Sin City is not worried about California Indian gaming. The combined annual revenue of Las Vegas casinos outdoes that of every American Indian casino in the country by a ratio of five to three, according to the March 2003 Harper's Index. That's not to say, however, that Vegas didn't see green when gaming facilities began popping up on American Indian reservations.
Once upon a time, the Vegas casino operators didn't see the opportunity. Prior to passage of Proposition 5, the first attempt at a ballot measure legitimizing Indian gaming, which was subsequently overturned by the Supreme Court, out-of-state gambling interests spent $26 million to oppose it.
But by the time the second ballot attempt, 2000's Prop. 1A, the opposition had very little money. The reason? Vegas, reading the writing on the wall, switched sides, and as soon as Prop. 1A passed, casino companies began signing on with the tribes under management contracts.
But if the outside investors do the job and train tribal members to run the casinos, they're likely to put themselves out of the Indian gaming business. So, the question is: What is the intended purpose of a management agreement, interim training or long-term interdependence?
Richard Schiff is the acting chief of staff at the National Indian Gaming Commission. He says self-sufficiency is an obvious goal for the tribes: “As the tribes improve their management expertise, they will need less and less to pay someone else to do it. Why would they pay someone else to do it?”
So long as they write a management agreement that meets NIGC's terms,the tribes decide who will manage their casinos.
There are at least four San Diego County tribes who have or are negotiating management agreements with Vegas-based gaming companies, Schiff says. The Rincon San Luiseno Band of Mission Indians agreement with Harrah's Entertainment Inc. has been the most successful, as evidenced in the August 2002 opening of Harrah's Rincon Casino and Resort in Valley Center. Rincon's tribal leaders and managing partners see the future of their relationship differently than NIGC.
Marty Goldman, vice president of marketing at Harrah's Rincon, says Harrah's goal is to secure an extension with the tribe by establishing a brand name value that is too strong to give up, but the way tribal chairman John Currier speaks, Rincon is just happy to be up and running.
Though the federal Indian Gaming Regulatory Act didn't pass until October 1988, the Rincon Band had been trying since 1984 to open a gaming facility, but repeatedly failed. But when Gov. Gray Davis signed a tribal gaming compact (issuing official licensees to tribes) in September 1999, the Rincon Band did what any entrepreneur with a great idea, no experience and no capital would do: they sought partners.
The Pala Band of Luiseno Indians signed with Anchor Gaming and independent casino manager Jerry Turk in 1999. Pala bought Anchor's half last year, but Turk kept his stake in the Pala Casino and Entertainment Center on the Pala reservation.
The Cuyapaipe Band is negotiating with Luna Gaming, and the San Pasqual Band is looking to Siren Gaming to bail them out of a jam.
San Pasqual Band was feeling pressure in 1999 to implement their license before the deadline, a year after the compact's signing. They tried to open Valley View Casino with First Nation Gaming and Sealaska Corp., according to a North County Times report. Even with several managers, San Pasqual could not get the casino running. Business was slow, but more devastatingly, First Nation was sued and there was an NIGC investigation into the San Pasqual tribal government, which eventually cleared. The controversy threatened San Pasqual's loans until negotiations began for a new agreement with Siren in May 2001. San Pasqual tribal chairman Allen Lawson did not return CityBeat's phone calls.
The Rincon tribe, right next door, was all too aware of the compact's expiration. Tribal leaders signed a temporary consulting agreement with Harrah's to build the interim casino where they would their house their machines while NIGC considered the more extensive management application. With approval, Harrah's took over operations and put a guarantee on the tribe's loans to build the $125 million permanent facility. Harrah's also has management agreements with Ak-Chin in Arizona, Cherokee Smokey Mountains in North Carolina and the Potawatomi tribe in Topeka, Kansas.
For their part, outside managers of any tribal casino get up to 30 percent of the net revenue-possibly 40 percent if the circumstances require, though those circumstances are on the surface ambiguous-for a period no longer than seven years. Harrah's and Rincon have a five-year agreement, in which Harrah's collects the gross revenue and writes Rincon a monthly check.
Chantal Saipe, San Diego County's liaison to the Indian tribes, confirms Schiff's idea that management agreements are designed to help tribes get started, but then fade away. “The trend, if there is to be one,” she said, “is the tribes will not renew these agreements once they've gained expertise.”
But how the tribes are going to gain this expertise isn't clear. There are no internal management-level training programs in the deal with Harrah's, Currier says, and the responsibility falls upon the tribal council to send tribal members to some sort of “casino college.”
Even assuming they do strike a management well on the reservation, is it likely that Rincon will split from Harrah's when the venture is established as Harrah's Rincon Resort and Casino, full of all the bonus and awards programs, logos and infrastructure of the parent company?
There is a risk in losing the brand recognition, Currier says. “Another option is another brand,” he says. “What's logical for the tribe is improving the deal. Harrah's took more risk up front-after three to four years, the risk is null and void, and it creates an opportunity to renegotiate the deal.”
The tribes that avoid the management track, Saipe said, opt for the less restrictive consulting agreement. “They hire expertise, but the arrangement is different, so they don't have to give up as much revenue,” she said, “and they have more control over the operation.”
For the time being, Rincon's tribal council is not concerned with who runs the casino: “Every deal has some kind of investor, and that financial backer gets some kind of cut,” Currier said. “The difference is control. What's more important now is success, more so than control. If you have control without success, what do you have?”