Casino Arizona at Salt River

Revenue Tumbles at Arizona Casinos

PHOENIX (By Max Jarman, Arizona Republic)
February 2, 2009 ― The revenue plunged at Arizona's 22 Indian casinos during the fourth quarter, as the worsening recession kept gamblers away from the tribes' gaming tables and slot machines.

Based on fees paid to the state, the casinos' combined revenue was down 16 percent, marking the biggest quarterly drop since Arizona Indian gaming was legalized in 1993.

"People are saving their money," said Sheila Morago, executive director of the Arizona Indian Gaming Association.

The casinos don't break out revenue figures on a quarterly basis.

The Tohono O'odham Nation, which operates Desert Diamond Casino near Tucson, one of the state's largest, has cut back on hiring but has not laid off any employees.

"We're down some, and we need our wages and salaries to track with our revenue," said Scott Sirois, chief executive of Tohono O'odham Gaming Enterprises.

The shortfall is adding to the state's budget woes and cutting into state programs that are supported by casino revenue.

It was the fourth straight quarterly revenue decline reported by the casinos, smashing the myth that gambling, like certain other forms of recreation, is recession-proof.

"It's a business based solely on people's discretionary income, and eventually, it was going to get hit," Morago said.

Under various compacts, the tribes pay licensing fees, 1 to 8 percent of their quarterly gross revenues, to state and local governments.

Of the 1 to 8 percent of quarterly gross revenues, Arizona gets 88 percent, with 12 percent being distributed at the tribes' discretion to cities, towns and counties.

The state's portion for the fourth quarter of 2008 was $12.8 million, compared with $15.2 million a year earlier.

The payments are based in a sliding scale, from 1 percent of the first $25 million to 8 percent of revenue in excess of $100 million.

The funds support education, trauma care, wildlife conservation, tourism promotion, problem-gambling services, and the Arizona Department of Gaming, which collects the payments and regulates the casinos.

Of the $12.8 million, education programs got $6.2 million and the Arizona Health Care Cost Containment System got $3.1 million for trauma and emergency services. That compares with $7.6 million and $3.9 million, respectively, a year earlier. Both departments are facing funding cuts to reduce the state's budget shortfall.

Gaming Department spokeswoman Seena Simon said the agency has not cut any workers.

Around the country, casino operators are laying off workers, and some, such as Las Vegas' Tropicana Entertainment LLC, have filed for bankruptcy.

Morago asserts that the Arizona casinos are not in such dire straits and have not announced any large-scale layoffs.

Still, the casinos are working hard to keep their most loyal customers with special promotions directed to their "players club" members. At Casino Arizona, loyalty-card holders get free breakfast with early-morning slot-machine play Mondays through Thursdays; Desert Diamond is offering room and meal discounts to its club members.

"We're trying to be smarter with our marketing and targeting regular customers, instead of the shotgun approach." Sirois said.