Tribal Casino Lowers Gambling Age

UpperMichiganSource.com reports that the Little Traverse Bay Band of Odawa Indians has lowered the minimum gambling age at its Odawa Casino from 21 to 19. The change should be implemented by the end of the year.

It is apparent that there was no restriction from the State in order for the tribe to make this operational change to the casino on its tribal lands. However, the change did have to go through the tribal council. The Little Traverse Bay Band of Odawa Indians Tribal Council passed the bill and it was signed into law by Tribal Chairman Ken Harrington.

Since legal age of adulthood is 18, it may be only a matter of time for minimum gambling ages to be lowered to 18. In several jurisdictions, you can play the state lottery at 18, but not in a casino until 21. So, the age restriction for casinos may not be as much in order to protect innocent youth as opposed to the providing the state lottery the best chance to grab as much money out of a young adult's wallet.

It would be expected that tribes that have this latitude to change the minimum age to gamble to eliminate this state advantage, but not to lower the age below 18. Generally, the minimum age to gamble is in the 18 to 21 range, although in Missouri, a person as young as 16 can play charity bingo.

Arizona Tribal Gaming Revenue Stablizing

Unlike the continuing trouble with Nevada gaming, the tribal gaming properties in neighboring states are somewhat stable. Casino Gambling Web reports that current gambling revenue for the quarter will come in at around $22 million, about 1% higher than the same period last year, reversing the declining revenue trend of the last couple of years due to the economy.

The tribal properties in Arizona pay differing tax rates, depending on their compact with the state. The article states that there are 22 tribal gaming properties in Arizona, with each property paying a tax rate that varies between 1% and 8%, again depending on the compact.

Since Arizona stirred up controversy and a boycott due to its illegal immigration law, that seems to have not had a huge negative impact on gaming revenues.

California Tribal Gaming Now Even More Competitive with Northern Nevada Casinos

This blog has discussed the threat to Reno and Tahoe casinos from California-based tribal gaming properties. The key advantage of the tribal casinos is that the tribal properties are much closer to the California population centers than Reno and Lake Tahoe. The New York Times has an article that highlights the proximity advantage as well as the upgrading of the tribal facilities to become more full-amenity hotel casinos.

I've posted a similar sentiment to the Times article a few months back. That post can be found here. The most controversial post on this blog regarding the topic can be found here. Specifically what do Reno and Lake Tahoe do to combat full-amenity tribal hotel casinos that are located much closer to California cities? In the last referenced post, I discussed that Nevada casinos may need to exploit the two things they can offer that California casinos can't - sports betting and legal brothels. Sports betting probably won't generate the level of revenue to make up for lost slot revenue, but legal brothels may be enough of a differentiator to pull sufficient traffic to the Reno and Lake Tahoe properties to hold their own. Right now, Reno and Lake Tahoe are hurting to the tune of a 25% decrease in gaming revenue since 2007.

The article describes that Reno properties are becoming more akin to the casinos that cater to the locals market, similar to how Stations Casinos operate their Las Vegas properties. The problem is that there may be too much casino capacity in Reno compared to the approximately 250,000 population base. In addition, the locations of the various Reno properties are not as well positioned as the suburban-located properties in the Las Vegas area.

Further Evidence Smoking Bans Harmful To Gambling Revenues

Several months ago, I posted on the topic of smoking bans playing into the hands of online gambling operators, to the detriment of land-based casino operations. The data from Illinois showed gambling revenues down approximately 20% after the smoking ban took effect. Montana has recently implemented a similar ban and the gambling revenue impacts are similar. According to the story by MontanaNewsStation.com, gambling revenues across the state are down 16% to 18%, just after one month. This is in line with the experience from Illinois casinos.

In my original post, I made the point that online gambling venues may benefit as if someone could smoke in their home and gamble might be a more attractive option than traveling to a smoke-free casino. Play the same games at home and smoke if you want.

In Montana, the competition can be online gambling, but a more clearly defined alternative is the tribally-owned casino in Montana. Tribally-owned casinos are exempt from the smoking ban as reported by the Flathead Beacon. According to a related story by the Great Falls Tribune, "some businesses on the state's Indian Reservations, which are not subject to the Montana Clean Indoor Air Act, are now marketing to people who like to have a cigarette with their cup of coffee, meal or adult beverage or while gambling - indoors."

What Montana has done in addition to eliminating smoking in more indoor venues is actually provide a sustainable competitive advantage to the state's tribal casinos, to the detriment of the other gaming competition. That likely wasn't an objective.

Most legislative bodies are chock full of lawyers. But like most lawyers, there is one law that they haven't been schooled in and continually run afoul of - the law of unintended consequences.

Tribal Gaming Is Good, But Not Invulnerable

The Kitsap (WA) Sun had a story back on September 28th that reported on the closing of the inaccurately named Lucky Dog Casino, owned by the Skokomish Tribe. It wasn't a large property, but even the modest employee base of 120 people losing their jobs is very sad. The casino management is stating the closure is just for the winter, but with the economy in its current state, there are no guarantees for next spring.

Management is pointing to the economy as the key driver of the closure. The general manager is quoted as saying, "people who used to come in three times a week were coming in three times a month." That's a very telling indicator regarding slowing patronage. With their winter slow season approaching, that was the final straw to move to close.

Not all tribal casinos in the state are doing that poorly. Net revenue for 2008 was $2.11 billion vs. $1.96 billion in 2007, according to state gambling commission records. It is possible the Lucky Dog may have had issues other than just the economy.

The story further reports that certain gaming products, such as lottery, are holding up well in the economy. Other products, like bingo and card rooms, are suffering. This recession is putting to rest the notion that gaming is a recession-proof industry.

Tribal Gaming Important Economic Engine

The gaming industry definitely has an impact on the US economy. This post will focus particular attention on the impact of tribal gaming. Gaming is generally on a for-profit basis with exceptions for certain charitable organizations, e.g. church bingo. One could claim that the church is definitely a for-profit enterprise, but I'll leave that argument aside.

Tribal gaming proceeds are applied to improving the general welfare of the tribes. Typical areas of focus are law enforcement, health care, education, water and housing. Specific guidelines are outlined in federal law, the Indian Gaming Regulatory Act.

According to the National Indian Gaming Association 2008 economic impact report, tribes:

• generated almost $26 billion in gross gaming revenue
• generated over $3 billion in related hospitality revenue (lodging, F&B, etc.)

which in addition to helping the economic and quality of life of the tribes:

• $150 million to local charities
• $100 million to local governments
• $2.5 billion to state governments
• $8 billion to the federal government

Oh, and not to be underestimated, tribal gaming directly and indirectly support 636,000 jobs nationwide. To put in perspective, that number of jobs is comparable to the total employment of the US Postal Service.

Some states are particularly impacted by Indian Gaming. A recent editor's letter in Casino Journal magazine reported that the two major tribal casinos in Connecticut, Foxwoods and Mohegan Sun are responsible for 12% of the entire state's job growth since 1992! Also, just these two Indian gaming properties are contributing 60% of what the state of Connecticut receives in corporate tax revenue. Would you think that just two tribal casinos would have that large of an economic impact to a state? Huge impact.

In addition to providing revenues to charities, local, state and federal governments, tribal gaming provides revenues to help tribes help themselves develop after centuries of oppression and neglect. A true win-win.

References:

IndianGaming.org (2009). The Economics of Indian Gaming. Retrieved September 14, 2009, from: http://www.indiangaming.org/info/pr/press-releases-2009/NIGA_08_Econ_Impact_Report.pdf.

Rutherford, J. (2009, September), A sharing problem, Casino Journal, 4.