CA: Promises of casino revenue fail to pan out for state

Just a few months ago, images of smiling children, police officers and firefighters filled TV screens and mailboxes across the state, urging voters to support major casino expansions for four Southern California tribes.

Gov. Schwarzenegger and other government officials promised that the tribes would help balance the state's troubled budget with an influx of gambling dollars. The casino riches would help protect state funding for schools, police and fire departments, health care and roads, the tribes and their supporters said.

Voters approved the deals, but recent signs suggest the promises may not pan out. Deals touted as a sure-fire way to help the state weather economic slumps are now struggling themselves.

Some casinos are making less than they did before they expanded. Voters approved a total of 17,000 new slot machines for the tribes, but just a few thousand have been installed. And state officials aren't sure how much of a hit the ailing state budget will take because of the gambling decline.

The Pechanga Band of Luiseño Indians near Temecula announced last week that it is laying off about 400 workers at the Pechanga Resort & Casino, and employees say numerous other people have been fired from the resort in recent months, including many just last week.

Other Indian casinos report drops in business. The Morongo Casino, Resort & Spa near Banning cut 400 to 500 positions this year through attrition. The Fantasy Springs Resort Hotel & Casino near Indio has had attrition-related job reductions, although General Manager Paul Ryan has attributed the declines to seasonal slowdowns in the hot Coachella Valley.

The Agua Caliente Band of Cahuilla Indians, which runs a popular downtown Palm Springs casino and another one in the Coachella Valley, also has felt the economic downturn's effects, Chairman Richard Milanovich said.

The tribal gambling slump comes as lawmakers try to close a $15 billion-plus shortfall between revenue and spending through June 2009.

Gov. Schwarzenegger's May budget revision banked on $446.7 million in gambling revenue in the current fiscal year for a proposed $101.8 billion budget. In addition, the state expects to get $100 million to repay loans from state transportation accounts.

The estimates did not reflect the possibility that an economic slowdown would reduce casino activity and produce less casino revenue for the state, Department of Finance spokesman H.D. Palmer said.

In an interview with The Press-Enterprise on Thursday, Schwarzenegger denied that he and other supporters oversold the deals.

"They have to make decisions, just like we do or like businesses do anywhere else, according to what is the demand," Schwarzenegger said of the tribes. "But I think that the compacts were really solid compacts, and there will be, really, billions and billions of dollars over the next 20 years of additional revenues for the state, which the state needs very badly."

In 2004, Schwarzenegger signed new and renegotiated agreements with several tribes, which pay the state's general fund roughly $35 million annually. In addition, about $100 million from the deals is pledged to pay back loans from transportation accounts.

Schwarzenegger negotiated the second set of agreements in August 2006, and opponents put the deals on the February ballot in hopes of stopping the expansion plans. Schwarzenegger and others campaigned aggressively to get the deals passed.

Voter approval gave four Southern California tribes -- the Pechanga, Morongo, Agua Caliente bands in Riverside County plus the Sycuan Band of the Kumeyaay Nation in San Diego County -- permission to add a combined 17,000 slot machines.

Another tribe, the San Manuel Band of Mission Indians in San Bernardino County, struck a similar deal that allows it to add 5,500 slot machines.

The tribes all agreed to share profits from their 2,000 existing machines and their new machines.

Leading up to the Feb. 5 votes on the deals, Schwarzenegger and other supporters predicted they would bring in $9 billion through 2030. Critics, who had put the agreements before voters as four ballot initiatives, argued that the state's take actually could be as little as $3.4 billion.

The first payments are due Thursday. The first payments for the 2008-09 fiscal year, which began July 1, are scheduled to arrive in October.

International gambling expert I. Nelson Rose said the amount of money the tribes were expected to give the state was significant, but never was going to be enough to solve the state's problems.

