In The News : 2005

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Indian Casinos Up the Ante on Vegas

January 31, 2005

The recent grand opening of the Fantasy Springs Resort Casino southeast of Palm Springs wasn't just a party with chilled lobster tails and the disco sounds of Kool and the Gang. It was the latest move by Southern California tribes to transform their once-scrawny desert casinos into Las Vegas-style resorts.

The Cabazon Band of Mission Indians is the fourth tribe in Riverside County to transform its casino into a luxury hotel and casino since 2002, and other such expansions, near San Bernardino and Rancho Mirage, are on the way.

Along with slot machines and blackjack, they offer day spas, sushi restaurants, steakhouses, nightclubs and hotel suites with plasma-screen TVs -- amenities often associated with the casinos across the Nevada state line.

The goal of the tribes "is to compete with Las Vegas," said Tom Davis, chief planning officer for the Agua Caliente Band of Cahuilla Indians. "We believe we can significantly take that California dollar that goes across the border and keep it in California."

To entice visitors to its cavernous casino, the Cabazon Band added a 12-story, 250-room hotel topped by a bar with views of the San Jacinto and Santa Rosa mountains, and a 100,000-square-foot events center for boxing matches, concerts and conventions.

And the tribe has plenty of company. The Agua Caliente tribe, which opened the $95-million Spa Resort Casino in Palm Springs in 2003, has announced plans to expand its Rancho Mirage-area casino by adding a 14-story, 400-room hotel.

The Morongo Band of Mission Indians opened a $250-million resort hotel and casino in Cabazon in December, featuring ads that boast "Whatever happens in Vegas … Also happens at Morongo." The Pechanga Band of Luiseño Mission Indians opened a $262-million hotel and casino in 2002 in Temecula.

On Friday, the San Manuel Band of Mission Indians opened a 465,000-square-foot casino near Highland in San Bernardino County.

Even the Cabazon tribe's Fantasy Springs expansion is the first piece of a multi-phase plan that will include high-end boutiques, a day spa, an 18-hole golf course, another hotel, timeshares and a tribal administration and cultural center.

"It's going to be sooner rather than later," said James H. McKennon, chief executive of Fantasy Springs. "The concept that we would like to create is a destination resort that has multiple offerings to customers besides the casino…. It allows us to diversify our economic base. It allows us to create a more interesting, exciting place."

Gambling analysts say the timing of the openings and expansions makes perfect sense. Tribes began in the 1980s with smoky bingo parlors that have evolved into the desert monoliths of today. The event that sparked these recent expansions occurred in 2000, when California voters overwhelmingly approved a proposition allowing Nevada-style gaming on tribal land.

"That was when the legality of gaming on tribal lands was fully clarified," said John Mulkey, a gambling analyst with Bear Stearns in New York. Soon after, "lenders became more comfortable financing large expansions. That was the watershed moment in the expansion of tribal gaming in California."

Mulkey said the competition among Coachella Valley casinos and those in nearby northern San Diego County was the most competitive in California, leading to bigger casino resorts with even more frills to "keep up with the tribe next door."

Tribal leaders say they are not worried about competition because the new resorts will attract more than just day-trippers.

"What we're actually doing is creating a destination market coming from Los Angeles or Orange County, and spending a night," said Anthony Miranda of the California Nations Indian Gaming Assn. in Sacramento.

Mulkey said the competition could eventually lure tourists from Las Vegas.

"I believe they may affect Las Vegas' growth going forward, particularly if Las Vegas doesn't improve the transportation corridor between Southern California and Las Vegas," Mulkey said.

Nevada casino owners don't appear worried.

"I don't want to sound too cocky, but there will never be another Las Vegas," said Jim Hughes, general manager of the Palms casino in Las Vegas. "A couple Indian casinos scattered about that are upgrading their facilities is not a threat to what we have here in Las Vegas."

Anthony Curtis, editor of Las Vegas Advisor, a consumer newsletter that covers gambling and the city itself, said the Vegas casinos were in the midst of the most successful years they've ever had.

"Theoretically, there's going to have to come a point where it's going to become a concern, when California … has as much to offer,'' Curtis said. "It's just such a long ways away."

In the Coachella Valley, politicians and tourism officials said the new casino resorts had added to the area's appeal, making it more than a desert getaway with world-class golf courses.

"It's adding a whole new dimension to tourism," said Mike Fife, president of the Palm Springs Desert Resorts Convention and Visitors Authority.

Local officials are also delighted with the economic impact the casinos have on the surrounding communities. A Claremont-McKenna College study funded by several tribes found that the tribal casinos employed more than 10,000 people in Riverside County in 2003.

But labor organizers complain that most casinos don't share the wealth.

Although three Southern California Indian casinos are unionized or negotiating their first union contracts - San Manuel near San Bernardino, and Viejas and Pala in San Diego County - a bitter fight is underway to unionize the Agua Caliente casinos in Riverside County.

It came to a head Sept. 30 when two workers and a union organizer were arrested after unfurling a banner from a hotel room at the Spa Casino during a protest against the tribe for raising health insurance costs.

The tribe used to pay for health benefits, but on Oct. 1, workers had to start sharing the cost - hard duty for workers who earn an average of $8.93 per hour, said Rosalind Sagara, spokeswoman for the California Indian gaming campaign of the union UNITE Here! Many workers could no longer afford insurance, so taxpayers ended up footing the bill for their healthcare, she said.

"It's outrageous that a casino making about $200 million a year is shifting more of the cost to workers and to taxpayers because they are not offering affordable health insurance plans for their workforce," she said.

Agua Caliente casino officials disputed the organization's accusations, noting that they employ 2,256 people in a variety of positions, including technical, executive and skilled trades.

"Those are jobs at all levels - they aren't just the menial, service-level jobs that people like to point to," said Todd Hook, Agua Caliente's director of economic development. "These are people … that now have a solid income with benefits that allows them to go out and feed their families, buy houses and buy cars."

Riverside County Dist. Atty. Grover Trask said the casinos may also lead to more crime. A 2004 study by the University of Illinois and the University of Georgia found that a casino's presence increases incidents of rape, robbery, car theft and other crime in its community.

There have been many partnerships between tribes and local officials to deal with the increase, most recently a new prosecutorial unit in the district attorney's office that was funded by a $700,000 grant from four tribes.

"They want to be good partners and good neighbors … and they're willing to put their money where their mouth is," Trask said.

Tribal and county officials also have been working together to address traffic concerns, trying to ensure that Interstate 10 and other highways leading to the casinos don't suffer the same fate as crowded Interstate 15.

The Morongos are paying to build two roundabouts on both sides of Interstate 10 near their casino to ease congestion, and are discussing construction of a freeway interchange and a grade-crossing-separation over rail tracks that bisect the town of Cabazon, said Riverside County Supervisor Marion Ashley, who serves on a county-tribal task force.

"Sure, there's an impact on our roads - that's part of the deal. We try to mutually mitigate those problems," he said. "The idea is, you work with mutual respect and mutual benefit, and you can work things out."

Gamblers aren't having any trouble finding the new desert hotel casinos.

Donna Carter, 69, of Sunnyvale comes to the Fantasy Springs Resort Casino in Indio two or three times a year and loves the Cabazon tribe's new hotel. She usually stays at a Holiday Inn.

"I'm going to start staying here," Carter said as she watched her visiting 75-year-old sister Ruth Deloria play slots. "I like staying in hotels in casinos - it's easier and more convenient."

Related Images

Morongo interior