Interest in reservation gambling is down with the economy in a slump. But Arizonans and visitors to the state still plunked enough into slot machines and at gaming tables to leave Indian tribes with more than $1.9 billion last year, even after they paid out winnings, according to a new report.
Interest in reservation gambling is down with the economy in a slump.
But Arizonans and visitors to the state still plunked enough into slot machines and at gambling tables to leave Indian tribes with more than $1.9 billion last year, even after they paid out winnings, according to a new report Thursday by Alan Meister. This is the eighth year that Meister, principal economist with Nathan Associates, has done the annual report.
That figure represents no more than 20 percent — and possibly less — of what actually was wagered. That is the maximum tribes can keep after winnings to pay their expenses and keep for profits, though some are more generous with their payouts.
So the actual “handle” by the tribal casinos in 2008 — the amount wagered — was at least $9.5 billion, about $2,600 for every man, woman and child in the state.
Actual wagering figures, while known to the Arizona Gaming Department, are considered a trade secret and not made public.
But, using that requirement to pay out at least 80 percent of what is wagered over the life of any machine, it is the best estimate of the scope of tribal gambling in Arizona.
Meister said he compiles his reports both from public records as well as confidential information that tribes agree to furnish him with the understanding that their specific numbers be kept confidential and used solely in aggregate form.
The 2008 numbers for Arizona are 6 percent below 2007. That compares with a 1.5 percent increase nationwide.
Even with that, tribal gambling revenues in Arizona last year still were the fourth highest in the nation, behind California, Oklahoma and Connecticut.
Meister said nongambling revenues — money that Arizona tribes got for food, drinks, lodging, shopping and entertainment at tribal-owned facilities — also were down by about 6 percent between 2007 and 2008. Nationwide these revenues were up by 3 percent.
But the Arizona tribes’ total revenues, both in gambling and other spending, still are slightly higher than they were in 2006.
Meister’s figures are similar to reports produced by the Arizona Gaming Department showing revenues for the tribes for last fiscal year at about $1.8 billion. Those numbers take into account the first six months of this calendar year with the economy still in decline.
He pointed out there actually were some opportunities last year for tribes to make a lot more money.
The original compacts signed by the tribes allowed each of them to operate between 475 and 1,400 gambling machines, with the actual amount based on tribal population.
But the deal also allowed for adjustments every five years, a deadline that clicked in for some tribes in February 2008 and the others in September of the same year. That now permits the two largest reservations that have gambling — the Tohono O’odham Nation and the Gila River Indian Community — to each have up to 1,666.
And tribes also are allowed to acquire the right to operate more machines from tribes that don’t have gambling or don’t need all their allocation. So the real cap for the two largest tribes is 2,686 machines, though they can’t all be at a single facility.
Several tribes took advantage of the change and added machines.
But the hopes by tribes of more money ran smack-dab into the recession.
“It really hasn’t been the best of times to expand,” he said.
On the flip side, though, Meister said once the economy recovers, all those new machines will pay off. He said all indications are that gambling in Arizona is far from reaching a saturation point.
“There definitely is room for more growth,” Meister said. “But it’s going to take some time for the economy to recover.”
Sheila Morago, executive director of the Arizona Indian Gaming Association, said that at least at casinos in metropolitan areas, there has been no decline in the number of patrons. What is happening, she said, is customers are simply wagering less.
“People still want to go out,” Morago said. But they’re trying to make their entertainment dollars go further.
Mark Brnovich, director of the state Gaming Department, agreed that low consumer confidence is a factor, with many Arizonans “upside down” on their mortgages, owing more than their houses are worth.
“The disposable income people have they’re holding onto more cautiously,” he said.