"The one thing we don't know is how long this is going to be, how long this will delay those projected numbers from coming," said Rose, a professor at Whittier Law School. "Of course they're still making money, and they're just not making quite as much as they projected."

Rose said the amount of money people spend on gambling has always been closely tied to the price of gasoline -- when it costs more to travel to a casino, gamblers are less likely to go.

Rising gasoline and food prices and the crashing housing market, combined with high unemployment rates in the region, are taking their toll on people's entertainment budgets, said John Husing, an Inland economist who has studied the economic impact of gambling for tribes.

"Entertainment is something people do from their discretionary income -- money that they have available to spend on things," he said. "Clearly (casinos) are being affected by that entertainment issue."

Nonetheless, the experts don't see this slump as the end of Indian gambling in the region or a sign that the market has too many casinos.

Economist Alan Meister, who studies the tribal gambling industry, said tribal casinos face the same ups and downs as the rest of the economy.

Meister produced a study earlier this year examining the economics of the Pechanga deal and three others that were up for voter approval on the Feb. 5 ballot. The tribes paid for the report.

"We were looking at a little bit different market than we are now," said Meister, who works for the Los Angeles-based Analysis Group. "It's the luck of when you get into the market. There are things that are out of your control.

"I don't believe that the Southern California market is saturated by any means," he added. "There's room to grow. It just might not be the right time."

Bingo! People here can't just be honest about things. I've been to more than one Indian Casino and everyone was clean,sober and having a good time. No problems in the parking lots either. The Casino just outside Roseville by Sacramento is one of the nicest ones I've seen. I know one of those Indians and they get thousands of dollars a month but the way I see it, they have it coming. They spend all of that money back to California, so whats the bitch? Well, that's my two cents anyway.

Indeed. The Indian Casino in NY that I was actually at have NY State Gaming Commission Agents and law enforcement officials on the premises 24/7. The patrons there were good and decent average folks (just like me) enjoying the entertainment and themselves.

Look, I could be way off base, but I do think the funds are helping the Indians. I think the initial casino deal probably wasn’t that bad, but I reject the call to expand them.

Nobody promised the tribes an income river. They were supposed to get an income stream.

"The estimates did not reflect the possibility that an economic slowdown would reduce casino activity and produce less casino revenue for the state, Department of Finance spokesman H.D. Palmer said.

Well, why not? There's the problem right there. Any dummy would come up with an average of what good and bad times would bring in revenue.

People have less disposable income right now for all forms of entertainment, including gambling. Plus most are in pretty remote locations, and the cost of gas is hurting them. Some are offering free gas or gambling credits to get people to come.

Within the last few weeks, a long ago preplanned vacation in Palm Springs supports your contention. Visited three and found very few visitors and many machines not occupied. One casino had stands for new machines, but were not installed. Tables were very empty. (I go mainly for the buffets and little gambling) Gas was around $4.25 to $4.50. Traffic was extremely light, not like past years.

Gambling is destructive and is nothing more than a tax and most affects those who can least afford it. There is a reason why it used to be outlawed in the U.S., and not because of outdated Puritan morals, but because of the common knowledge that gambling appeals to our destructive instincts. It’s the arrogant belief that we in 2008 are smarter than our forefathers, that we pass new well intentioned laws to sponsor ideas like gambling. When it’s “for the (children, Indians, etc.)”, then we reject the wisdom of our forebears.

With each succeeding generation, it seems, we try to continue to tear the fabric of society that has made this country great.

The same in Vegas. The manager of the slot attendants at our hotel said the air fare prices “... are killing us.” I booked our flights to Vegas in March at a great price before oil prices started rising. Less people are driving from LA to Vegas as well, I was told. Our economy is about energy.

Gambling, like ANYTHING else, is destructive if one lets it to become that. I have a part-time job which I use for my gambling money. I don't think there's a problem with it. It's time for people to stop telling each other what they can and cannot do. If you don't like something, don't participate in it. It works every time.

can you post here where you are getting all of your “facts”?

