By Malcolm Maclachlan | 03/03/11 12:00 AM PST

After years of continual expansion, Indian gaming revenues in California fell between 2008 and 2009, according to a new report.

Alan Meister, an economist with Nathan Associates Inc., was scheduled to release his annual report Thursday that looks at Indian gaming around the country. Overall, the nationwide industry mirrored that of California, with small revenue decreases the rule around the country.

Nationwide, Indian gaming revenues fell from $26.7 billion in 2008 to $26.4 billion in 2009, the latest year for which figures are available. Non-gaming revenue — often from casino-related businesses such as hotels, restaurants and gas stations – fell from $3.3 billion to $3.2 billion. The overall Indian gaming universe includes 237 tribes operating 446 casinos in 28 states.

The drop off was steeper in California, from $7.3 billion in revenues in 2008 to $6.9 billion in 2009. California is still by far the biggest Indian gaming market, representing more than a quarter of all Indian gaming business.

Meister attributed the drops in business to an overall slowdown in the economy. However, he said business was already leveling off when the economy was still booming.

“The decline of nationwide Indian gaming in 2009 was part of a larger trend, namely the recent slowdown of Indian gaming,” Meister wrote. “The growth of gaming revenue declined from 15 percent in 2005, to 10 percent in 2006, 4 percent in 2007, and 1 percent in 2008. While the slower growth in 2008 and the decline in 2009 can be attributed in large part to the general slowdown in the U.S. economy, it cannot explain the slower growth in prior years, or the overall pattern of declining growth since 2005.”

But Meister went on to say that much of the downturn came from opposition and government regulation: “These phenomena have been the result of public policies designed to restrict the supply of Indian gaming. These public policies have included proposed and enacted legislation and regulations, as well as judicial decisions and tribal-state gaming compacts.”

Eleven Indian casinos were expanded or renovated in California in 2009. But the overall availability of gaming went down very slightly. By the end of 2009, there were 66,325 gaming machines in California, a 2-percent drop from the previous year, and 2,119 table games, down 0.3 percent.

Only one new facility opened in California in 2009. The Viejas Bowl is operated by the Viejas Band of Kumeyaay Indians. Tellingly, the 15,667 square foot facility is best-known for its 12-lane bowling alley, video arcade and large sports bar. It contains only 10 Class II machines, which aren’t even Vegas-style slot machines most tribes are seeking with gaming compacts but instead are considered bingo machines, though the experience of the game often resembles a traditional slot machine. The facility operates out of the tribe’s Viejas Outlet Center. The tribe does have 2,000 Vegas-style slot machines and more than 80 gaming tables in its nearby casino.

“We’ve always offered a well-rounded entertainment experience, more than just gaming,” said tribal spokesman Bob Scheid.

Scheid also said that gaming appears to be a “leading economic indicator.” The tribe took a lot of heat for laying off 130 employees in early 2008, Scheid said, but the leveling off in gaming revenues the previous year proved to be a sign of worse economic times that were on the way.

The move allowed the tribe to stay financially healthy and maintain their market share during the downturn, Scheid said. Things have since turned around, he said, with a slight uptick in revenues. In January the tribe announced a pilot program for a cross-promotion with the state lottery.

Meister also noted the California tribes have left a fair amount of possible expansion on the table, so to speak. For instance, court rulings in 2009 opened up 10,549 slot machine licenses that had previously been denied by the state. But in the end, these licenses only resulted in 10 tribes rolling out 1,878 new slot machines, a fraction of the possible total.

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