Gambling Accords Offer Clue to Tribes’ Revenues

While California Indian tribes do not disclose their casino revenue, compacts signed this week by Gov. Arnold Schwarzenegger and five bands of Native Americans provide insight into their wealth.

The deals require that the tribes finance a $1-billion bond for the state with roughly 10% of their annual slot machine winnings. Combined, the five tribes would pay $100 million a year, meaning their slots generate $1 billion a year. The compacts break down the payments each tribe must make:

Owners of Thunder Valley casino in suburban Sacramento promise to make annual payments of $33.8 million. If that is 10% of the take from slots, Thunder Valley, owned by the 255-member United Auburn Indian Community and managed by Station Casinos Inc. of Nevada, earns $338 million a year from its slot machines.

The tribe has 1,906 slot machines, each generating an average of $177,334 a year, or $486 a day.

Thunder Valley, celebrating its first anniversary this month, is believed to be the most successful tribal casino in California. Given its location and success, experts believe, Thunder Valley could more than double its number of slots.

The 46-member Rumsey Band of Wintun Indians, which has a newly expanded casino-resort west of Sacramento, agrees to pay $25 million a year to repay the bond, suggesting that the tribe earns $250 million a year.

The compacts imply that the 918-member Pala Band of Mission Indians’ annual profit from slot machines is $188.6 million, while the 289-member Viejas Band of Kumeyaay Indians earn $174 million a year from slots. Both of those tribes are in San Diego County.

The fifth tribe, the Pauma-Yuima Band of Mission Indians, also in San Diego County, has a smaller operation, with 850 machines. Its annual slot machine take is pegged at $57.5 million

Economist Ronald Schmidt, retained by horse tracks and card rooms that hope to gain the right to operate slot machines, said he believes the pacts understate the tribes’ earnings. His analysis, based on Station Casinos’ financial reports to federal regulators, shows that Thunder Valley generates $578 to $694 per machine.

“The revenues in this business are enormous,” said Schmidt, who works for LECG Inc., a consulting firm in Emeryville. “When you start out being in a controlled environment where you have little competition, your profit margins can be very large.”