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Navajo Tribe Intensifies Casino Plans

Posted on December 23rd, 2010

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The economic recession has caused a widespread slowdown on most American industries. One of those especially affected is the casino industry. Gambling hubs like Atlantic City and Las Vegas have reported dismal losses. With revenue generation only a fraction of what it was a couple of years ago, it is apparent that the industry is struggling. Indeed, many gambling facilities have closed down, declared bankruptcy, or sold whatever is left of their assets. These figures do not seem to faze prospective casino operators as casino proposals and projects mushroom all across the country.

One such operator venturing into the industry is the Navajo Tribe. The tribe, although already operating two casinos, is a newcomer of the industry. The Navajo Tribe has only begun conducting operations in November of 2008 with their class 3 casino in Church Rock. Since then, the tribe as built another casino, a class 2 facility in Hogback, the Flowing Water Navajo Casino. The Navajo tribe is planning the construction of two more casinos in different locations. These casinos will be a class 3 facility and the other, a casino resort complete with amenities other than gambling.

For the tribe, the construction and operation of the casinos and the gambling facilities is a sure fire way of addressing poverty and unemployment concerns. The facilities will almost always be staffed by members of the tribe. The profit earned from the gambling facilities will also redound to the general benefit of the tribe and its members. While the construction and operation of these gambling facilities is an efficient answer to the problems of the tribe, it also stirs up concerns from among those affected—particularly the existing privately owned casinos in the area and the local government. The rate at which the Navajo tribe expands its gambling capabilities is alarming casino operators in the area and by extension, the local governments which would be affected if the existing casinos are to be sidetracked.

Existing privately owned casinos like the SunRay Park and Casino claim they will be adversely affected by the Navajo-backed casino plan in Fruitland and Hogback. They claim casinos in these areas would take away their patrons and cause cutthroat competition among the two operators. Local officials have sided with the private operators saying that the tribe-owned casino will have a serious effect on the local coffers. The county earns from the private casinos in the form of payment through lease and taxable revenues. The same cannot be said for tribe-owned gambling facilities as these do not pay taxes or lease to the county. “We’re concerned that they’re going to flood the market,” county CEO Keith Johns said of the additional casinos. “It doesn’t quite seem wise to put two more casinos there (in the county). There are many concerns that more casinos will put pressure on the market.”

SunRay Park and Casino has been silent about the issue but it is clear that the staff are preparing to implement measures to face the eventual competition. The casino has recently installed new video gaming machines in anticipation for the tribe-owned facility. The tribe, though, is set in its decision to operate a casino in the area. Robert Winter, CEO of the Navajo Nation Gaming Enterprise, admitted that they have factored in SunRay’s success in their feasibility study and have concluded, based on it, that a tribal facility in the area would be highly profitable. He maintains that since the people are already acclimated to gambling, it would be easier to attract customers to their facility. “We will be located less than a mile from Farmington,” Winter said. “The closer you are to the market, the better off you’re going to be.”

The Navajo Tribe has signed a compact between the State. Which requires the tribe to pay 8% in taxes if the annual income of the facility reaches at least $12 million. The tribe is not entitles to pay taxes if figures dip below the $12 million mark. The county maintains that it still prefers private owned facilities to tribe owned ones but at this point, there is nothing the county could do to prevent the Navajo tribe from implementing their plans.