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Saturday, February 04, 2012
Feature: August 2007
High Rollers
Local casinos raise their bets to stay in the game
Story by Wes Sander
When the top brass at Cache Creek Casino Resort revealed their expansion plans at a press conference in early June, one of the first things they mentioned was the threat of new competition.
“I refer specifically to El Dorado County,” said Randy Takemoto, general manager and chief operating officer at Cache Creek, with Marshall McKay, chairman of the Rumsey band of Wintun Indians, at his side.
Takemoto and McKay spent the mid-morning in the tribal fire station overlooking the casino grounds and describing a new Cache Creek that would offer attractions well beyond the casino and hotel.
The pair spoke as though — peering over their shoulders — El Dorado County’s new casino-in-progress was looming back there. That casino, Foothill Oaks, had staged a groundbreaking ceremony in April for a new freeway spur along Highway 50. It was a culmination of years of public wrangling and court battles, and with Caltrans finally beginning construction of the interchange, the Shingle Springs tribe behind the casino publicly celebrated its victory.
Backers for the new casino say a large number of visitors will soon enjoy easy access to Foothill Oaks once the off-ramp reaches completion and the casino — which saw its first, short-lived incarnation under a tent-like structure in the mid-1990s — opens in the fourth quarter of 2008.
In late June, the Shingle Springs band of Miwok Indians closed a $450 million round of funding to finance the 278,000-square-foot project. Lakes Entertainment is developing the casino and has agreed to manage it for the first seven years.
Foothill Oaks is expected to include an 88,000-square-foot gaming floor with five restaurants, two bars and even a child-care facility and arcade. Developers are leaving room for a hotel and expanded gaming space for a second phase of the project. The long-anticipated arrival is expected to make a dent in South Lake Tahoe’s gaming scene, as it will be the only casino on Highway 50 between Sacramento and Tahoe.
Foothill Oaks’ easy access along the well-traveled route to Lake Tahoe seems to give it a competitive edge. Cache Creek’s location, by contrast, may be more of a liability, as the tribe seeks the pull of a stronger destination to hold its own with escalating competition.
Cache Creek sits 20 miles west of Woodland along narrow Highway 16, which meanders through progressively smaller farming towns. Its drive-up entrance is expansive, like its concierge desk, backed by a towering, glass-encased cascade of blue water. While Cache Creek isn’t the easiest to get to, it rewards its visitors for the drive with an opulent atmosphere.
The casino was looking to become more of a resort that its name suggests when, two weeks after its press conference, Cache Creek’s most immediate competitor raised the stakes.
Thunder Valley Casino — one of the nation’s most successful Indian gaming attractions, drawing visitors from around the Sacramento area to South Placer County — revealed its own expansion plans, and they looked a lot like Cache Creek’s.
Where Cache Creek would expand its accommodations from 200 to 667 rooms, Thunder Valley would build a 650-room, 23-story hotel. Both would add entertainment and events centers; both would add restaurants; both would expand their casino floors and add parking structures.
With its relative remoteness among bucolic surroundings, Cache Creek may offer more of a getaway atmosphere than its competitors, and its proximity to wine country and outdoor recreation give it solid odds against similar assets in El Dorado County.
Nonetheless, Cache Creek felt pressured to keep pulling visitors up Highway 16, so it took its expansion further, adding 27 hillside “casitas” for families and honeymooners, several outdoor swimming pools, and a golf course spilling across the grassy slopes to the east.
“It appears that their intent is to create a destination resort, and they have to differentiate themselves because they’re in the middle of nowhere,” says Doug Elmets, Thunder Valley’s spokesman.
However, he adds, Thunder Valley’s location will prove the deciding competitive factor. There’s little competition in South Placer, which is one of the fastest-growing counties in the nation and one of the wealthiest counties in California, Elmets says.
“It has a customer base that has the discretionary income to want to seek this form of recreation,” he says.
And while the bulk of gaming growth is coming from expansions like those of Cache Creek and Thunder Valley, there’s a chance of new chips soon landing in the pot.
The Estom Yumeka Maidu tribe behind the Enterprise Rancheria in Oroville has wrangled with approvals for several years, pushing a plan for a casino and convention center in south Yuba County. Most observers dismiss its chances of success. But if Enterprise Rancheria eventually succeeds, it would bring the number of Indian casinos surrounding Sacramento County to five — leaving only two of the surrounding seven counties casino-less.
“Our customers have choices, and if we are not prepared to accommodate them, we’re going to lose them.”
— Randy Takemoto, general manager, Cache Creek Casino Resort
And it doesn’t end there. In Amador County, immediately south of the jobsite for Foothill Oaks Casino’s new freeway spur, the Jackson Rancheria Casino and Hotel, owned by the Jackson Rancheria band of Miwuk Indians, has its own expansion plans.
