Thunder Valley adding more slots

August 30, 2004

Two area casinos hot for more slots – Thunder Valley adding several hundred

Mark Anderson - Staff Writer

The area's two big casinos, Thunder Valley Casino near Lincoln and the  Cache Creek Casino Resort in rural Yolo County, are adding more slot machines -- "several hundred" more, at Thunder Valley.

The expansions follow federal approval last week of amended compacts between the casinos and the state of California. Gov. Arnold Schwarzenegger signed the compacts June 21.

In Placer County, crews are converting Thunder Valley's bingo hall into  a space for several hundred new slot machines. The casino is also turning its former baccarat zone into a non-smoking area with more  slots, said Doug Elmets, owner of Elmets Communications and spokesman for both casinos.

The expansion will bring the casino's total to at least 2,200 machines. In theory the compact allows for more than 4,500 slots, although they would have to fit in the existing casino and the tribe would pay an increasingly steep fee to the state as it added machines.

Thunder Valley's 500-seat bingo hall doubled as its entertainment venue,  so the musical acts and comedy are gone for now. The baccarat room is roughly 5,000 square feet and could hold perhaps 100 machines. The tribe will say only that it's adding "several hundred," Elmets said.

It isn't clear how many machines Cache Creek is adding to its  66,000-square-foot open floor plan. The Yolo County casino has 1,700 slots and opened an expanded gaming area in a brand-new building in April.

Rich machines: The Schwarzenegger administration negotiated the new gaming compacts with five tribes last spring -- the Rumsey Band of Wintun Indians, which owns Cache Creek; the United Auburn Indian Community, which owns Thunder Valley; and three tribes with casinos in Southern California.

The new compacts allow additional slot machines only on existing Indian land in existing gaming locations.

Thunder Valley's bingo hall and baccarat area were gaming uses. Converting them into more slots means higher profits for the same space.

"Slot machines account for the largest chunk of revenue for a casino, usually about 80 percent of the revenue," said Bill Eadington, professor of economics at the University of Nevada Reno. He's director of the school's Institute of Gambling and Commercial Gaming.

Slot machines are the most profitable games in a casino. They don't require a dealer or employees, other than for maintenance.

In areas with abundant slot machines like Nevada, a typical machine generates gross gaming revenue of $100 daily. Gross gaming revenue is the income after payouts.

In areas with fewer machines, each can generate up to $400 in gross gaming revenue per day.

Eadington said there are estimates that California's tribal casinos average about $260 per machine per day, or $96,360 a year.

Thunder Valley is immensely profitable. It is managed by Station Casinos Inc., a publicly traded company based in Las Vegas. Station reported about $40.3 million in management fees from Thunder Valley last year, which translated into about $168 million in casino profit in the seven months Thunder Valley was open during 2003. The tribe has asked Station to stop disclosing the size of its management fee.

The state's cut: Thunder Valley opened in June 2003 with 1,906 slot machines and 100 table games. Its original compact assigned the tribe the right to operate 2,000 slot machines. The new machines would bring the casino over that number.

For the first 93 games over its initial 1,906 slots, the casino will pay the state $11,000 per machine per year. For the next 500 machines, the fee rises to $12,000. It increases to $13,250 for the next 500.

The scale tops out at $25,000 per additional machine if the casinos grow to more than 4,500 machines.

It's unclear if Cache Creek will now surpass the old limit of 2,000. Cache Creek just completed a massive new building and will add its new machines onto its expanded gaming floor.

Under the terms of the previous compacts, which were 20-year legal agreements signed by then-Gov. Gray Davis, the tribes didn't have to share money with the state other than to put money into funds for tribes that had small or no casinos.

Sixty-four tribes have compacts with the state. Schwarzenegger has negotiated or renegotiated 10 compacts, but only these five have been approved by the Department of Interior.

The five new compacts also:

Allow the state to inspect machines  Require tribes to prepare environmental reports for new projects and to mitigate off-reservation impacts of casinos Require tribes to meet state building and safety codes in new construction Require tribes to agree to meet state laws for third-party injuries, with binding  arbitration if negotiations reach impasse. Currently, tribes aren't subject to suits under state law because they are considered sovereign domestic nations.

San Pablo setback: Meanwhile, the Legislature is weighing details of a new compact with the Lytton Band of Pomo Indians for what would be the first Native American casino in one of California's big urban areas.

The Lytton band has a 9.5-acre site that is currently a card room and parking lot off Interstate 80 in San Pablo, near Berkeley. Last week Schwarzenegger announced that he had reached an agreement with the tribe for a 600,000-square-foot casino that would feature 5,000 slot machines.

Legislators choked on the size of the casino they were being asked to swallow in a metropolitan area, and called for half that many machines at most. The tribe agreed, leading to a scaled-down casino of up to 2,500 slots proposed in a contract that Schwarzenegger signed Monday.

The Rumsey Band of Wintun and the Maloof family -- which owns the Sacramento Kings in Sacramento as well as the Palms Casino in Las Vegas are partners in the proposed development.

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