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The Honolulu Advertiser
Posted on: Monday, November 19, 2001

Rival casinos alarm Reno

By John Stearns
Reno Gazette-Journal

RENO, Nev. — "Houston, we have a problem."

Sue McClintic, a dealer for the 21 game, works at Cache Creek Indian Bingo & Casino in Brooks, Calif. The casino has 1,150 slot machines and 80 table games.

Associated Press

That's what Ferenc Szony said as he and other Reno officials pulled into the crowded parking lot of Cache Creek Indian Bingo & Casino in California two weeks ago.

The officials were on a fact-finding mission to see for themselves the competition faced by northern Nevada's gambling economy.

The large, modern California Indian casino in Brooks, about 45 minutes northwest of downtown Sacramento, was bustling on a dreary Monday afternoon as most of the 1,150 slot machines and 80 table games hummed with activity next to a 1,500-space parking lot nearly full with cars and tour buses.

"(Customers) will not leave the (slot) machine to eat. It's amazing," said Guy Wolcott, Cache Creeks chief financial officer, describing the casino on weekends, when it's difficult to move through the building.

"We're already over capacity with respect to the devices. We really have not had a need to advertise much at all."

A planned expansion is being studied. The move would double the casino's size, add a 350-room hotel and perhaps a golf course and showroom.

Land already has been purchased next to the casino, which also has a popular 1,500-seat bingo hall.

Cache Creek was the most eye-opening stop on the tour of three Northern California Indian casinos in Hopland, Nice and Brooks.

University of Nevada-Reno gaming expert Bill Eadington led Reno-Sparks Convention & Visitors Authority staff, Reno casino officials and media on the tour.

Separately, the authority's staff visited a San Pablo card room near Interstate 80 in the East Bay that the operators of Cache Creek plan to run as a full-fledged casino for the Lytton Band of Pomo Indians.

Wolcott said the East Bay casino, which Eadington said could open in 18 months pending resolution of political and legal issues, probably would have the maximum 2,000 slot machines allowed by state law.

"It's a phenomenal location. I think we'd take advantage of whatever we could," Wolcott said. With 8 million people within 75 miles, the operation could produce $350 million a year in gambling revenue, perhaps more, Eadington said. By comparison, the Eldorado Hotel & Casino in Reno had $113.6 million in casino revenue last year.

The tour offered top Reno tourism executives a chance to better understand the casinos luring gamblers from the main feeder market for northern Nevada's visitor-based economy.

It also exemplified why Wall Street investment banking firm Bear, Stearns & Co. of New York predicts Indian casinos could take as much as 22 percent, or $231.6 million, out of Washoe County's gambling revenues by 2004-05.

"I think it could be worse (than that)," said Eadington, director of UNR's Institute for the Study of Gambling and Commercial Gaming.

That rattled Tim Maland, president of the Reno Hilton. "That's a scary thought if that's the case."

Using public filings, Eadington estimated that seven key Reno casinos this year would post combined earnings before interest, taxes, depreciation and amortization — cash flow, essentially — of almost $200 million. He estimated that four Northern California Indian casinos in Reno's key feeder areas could show $180 million in cash flow this year.

By 2007, with the anticipated construction of several other key Indian casinos, including a $100 million project planned outside Roseville, Eadington estimates that eight key Northern California casinos could exceed $600 million in cash flow on $1.8 billion in revenues.

Therein lies Reno's challenge: protecting and diversifying its visitor base as larger, closer, more-sophisticated Indian casinos go after the same customers.

Many of the Northern California casinos are managed by former Nevada gambling executives. And powerful Las Vegas-based operator Station Casinos Inc. is planning to run the casino outside Roseville for the United Auburn Indian Community when it opens. The project is awaiting federal approval.

The Indian casinos already offer the same coin-dispensing slots as Nevada, and all table games except craps and roulette, thanks to Proposition 1A, passed in March 2000, allowing Nevada-style gambling.

Casinos in the Golden State that don't offer alcohol can cater to 18-year-olds. The legal gambling age in Nevada is 21.

Fortunately for Reno, casinos such as Cache Creek are still rare in Northern California, buying northern Nevada perhaps three to five years.