REGION: Casinos' expansions may be ebbing
Pechanga cuts 400 jobs; most in North County say no layoffs planned
By CHRIS BAGLEY - Staff Writer | ∞
An era of spectacular growth may be waning for area casinos as a rocky economy convinces more gamblers to stand pat.
A maxim that the gambling industry is "recession-proof" now is being questioned following the announcement this week that the Pechanga Resort & Casino, the region's largest casino, would cut 400 employees in coming weeks. Three moderately large casinos in North County indicated that they had no such plans, but several people in and close to the industry said that a lot of money is being taken off the table.
"It's obvious that it's a downturn," said Sheryl Sebastian, a spokeswoman for Harrah's Rincon casino in Valley Center. "You're talking about discretionary spending. When people's income gets cut, people's entertainment budget gets cut."
A representative of Valley View Casino, owned by the San Pasqual Band of Mission Indians, declined to discuss revenue, but said the casino plans no layoffs. An executive for Pala Casino Spa Resort said business was about as strong this summer as in prior years and planned no layoffs. "We're lean and we've always kept it that way," said Sue Welp, Pala's vice president of marketing.
Leaders of the financially struggling Santa Ysabel tribe couldn't be reached for comment. The tribe opened a $27 million casino 30 miles east of Escondido last year but has missed several payments to the state and San Diego County governments since then. In May, the tribe's leaders cited a weeklong closure during October's wildfires and a "critical cash-flow crisis" in asking its 700 members to forgo a total of $140,000 in profit distributions. Leaders of the Pauma tribe, whose casino is about four miles north of Rincon's, couldn't be reached late Wednesday.
San Diego County's tourist-oriented industries have expanded and shrunk their payrolls markedly from season to season with the tourist tides, according to data from the state Employment Development Department, but the trend has clearly been one of growth. Gambling and other entertainment businesses employed 18,700 people in June, up 10 percent over the last two years.
Not counting entertainment and hotels, the county's private sector shrank 1.5 percent, to 928,500, in the same period.
Still, the casino industry's reputation for being recession-proof isn't totally deserved, analysts said.
"It's merely recession-resistant," said Randy Baker, a San Diego State University professor who studies American Indian casinos. "The economy is taking its toll."
The industry began to build its recession-proof reputation in the 1970s, when Las Vegas was the only real gambling destination, said I. Nelson Rose, a Whittler Law School professor who runs www.gamblingandthelaw.com. But revisions to federal and state laws have allowed tribes to open casinos around the country, many near major metropolitan areas. Many Southern Californians have made gambling part of their weekly routine and can cut back on their visits if paying the bills gets tough, Rose said.
Gambling revenue in Las Vegas fell by about 6 percent in the first five months of 2008 compared with last year, according to the Las Vegas Convention & Visitors Authority. Casinos whose patrons don't have to drive 300 miles up Interstate 15 face similar but less dramatic challenges, Rose said.
"We've got a recession for a whole lot of people," he said.
Some California tribes that operate casinos under compacts ---- agreements ---- with the state government make payments based on their gambling profits. Normally, that would help to indicate how business is going, but recent amendments to several large tribes' compacts have allowed them to delay payments this year, making year-to-year comparisons impossible.
Of the "whole lot of people" who may perceive a recession, more are in Riverside and San Bernardino counties than in San Diego County. The Inland Empire's unemployment rate has gone from 5.1 percent to 8 percent in the last two years, state figures show. San Diego County's jobless rate has gone from 4.2 percent to a relatively moderate 5.8 percent.
Pechanga officials were not available for comment.
The cold economic tide has crashed squarely into a multiyear expansion at Pechanga. The casino was legally limited to 2,000 slot machines but added 1,300 of the 5,500 additional machines allowed by Proposition 94, which voters approved in February. Like many large tribal casinos, Pechanga makes money off slot machines, concerts, and a hotel. Pechanga also plans to open a golf course next month and is petitioning the federal government to add 1,200 acres to its 5,500-acre reservation.
Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com.
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Too Bad... wrote on Jul 24, 2008 5:14 PM:they've built and built, and keep planning to add more, now peoples funds are stretched and no-one has available cash to dump into the fixed video slot machines, too many casinos, too many slot machines, too few folks with money to burn on long shot chances of winning returns...
Geronimo wrote on Jul 24, 2008 6:05 PM:I guess people are starting to catch on that gambling is just a depository with very little chance of getting anything back.
I don't put my money in those one armed bandit, money hungry machines.
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