Fallout: The Financial Crisis

Indian casinos unlucky in recession

Marketplace Staff Jan 26, 2009
Fallout: The Financial Crisis

Indian casinos unlucky in recession

Marketplace Staff Jan 26, 2009


KAI RYSSDAL: One of the underlying fundamentals of this economy — and to be honest it’s both in part a cause and an effect of the slowdown — is the change in what consumers are doing with what disposable income they have. They’re saving it for the essentials. Things like food and rent. They’re not so inclined to let it ride on a roll of the dice. Alex Cohen reports on Indian casinos wishing their luck would change.

ALEX COHEN: It’s a weekday afternoon at the Agua Caliente Casino in Rancho Mirage, Calif. There’s barely a soul in the high rollers room, and not much traffic at the 1,400 slot machines.

NANCY CONRAD: I would say the numbers show that we’re probably down, say, 10 percent — something like that — businesswise in the casino.

Nancy Conrad is the spokesperson for the Agua Caliente band of Cahuilla Indians.

CONRAD: People are not dropping as much money into the slot machines because everyone is cautious and we certainly understand that.

Throughout the country, many tribes are reporting similar declines.

Mitchell Etess is the president and CEO of the Mohegan Sun Casino in eastern Connecticut. He says the casino saw steady growth since it first opened in 1996 — until now.

MITCHELL ETESS: We just last year had the first time that our slot revenues were down.

To deal with the drop in business, the Mohegan Sun casino recently announced it will cut the salaries of all 9,800 employees.

ETESS: Vice presidents and above received a 10 percent rollback, managers-directors received a 7.5 percent rollback, and line employees received a 4 percent rollback. It’s been very, very well-received by our employees. They’re very happy that we took this step rather than eliminating jobs, which has really been the order of the day around Connecticut.

Several tribes have had to eliminate jobs. Just last week, the Little Traverse Bay bands of Odawa Indians in Michigan laid off 80 employees. These sorts of cuts have ripple effects throughout local economies and Native American communities.

At the government headquarters of the Agua Caliente Band, tribal member Sean Milanovich sings a traditional song in the Cahuilla language, a language he teaches to the community.

SEAN MILANOVICH: The language is taught to whoever wants to learn. We have kids that are 2 years old, on up to 70-plus.

Milanovich’s classes and several other cultural preservation programs are funded by casino revenue. With the recent drop in business, they’ve had to start making cuts. And that, Milanovich says, has left him feeling . . .

MILANOVICH: . . . I’m sad. It hurts to cut back on some of these things.

The tribe is doing what it can to prevent further reductions. They’ve been offering rooms for $89 a night at the casino’s resort hotel. And next month, they’ll open a theater there with concerts by Billy Joel and Tony Bennett.

But in an economy like this, some Indian leaders are wondering if investing in entertainment is the best course of action.

Veteran gaming consultant Michael Lombardi currently works with the Augustine Casino in the southern California desert.

MICHAEL LOMBARDI: I think in these next difficult months ahead those tribes that are well-managed will survive.

This month, Lombardi spoke at a gaming conference where he advised tribes from throughout the Western U.S. to diversify their investments beyond gaming.

LOMBARDI: For the tribe I work for, the Augustine band, on February 11th we will hold a ribbon cutting for our 40-acre solar park, a solar-energy park that is generating 1.5 kilowatts of power. It would drive 250 homes.

Lombardi says adaptability is a key trait of most tribes, and something that will come in handy now.

LOMBARDI: We’ve been here for probably 29,000 years, and by the grace of the Creator we’ll be here another 29,000 years, despite what’s happening in the economy today.

I’m Alex Cohen for Marketplace.

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