The neighborhood may soon get even more crowded: the Ione band of Miwok Indians and the Buena Vista rancheria of Me-Wuk Indians are moving through the public process — including environmental-impact reports and the usual legal battles with the county — for their own casinos near the towns of Plymouth and Ione, respectively.
Is there a saturation point to the region’s gaming market? Maybe so, but Neil Starr has yet to glimpse its approach. Starr, a consultant based in the Amador County town of Pioneer, marketed Jackson Rancheria for much of the 1990s.
“When we started doing the marketing for Jackson, we totally closed down Carson City,” he says. “You could see places closing. You could really see what Indian gaming had done.”
Tribes are using casino wealth to diversify investments, Starr says, and despite constant complaints from county governments that casinos stretch law enforcement and emergency response services, communities are finding enough revenue in casino-related business to strengthen the industry’s foundation.
“Now the competition is getting so great, everybody wants a piece of the pie,” Starr says. “You really notice how well Indian gaming is taking away Tahoe’s business. It’s completely a chess game, and a political chess game, too.”
And competition doesn’t show any signs of slowing. Gaming is estimated to become the second fastest-growing job segment in the Sacramento metropolitan area, according to the California Employment Development Department. According to estimates, the need for workers will increase by at least 60 percent to 1,060 workers by 2014.
While local tribes are upping the stakes and vying for gambling dollars, card rooms in Sacramento are fretting over the chances of staying in the game much longer.
Kermit Schayltz owns the Lucky Derby Casino, a card room in Carmichael that dates to 1979. Schayltz bought the place 17 years ago, and four of his five children have since earned business degrees and returned to help run it.
Schayltz also lobbies state government and serves as spokesman for the Golden State Gaming Association, which represents card rooms. When talking about the escalating competition, he assumes a glum tone.
“I don’t know how to respond to it,” he says. “You have to admire what the tribes have accomplished. As a businessman, I have to respect that.”
Both sides of the industry are trying to ramp up their operations — card rooms are trying to acquire as many tables as they can, while casinos are installing as many slot machines as the law allows. Schayltz laments the growth moratoriums imposed by the state since the 1990s. Likewise, tribal-state compacts have restricted slots.
Direct authority over Indian gaming rests with the Feds under the Indian Gaming Regulatory Act, which requires that tribes work out compacts with their respective states to set operating rules. If tribes want the rules changed, they can negotiate new compacts — as five Southern California tribes have done this year, resulting in new compacts that allow for more slot machines.
And if card rooms want new rules, they can support legislation, as they are doing with SB 152, which easily passed California’s Senate and has fared similarly in the Assembly. The bill would enlarge the limit on card tables by 24.9 percent of what an establishment already has, and allow cities and counties to up the limit again for small operations.
Schayltz says that’s small help against the tens of thousands of slots to come, once other tribes renegotiate their compacts to meet the new precedent.
“The smaller clubs throughout the state have been stifled,” Schayltz says. “We’re trying to diversify, prepare for it. That’s what every business has to do, is prepare for the future.”
Schayltz musters a glimmer of optimism by recalling the early days of Internet poker, which likewise had the card rooms fretting over competition. But in the end, Web gaming only fed poker’s popularity, and everyone gained. Can that effect be repeated?
“The casinos may very well create more players,” Schayltz says.
But then he becomes glum again. “I’m not an optimistic individual,” he says. “I’m realistic. I can see the handwriting on the wall. If Thunder Valley wanted to eliminate all the card rooms in this area, they could do it.”
But card room owners aren’t the only ones watching their backs — Cache Creek and Thunder Valley are taking measures to protect their own well-established positions.
In 2005, when the Enterprise Rancheria, composed of the Estom Yumeka Maidu tribe, floated a November ballot referendum on its Yuba County casino plans, it narrowly lost the vote. The opposition had crafted a campaign portraying other casinos as causes of crime and problem gambling, and the bulk of its funding had come from the Rumsey band of Wintun Indians and the United Auburn Indian Community — owners of Cache Creek and Thunder Valley, respectively.
Because the referendum was non-binding, the Estom Yumeka Maidu pressed on, and in May they finished a draft of an environmental-impact report. Opponents, meanwhile, continued arguing that the tribe had lost its bet fair and square. Furthermore, they say, the federal process of approving Indian trust land for new casinos is becoming more tangled, so the plan stands little chance of success.
Which gives the top brass at Cache Creek some measure of confidence in their ability to hold down its corner of the market. Casino Manager Takemoto sees evidence of unfilled potential in the fact that Cache Creek regularly turns away groups for lack of adequate hotel accommodations — among them a recent Air Force function requiring 1,000-room nights.
“There’s a lot of potential out there,” Takemoto says. “We just have to go out and get it. The bottom line is, our customers have choices, and if we are not prepared to [accommodate them], we’re going to lose them.”
“Our customers have choices, and if we are not prepared to accommodate them, we’re going to lose them.”
