,346
Issues to Watch: Table games legislation, growth
Smoking: Permitted on 50 percent of casino floor

Washington

W. Ron Allen
Chairman
Washington Indian Gaming Association

Despite a long line of governors who have not been too keen on gaming and the economic woes facing the nation as a whole, Washington’s Indian casinos are actually faring pretty well. In fact, W. Ron Allen, chairman of the Washington Indian Gaming Association and chairman/CEO of the Jamestown S'Klallam Tribe, said the current state of gaming is strong. “You’ve got to look at it from the perspective of the tribes first,” he explained. “Even though the current and recent past governors are not supportive of the gaming industry, they have been very respectful of the tribes’ sovereignty and our unique governmental rights. And if the gaming activity is legally authorized in the state, the tribes have recognized our right to engage in the gaming.”

Even better, the state has also recognized that gaming is a primary revenue source for tribal government operations and has not tried to tap into that money to solve its own budgetary problems. “I think that is exhibiting incredible discipline and respect that the tribes’ governmental and program needs are proportionally far greater than the state’s,” Allen said. “And that it would be inappropriate for them to try to tap into the tribes’ industry to offset their needs.”

Allen also finds strength in the state’s “phenomenal” gaming growth over the past 15 years, which he believes puts the dips of the past year and a half into perspective. “It is still healthy,” he said of the state’s gaming industry as a whole. “You have to recognize it as healthy; it just means that as business entities, the tribal governments and the state government have to tighten up their budget ships in terms of what their expectations are for the industry’s revenue capabilities.”

“The recent dip … isn’t alarming,” he added. “It’s just an economic downturn in the cycle.”

Nonetheless, there are casinos that are down as much as 30 percent or 40 percent, and one casino has shut down due to major drops in their numbers exacerbated by market saturation and prohibitive costs. Still, Allen finds the positive in the situation: “They’re reviewing their operations in terms of, do they have excess FTEs?” he said. “Are they spending their money the best way with regard to marketing and customer relation techniques? They’re asking all those kinds of questions and becoming better business managers. … The businesses themselves are becoming stronger. They’re becoming better managed. The managers are becoming more astute and becoming more mindful of watching their dollars and cents.”

One area of concern, however, is finding the appropriate balance of oversight between tribal regulatory agencies, the state regulatory agency and the national regulatory agency, and creating a dialogue with the state by which to achieve it. “There’s a delicate balance,” he said. “And although many will say that the tribes are the primary regulator, they act as if they’re not, and as if they’re overseeing them. That’s not their role.”

“Our tribal regulators are protecting the integrity of the game to the public’s interest, and we are taking the responsible actions to manage our operations appropriately, with full accountability,” he added. “As long as we’re compliant with those regulatory expectations and requirements, the state and federal governments should be fine. There is not a need to duplicate and create excessive regulatory bureaucratic oversights.”

Meanwhile, Allen reports that the majority of the tribal operations are still looking for ways to expand. “They’re not sitting still,” he said. “Many of the tribes have taken the economic, philosophical approach that they’re going to tighten up their ship, but they’re going to keep looking for better ways to do business, so they come out of this recession stronger and more aggressive and become more competitive with any venues out there that they would be competitive with, whether it’s the gaming industry or the hospitality industry.”

And if all of Allen’s optimism sounds out of place in this economy, at least it is not unfounded. “I really do think that the tribal properties that are already out there are going to continue to grow and get better,” he said. “Every tribe that I know of is looking for ways, not only to make the property stronger, more customer sensitive, but they’re also looking at ways they can diversify and broaden out their economic base. There’s lots of reasons to be optimistic for our future.”

WASHINGTON AT A GLANCE
Types of Gaming: Card rooms, pari-mutuel, state lottery, tribal, charitable
Casinos in Operation: 127
Issues to Watch: Tribal business expansion
Smoking: Permitted on tribal land