Views mixed on effect of tribal casinos on Nevada

Scott Sonner

Thursday, Dec. 12, 2002 | 9:27 a.m.

RENO -- Indian gambling in California could soon overtake Nevada's casino industry and devastate some markets, experts warned Wednesday, though others said the tribes were merely developing more customers.

Leaders of Nevada's tourism industry heard a mixed message about how much they should fear the rapidly growing number of tribal casinos in neighboring California and Arizona.

The gambling industry's top lobbyist said the competition could prove "devastating," especially in Northern Nevada. But others said Nevada has unique advantages and its casinos will benefit because gambling opportunities elsewhere will breed new players.

"I think there's room for everybody in California and Nevada," said Anthony Miranda, secretary of the California Nations Indian Gaming Association.

"I think we should be working for partnerships because Indian gaming is going to grow," he told Nevada's 19th annual Governor's Conference on Tourism.

A half-dozen tribal casinos being developed in Northern California will be "important and significant competitors in the Northern Nevada market," said Bill Eadington, an economics professor who directs the Institute for the Study of Gaming at the University of Nevada, Reno.

"In Reno, the question is, will the patient survive?" he said.

"Will we in Northern Nevada be clever enough to come up with new strategies?"

California tribal casinos brought in an estimated $5 billion last year -- half of Nevada's nation-leading total of $10 billion, Eadington said.

"California Indian gaming likely will grow to exceed Nevada in the next 10 years," he said.

Tribal casinos in Arizona brought in about $1 billion -- about the same as the Reno-Sparks-Carson City market -- and it's "not inconceivable that could double in the next four or five years," given expansion approved in the November elections, he said.

Eadington said he's most impressed with the "rapid rate of change in the market."

In just three years, tribal gambling has gone from "Quonset huts or tents or warehouse-style buildings" to casinos "characteristic of those in Nevada," he said.

"Three or four years ago they were primarily self-financed. Right now, at least in California, the biggest financiers are a couple of people named Wells Fargo and Bank of America," he said.

Frank Fahrenkopf Jr., who lobbies Congress for casinos as president of the American Gaming Association, said he's been warning his former home state of Nevada for seven years about the very real threat of tribal casinos.

"It's devastating, but it's not the end of the world," he said, joining the call for Nevada to play to its strength and emphasize other recreational and entertainment offerings.

Nationally, tribal casinos in 29 states grossed about $12.8 billion in 2001 and non-tribal casinos in 11 states grossed about $25.7 billion.

"Indian gaming has had tremendous growth. All over the United States, tribes are trying to get recognized," Fahrenkopf said.

Jim Baum, corporate director of development for Harrah's Entertainment, said such growth has been a "double-edged sword" for his company.

Harrah's is operating casinos for tribes in California and other states with about $400 million in investments, compared with its $2.4 billion invested in seven Nevada casinos.

"Fighting growth of Indian gaming is a futile battle," Baum said.

"We should not fear continued growth in California. To the contrary, it could prove to be a benefit," he said.

"If new gaming customers are created in California and Arizona, that's great news for Nevada because those are our two biggest feeder markets."

Miranda said tribal casinos develop gamblers.

"They view us as a place to come and practice. They say, 'We're going to Las Vegas,' or 'We're going to Reno,' " he said.

"We're basically a locals market. We don't have the density you have. We don't have the amenities to draw people in ... You have a tremendous advantage over us on that."

Eadington agrees new customers will provide "some offset," but said research indicates "a casino closer in to a major market takes business from one further away as long it as viewed as similar."

And the largest tribal casinos planned in Northern California, including one at Auburn, are "similar to what is in Northern Nevada and Reno," he said.

"We are going to lose some (business to California). The question is how quickly and how significantly."