MGM MIRAGE signs Indian casino deal

By Liz Benston (contact)

Thursday, Sept. 12, 2002 | 10:54 a.m.

Las Vegas Strip resort operator MGM MIRAGE has signed an agreement with the Agua Caliente Band of Cahuilla Indians to help the California tribe develop a casino in downtown Palm Springs.

The agreement marks the casino giant's first foray into Indian gaming, though the company is pursuing other arrangements with tribes nationwide.

Unlike deals other major casino operators have struck with Indian tribes, MGM MIRAGE won't manage the casino but will serve as a consultant, offering design and development assistance.

"They are very capable people and very sophisticated people," MGM MIRAGE Chief Executive Terry Lanni said. "They wanted us to merely help them in the area of design and development."

The consulting project will be spearheaded by MGM MIRAGE Development Inc., a business unit that was created when the development departments of MGM Grand Inc. and Mirage Resorts Inc. came together following the merger in 2000. The unit is headed by Ken Rosevear, who previously served in a consulting capacity for the company until assuming a full-time position as president last month.

The tribe owns the upscale Spa Resort Casino on nine acres in downtown Palm Springs and the Agua Caliente Casino, a locals' casino, off Interstate 10 near Rancho Mirage.

It expects to build a new casino across the street from the existing Spa Resort Casino. A separate hotel will later be demolished and replaced with a new structure.

The opportunity to develop a relationship with Agua Caliente tribe, a pre-eminent tribe in California, prompted MGM MIRAGE's interest, company spokesman Alan Feldman said.

The company will receive a "modest" consulting fee that will be based on the project's construction cost, which has yet to be determined, Feldman said.

A tribal attorney, who declined to be named, said details on the casino project have yet to be determined and will depend on initial input from architects and consultants. The timeline of the project also hasn't been determined.

The federal government deeded land in trust for the Agua Caliente tribe in 1876. Of the reservation's 52,000 acres, about 6,700 acres lie within the city limits of Palm Springs, a longtime getaway for Southern California's rich and famous.

The 2000 passage of California's Proposition 1A, giving tribes the exclusive right to operate Las Vegas-style casinos in California, has emerged as a significant competitive force to Nevada's casino industry. More than 60 tribes have since signed compacts with the state to operate casinos, according to the California Nations Indian Gaming Association.

"I think all these things that people look at as threats are really opportunities," Lanni said. "The ability to add our brand where it might make sense in that marketplace should enhance what we have here in Las Vegas, and it wouldn't be to the detriment of those operations here."

Las Vegas Strip operators Harrah's Entertainment Inc. and Park Place Entertainment Corp., along with Las Vegas neighborhood casino operator Station Casinos, have all signed deals to manage casinos for Indian tribes. Sheldon Adelson, owner of The Venetian, is looking at Indian gambling opportunities.

Other companies say they are neutral on such opportunities because of their short-term business potential.

Federal rules limit management contracts to just a few years, after which some tribes choose to run their casinos themselves.

MGM MIRAGE is pursuing arrangements with other tribes nationwide, Feldman said, declining to reveal specifics.