Caesars signs up for one project, drops out of another

Wednesday, Feb. 18, 2004 | 11:20 a.m.

Caesars Entertainment Inc. of Las Vegas has signed a preliminary agreement with a Central California Indian tribe to develop and manage a $200 million casino near the tribe's reservation. The company also has withdrawn a bid to develop a resort casino in Central Indiana, saying the deal would have cost too much.

In a recent letter to the Indiana Gaming Commission, Caesars Entertainment said "growing community expectations for the project would require an investment that is too large to afford the company an opportunity to earn a reasonable return on its capital." The company also said it would not be able to achieve anticipated cost savings from combining some operations with its existing Caesars Indiana riverboat casino.

Three remaining bidders remain for a casino license in French Lick, Ind., a town that aims to rebuild its declining resort industry.

"We greatly appreciate the enthusiasm, warmth and kindness shown to us by the people of Orange County (Ind.), and we wish them much success as they continue their plans for the growth and development of their communities," Caesars Entertainment Executive Vice President and General Counsel Bernard DeLury Jr. said in a letter to the commission.

Caesars' pullout may benefit the three remaining bidders on the license, including an investment group called Tranchant Indiana, Trump Hotels and Casino Resorts and Coast Casinos Inc., which is affiliated with an investment group led by Indiana Pacers President Larry Bird. Tranchant Indiana is affiliated with Groupe Tranchant, a French company that operates more than 20 casinos in France and other countries.

In California, plans detailed today with the Big Sandy Band of Western Mono Indians call for a casino on more than 215 acres 10 miles northeast of Fresno. The casino would include 250 to 300 hotel rooms, more than 75,000 square feet of casino space, at least 2,000 slot machines, about 20 table games, restaurants, retail shops, entertainment areas and meeting space. The gambling space would be on a 40-acre parcel of land that was granted to a tribal member decades ago and has been passed down for generations.

The Big Sandy Band tribe approached a few companies with plans to expand its gaming operations and was passed up by Harrah's Entertainment Inc., which believed the deal was too small, Tribal Administrator Ric Contreras said. The Caesars Entertainment brand was a deciding factor for the tribe, he said.

"That was an honor for the tribe to be ... accepted by a company with that many brands that are recognized throughout the world," he said.

The management agreement between Caesars and the tribe requires the approval of the National Indian Gaming Commission. The Big Sandy Band also would have to amend its existing compact with the state or negotiate a new one to operate a second casino.

The tribe operates the Mono Wind Casino, a small property with about 300 slot machines in a more remote location further from Fresno. It will wait until the new casino is under way before deciding the future of the existing property, which generates some $15 million a year, Contreras said.

The casino will take about 18 to 24 months to build following approvals from the National Indian Gaming Commission and the state, Caesars spokesman Robert Stewart said.

The tribe is a step ahead of others that don't have a reservation or other tribal lands available for casino development, Contreras said. Still, the approval process could take at least a year, he said.

While some locals may no doubt emerge to oppose the casino, he said, the tribe expects to work closely with the community and also help to expand a road that would lead to the new casino and an existing tribal property, the Table Mountain Casino.

The Caesars brand was a strong selling point for the tribe, he added.

"We've had the best little casino in northwestern Fresno County for the longest period of time. Now it's time for us to expand and deal with a brand name company," he said. Caesars also has contacts and experienced managers to make a resort casino work, he said.

"We developed very quickly a very close and trusting relationship ... with the tribe," Stewart said.

Caesars is discussing other deals with tribes and other entities in California and beyond, he said, declining to elaborate.

"We view California as ... an area we need to be in," he said. "We think we have unique destination resorts (in Las Vegas but) want to take advantage of the growing market in California."

Fulcrum Global Partners casino analyst Joe Greff said the deal could generate from $16 million to $40 million in annual fees for Caesars, or from 3 to 8 cents per share in profit. The agreement "poses virtually zero risk" for the company and requires "little" capital investment, he said.

The casino would be located within 40 or so miles from four other tribal casinos, including the Palace Casino the Eagle Mountain Casino and the Chukchansi Gold Resort & Casino. It would be the second located closest to Fresno, a city of more than 1 million people.