SEATTLE - Tribal casinos in Washington state are no longer a sure bet, with revenues at some casinos dropping as much as 30 percent in 2009, The Seattle Times reported Sunday.
The Nooksack tribe is in court with its lender. The Snoqualmie tribe is struggling to make payments on its gleaming new casino east of Seattle. And the Skokomish tribe simply closed its casino last fall rather than lose cash.
Before the recent slowdown, tribes didn't have to think too hard about strategy, said W. Ron Allen, chairman of the Washington Indian Gaming Commission. Tribes could simply implement a marketing plan just because it sounded like a good one, he said.
"We were riding a high wave and a long one," Allen said.
When times were good, no one was paying too much attention to the fine print about the risks of investing in tribal casinos. But nontribal commercial casinos, especially in Las Vegas, were falling victim to the recession before tribal casinos.
"It's like nothing we've seen, over the past two years," said Craig Parmelee, team leader for gaming and lodging at Standard & Poor's. "Going back to 1997-2007, never did more than two gaming companies default, and in many years none did, and in the past two years, 20 did."
Indian casinos have been consistently stronger performers than nontribal casinos, making the 2009 loan defaults the more notable.
Tribal-casino investments pose unique risks for tribes and their lenders. For tribes, everything is at stake: Casino revenues aren't just about profit.
Money made sometimes goes directly to tribal members in per-capita payments. Profits are also used to pay for government services, or to fund college scholarships for members.
But lenders who got in on the construction boom are wondering how they will get repaid if debts go bad. Creditors can't foreclose on the property because the land is held in trust for the tribe by the U.S. government. The lender can't seize the casino business because only the tribe is licensed to run it.
Despite the troubles, there are some success stories from 2009. In Washington total tribal-casino revenues were up slightly to $1.6 billion in the fiscal year ended June 30, 2009, according to the Washington State Gambling Commission, from $1.5 billion in 2008.
The Puyallup tribe's newest casino, along Interstate 5 in a converted Best Western, is regularly packed and the tribe has yet to see a dip in its casino success. Despite the recession, the Puyallups continue to make about $250 million a year from two casinos.
The Tulalip tribe went with a Las Vegas-style resort north of Seattle, including a $130 million resort. The result so far is positive, Tulalip officials said.