I live here. My family are friends with people who get checks. I live on the street that leads to the Casino. Everyone driving to the Casino on Edison Street drives by my house. Why is the word "facts" in quotation marks? What is it that you dispute?

Look, I could be way off base, but I do think the funds are helping the Indians.

First of all, explain how 150 self-proclaimed Chumash share in the pot, while there are 12,000-15,000 (according to our local Santa Ynez Historical Society) Chumash descendants who get nothing. Secondly, are you for reparations in general, or only for people who claim to be indigenous? Finally, how do you feel about preferential treatment of minorities in general? I think racial preferences result in racial divisiveness. Why can't all races operate casinos? Why don't the Indian Casinos have to follow the same permit process and pay the same taxes as other businesses run by people of other ethnic backgrounds?

The word facts is in quotations because you don't have any. Only your personal biased opinion. My cousin is married to an Indian that is with the Thunder Valley Casino in Roseville and they get about fifty thousand a month and guess what. They spend it all right back into the economy of California. So does all the other members there. Also nothing like you describe goes on around that casino. I guess you are just unlucky that all the derelicts like your casino best.

My cousin is married to an Indian that is with the Thunder Valley Casino in Roseville and they get about fifty thousand

It sounds like you are the one with the "personal biased opinion". I used quotation marks because I was quoting you. I am throwing in the English lesson free of charge.

My assertions are about the Chumash Casino. Once again, I would like you to specifically point out a single error in what I have asserted here.

There evidently is no error as it is all in YOUR head. You see it as truth without bias or prejudice. Nothing I can do to help you except suggest you look for another house in another area where there are no dirty casinos or casino people.

Nothing I can do to help you except suggest you look for another house in another area where there are no dirty casinos or casino people.

First of all, we are the fourth generation of our family to live in our 108 year old house so we have no intention of leaving. Second of all, I never called anyone "dirty". Once again, those are your words so I am using quotation marks. I think you may need to take a deep breath and re-read my posts re; my problems with the Chumash Casino. If you would like to engage in a meaningful debate or discussion I am happy to oblige. I think the debate on these threads is very educational and it is helpful to hear from all sides.

Gambling, like ANYTHING else, is destructive if one lets it to become that. I have a part-time job which I use for my gambling money.

Gambling is for people who are bad at math, but being foolish should not be a crime. I do not think gambling should be against the law but I think every U.S. citizen should have to be governed by the same laws. That is the basis for my opposition to the so-called Indian Gaming; there is a racist double standard at the foundation of these institutions.

The Chumash Casino did not have to adhere to the local building codes, application process, business licensing, taxes, etc. of other new businesses in our county. It was built against the wishes of the overwhelming majority of the residents of this small hamlet. We have little or no recourse as citizens. Our elected officials are not able to enforce the county regulations that normally govern such enterprises. That is my concern. I have no problem with legalized gambling.

You described partially what has happened in Fresno with the Table Mountain Casino. When the tribe reconstituted in the early 80’s, the rules spelled out who is considered a tribal member. Initially, you had to own property on the mountain, or be the child of one owning property. Anyone else had to show a direct relation to someone on the last tribal manifest (circa 1950’s), and be voted in by the tribal members. Sounds OK, right. Wrong! They have refused to include as tribal members all applicants, regardless of the fact that they know them personally, are closely related to them, and they live in the immediate Prather/Auberry area. The result is about 40-50 adult members receiving all the profits. While their cousins, aunts and uncles live in trailers. That has spoiled the whole Indian gaming for me.

The result is about 40-50 adult members receiving all the profits. While their cousins, aunts and uncles live in trailers. That has spoiled the whole Indian gaming for me.

The corruption and obvious inherent unfairness is a big problem, but for me it comes down to racial preferences are never okay. I think if opening and operating a casino is legal, it should be legal for everyone and competition should occur. Anything less is un-American.

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