Gaming troubles on South Shore

3/09 unedited Tahoe Mountain News

By Kathryn Reed

Gamblers say there is no such thing as a sure bet. Now the gaming establishments are starting to say the same thing – except for perhaps Red Hawk in Shingle Springs.
Each quarter profits keep declining for Nevada casinos. For a state that counts on that revenue (it doesn’t have income tax) to bankroll most of its expenses, the affects are looming seemingly as large as the fiscal mess in California.
It’s not that gamblers are winning more. The problem is not enough people are bellying up to the green felt or one-armed bandits. This in turn means layoffs.
Harrah’s-Harveys, both owned by Harrah’s Entertainment in Las Vegas, have laid off hundreds of workers since the start of the year. Housekeepers, kitchen staff, accounting personnel – all are looking for work at a time when jobs are scarce everywhere.
Harrah’s Tahoe deferred comment to flaks in Reno. They didn’t return calls.
Many of those unemployed live in California, meaning they are tapping into the Golden State’s resources. The Family Resource Center has been inundated with out-of-work casino employees needing assistance. Many of these people who had access to a health clinic at Harrah’s are likely to turn to Barton’s community health center.
Another culprit of Nevada’s woes is California’s growing Indian casino business. About 50 tribal facilities operate up and down the state, with several on the corridors into Tahoe. Red Hawk opened in December off Highway 50 and is said to be full much of the time. Thunder Valley is on Interstate 80 and Jackson Rancheria catches folks headed to Tahoe via Kirkwood.
An irony is Red Hawk is El Dorado’s largest employer with about 1,800 workers.

Red Hawk’s draw

Mark (he didn’t want his last name used) is one of those players who is either hitting Red Hawk or Thunder Valley instead of Nevada.
“It’s no fun to drive 2.5 hours after you lose. I live eight miles from Thunder Valley,” the 51-year-old Roseville resident said, even though this particular Monday he is playing at Red Hawk. “I don’t go up there anymore (he said of Tahoe).”
Marie Lucy feels the same way. The 63-year-old El Dorado Hills resident likes Red Hawk because it’s close to home. She likes saving on gas and avoiding Tahoe traffic.
With approximately 2,100 slot machines, 75 table games, six restaurants, four bars, lighted-covered parking, and an entertainment lineup that keeps growing, the incentives for gamblers to venture past Shingle Springs is minimal.
One floor is smoke-free. The smoking area doesn’t smell as bad as the big four Stateline casinos. Another plus is picture windows looking out onto the green foothills.
People – workers and gamblers – seem to be in a good mood this spring morning. A fun vibe permeates the place. The same cannot be said when walking into the Stateline casinos.
Industry officials blame Red Hawk for Stateline’s 23.7 percent gaming revenue drop in January.
This could get worse with the casino expanding its bus services. On April 11, Red Hawk will offer daily bus service from Modesto, Stockton and Lodi. It already brings people via public transit from Sacramento and the Bay Area. It’s free for rewards club members.
More than a dozen buses may swing by in a day.
Buses to Stateline casinos seem like a relic from the past.

Troubling financial times

“All I know is this has been a weak first quarter for everyone. I think the county sold us down the river with Red Hawk and kept everything on the West Slope,” said Tom Davis of Horizon and MontBleu.
Davis is referring to the $190 million the Miwok’s will pay El Dorado County over 20 years. None of that is projected to make its way to the basin.
California will take about 25 percent of Red Hawk’s slot profits for the next 20 years.
The first check to the county is expected in December on the casino’s one-year anniversary. Part of that money goes for roads, some for public safety and some is discretionary.
Supervisor Norma Santiago said the casino is requiring more money for public safety than anticipated. The county received $250,000 before the casino opened for law enforcement issues and expects another quarter million in June.
Sheriff Jeff Neves said things are running smoothly.
“From the sheriff’s office standpoint, I have actually been pleasantly pleased that the casino has not been as big of an impact as we thought it would be,” Neves said earlier this month.
Six deputies and one supervisor were hired with the projected casino money. The cash pays for an additional car to patrol the casino area 24/7.
“The casino overall has been a non-issue. I say this because from the traffic side we really thought we would see a noticeable traffic volume increase on Highway 50,” Neves said.
When deputies are called to the casino, it has been mostly for thefts. With the surveillance system in place, the culprits are apprehended quickly.
2008 was a dismal year for casinos nationwide. The American Gaming Association calculated 2008 revenue throughout the country at $32.6 billion. This is a drop of $1.45 billion or 4.3 percent from the previous year.
That association said in Nevada the revenue decline from 2007 to 2008 was $1.2 billion or 9.7 percent.
Local casinos are not faring well, though specific numbers are not available.
The parent company of MontBleu and Horizon is in Chapter 11 bankruptcy.
“We will come out stronger. All I can tell you is we are planning stuff for the summer right now,” Davis said.
Harrah’s Entertainment on March 13 reported a 13.3 percent decline in revenue for the fourth quarter compared to the same period a year ago. On March 26 the company released a statement about how it plans to restructure its debt and avoid defaulting.
When the gaming enterprise was bought by Apollo Global Management and TPC Capital in January 2008 for $30.7 billion, it included assuming $12.4 billion in debt and about $1 billion in acquisition costs.