Firm Makes Bet on Calif. Casino
Park Place Entertainment Corp., the world’s largest casino company, said Thursday that it had reached a tentative deal to open its first gambling operation in California, a $250-million Caesars resort on Indian land near Temecula.
Park Place would join other large casino operators that have entered California’s lucrative Indian gaming industry in recent years as tourism has slowed in Las Vegas. Harrah’s Entertainment Inc., Station Casinos Inc. and Trump Hotels & Casino Resorts Inc. already manage casinos in California for Indian tribes in exchange for a share of the profits.
The Pauma-Yuima Band of Mission Indians picked Park Place to build and manage the proposed 500-room hotel and casino complex on a site off California Highway 76 where the tribe now operates a small tented gambling operation.
The company has to finalize its agreement with the tribe, and the 100,000-square-foot casino would need to be approved by the National Indian Gaming Commission and other regulators. But Park Place said the casino could open as early as 2005.
The rush into the California gambling market began in 2000 after voters passed Proposition 1A, which legalized slot machines, blackjack tables and other Las Vegas-style games on Indian land.
Since then, more than a dozen casinos have been built on Indian land, and analysts say many more are expected.
Last year, Donald Trump opened his Trump 29 Casino in Coachella, outside Palm Springs, on land owned by the Twentynine Palms Band of Mission Indians.
The California gambling halls “have proven that they can make a lot of money,” said William Thompson, a professor of public administration at the University of Nevada, Las Vegas, who is affiliated with its Gaming Studies Research Center. “It’s going to siphon some of the play in Las Vegas.”
Marc Falcone, a gaming analyst with Deutsche Bank in New York, countered that California casinos were helping their operators’ Vegas businesses “more than siphoning it away....It’s cross-marketing, really.”
California’s 54 tribal casinos had $3.6 billion in revenue last year, according to the California Nations Indian Gaming Assn. But a study by the University of Nevada, Reno, estimates California’s Indian casino revenue at $5 billion to $6 billion a year. In Nevada, annual casino revenue is about $9.3 billion.
Some analysts predict that gambling revenue in California could grow to $10 billion a year by decade’s end as more gaming operators open ever-glitzier resorts and casinos.
Although Indian tribes own the properties, casino operators get a percentage of the profits as managers. Their contracts are quite lucrative, analysts say, with most operators receiving 25% to 40% of the revenue generated each year by the casino.
In fact, Station Casinos’ Thunder Valley casino, which opened in June near Sacramento, is the most profitable of its 10 casinos, outpacing even its Las Vegas properties, the company said.
Around the Temecula area, where the new Caesars resort is planned, three large casinos already are open -- Pechanga Resort & Casino, Harrah’s Resort & Casino in Rincon and the Pala Casino Resort & Spa.
Park Place spokesman Robert Stewart said he believed the area was starting to develop “critical mass” and would draw gamblers from Los Angeles and San Diego.
Park Place’s casinos include Paris Las Vegas, Caesars Palace and the Flamingo Hilton in Las Vegas. Shares in the Las Vegas-based company rose 38 cents Thursday to $9.60 on the New York Stock Exchange.
