Casinos feel the squeeze

LINCOLN, California – The Thunder
Valley casino, outside Sacramento, has all the trappings of a modern gambling
resort: endless rows of slot machines, a high-end spa offering gold-leaf
facials and the type of performers – Tony Bennett, Peter Cetera – for whom
casinos were seemingly invented.

But ask Ken Lawson why he brought his
father, George, here on a recent afternoon, and his answer has nothing to do
with shows, slots or service.

“It’s just a shorter drive,” said
Lawson, who lives in the nearby suburb of Rio Linda.

Like many, Lawson favours California
convenience over old-school Nevada glitz. A decade after California voters
expanded gambling on tribal lands, Indian casinos here have slowly been
squeezing their competition across the border by building increasingly
elaborate – and exceedingly accessible – gambling centres along the major
freeways leading from the Bay Area and the Central Valley over the Sierra

The result has been a prolonged slump
for many of Northern Nevada’s gambling towns. In Reno, “the biggest little city
in the world,” gambling revenue has declined in 30 of the last 37 months,
according to Michael Lawton, a research analyst with the Nevada Gaming Control
Board. And while the recession has certainly taken its toll on gambling
nationwide, experts say the problems have more to do with proximity than

“Less people are coming over the
hill,” said Frank Streshley, chief of the tax and license division of the
Gaming Control Board.

In Reno, total gambling revenue is
off 25 percent since the spring of 2007, according to David G. Schwartz, the
director of the Center for Gaming Research at the University of Nevada, Las
Vegas, while other nearby towns on Lake Tahoe have seen declines of more than
40 percent.

Frank J. Fahrenkopf Jr., president
and chief executive of the American Gaming Association, the casino industry
lobbying group, said the effect on Reno and nearby cities is particularly
profound when snow shuts off the mountain passes.

“I’ve been under a car many times
putting chains on,” said Fahrenkopf, who grew up in Reno. “I can’t think of
another market anywhere in the United States that’s been hit as hard as
Northern Nevada by the spread of Native American gaming.”

Congress set up the statutory basis
for the regulation of Indian gambling in 1988, and in 2000, California voters
passed a ballot initiative that allowed slots and house-backed card games like
blackjack on Indian land. (Before that, only so-called Class II games –
primarily bingo and poker – were permitted.)

Since then, the state has become the

Indian gambling market in the
country, with estimated revenues of $7.3 billion in 2008, according to Alan P.
Meister, an analyst with Nathan Associates, an economic consulting firm. And at
least some of that growth has to do with convenience.

And while early tribal operations may
have been little more than small, bland card rooms, recent renovations are
enhancing properties throughout Northern California. Over the last two years,
several tribes have added hotels and event centres and have expanded floor

More than such amenities, though,
what California casinos seem to be banking on is location. Thunder Valley is
owned by the United Auburn Indian Community, which is made up of Miwok and
Maidu Indians. It expanded to 18,581 square meters of gambling space over the
summer, adding a steakhouse, a 300-room hotel and a cabana-ringed pool. The
casino sits in the middle of a patch of browning farmland, flanked by a few
lonely ranch houses and a nearby landfill, but is also just minutes off
Interstate 80, a well-traveled corridor between the Bay Area and Reno.

To the south of Thunder Valley is the
hulking Red Hawk casino, opened by the Shingle Springs Band of Miwok Indians
just outside Sacramento in December 2008. The opening caused traffic jams along
Highway 50, a main east-west route to South Lake Tahoe from which the casino
has its own exit.

Meanwhile in Reno, several casinos
are out of business or have been closed for extended periods in the city’s
downtown, where low-rent motels sit near a new minor-league ballpark and the
National Bowling Center.

With fewer Californians at the
tables, many Reno casinos are now focusing on local players, using loyalty
cards, inexpensive entertainment and direct mail and e-mail offers. And while
the Reno downtown district still has clusters of casinos – something the
California tribes, almost all single-casino operations, do not offer – the most
successful casinos in Reno offer more basic suburban amenities.

“Good parking, well-lit floors, good
security and easy access have become more attractive for local clientele,” said
William Eadington, director of the Institute for the Study of Gambling and
Commercial Gaming at University of Nevada at Reno.