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Wednesday, 06 March 2013 14:53

Cherokee leaders contemplate second casino in Murphy

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fr cherokeecocasinoThe Eastern Band of Cherokee Indians could decide soon whether to move forward with a second casino near Murphy, but some tribal members are raising concerns.

The Tribal Casino Gaming Enterprise will go before the Eastern Band of Cherokee Indians’ Tribal Council Thursday to ask for permission to continue planning the development of a $110 million casino outside Murphy.

For several years, the tribe has been discussing the idea of a second, smaller gambling establishment in Cherokee County to capture more of the gambling market share. The tribe even bought up land to build one outside Andrews but is now eyeing a different tract of land just outside Murphy.

Members of the five-person gaming enterprise board, which oversees the tribe’s casino operations, held meetings in communities across the reservation last week to give tribal members an idea of what building a new casino would entail.

The proposed plans call for a 50,000 to 60,000 square foot casino and 300-room hotel — an estimated cost of $110 million. The hotel alone will cost $30 million but is a necessary part of the plan because people who stay overnight spend more money, said Adele Jacobs-Madden, vice president of finance at Harrah’s Casino.

“We get more revenue from those customers. That is why we need a hotel down there,” she said.

Numbers crunched by Harrah’s financial officers and the tribal gaming enterprise predict that a casino in Cherokee County would bring in $50.7 million in income during its first year and would continue to grow year after year.

The first-year number does not account for annual debt payments but does factor an estimated $47 million decline in revenue at the current Harrah’s casino in downtown Cherokee. If built, some people who previously patronized Harrah’s casino would choose to visit the Cherokee County casino instead.

Despite the promising numbers put out by the gaming enterprise, some tribal members aren’t so sure it is a wise venture. Lisa Frady, a 35-year-old enrolled member, attended the informational meeting in Big Cove last week with her young daughter and was worried about leaving massive amounts of debt for her child’s generation to pay off. The tribe is still paying off loans from the $633 million expansion of its current casino and is continuing with plans for a $92 million family adventure park.

“I don’t feel comfortable handing them that much debt,” Frady said.

Tribal members also raised concerns about putting too much emphasis on gambling as a source of revenue and siphoning business away from local businesses in Cherokee should a second casino open in Murphy.

Big Cove representatives Perry Shell and Bo Taylor both stated that they would ask their fellow Tribal Council members to table the enterprise’s request for approval and funding to give them more time to gather feedback from other enrolled members.

“Not enough people are aware of the details,” Shell said.

Taylor agreed that he would like to hear more opinions on the plan.

“There are still some unanswered questions,” Taylor said. “It’s probably a good investment, but if Big Cove says ‘no,’ I’ll go ‘no.’”

Rather than taking out another bank loan to pay for the construction of the new casino, the tribal gaming enterprise would ask the lenders to simply tack the new debt onto what it owes for the current downtown Cherokee casino.

“It basically won’t be a problem getting the $110 million (loan) approved,” Jacobs-Madden said.

If it gets approval from the Eastern Band’s Tribal Council, the gaming enterprise would not waste any time.

It first must close on the purchase of an 85-acre tract in Murphy, which sits down the road from Walmart and near U.S. 19/74. Then they would build a temporary facility, more like a warehouse, to house gaming operations while the actual casino is constructed. The second casino would offer both table games and slot machines.

Early on, the tribe envisioned a secondary casino with limited types of gambling, something more than a bingo hall but less than a full-blown casino. But now, the tribe plans to go all the way — even offering live dealers and table games — after winning state approval last year to enter the world of the Vegas-style gambling.

Data shows that within a 180-mile radius of Murphy, there are 2.3 million customers who have been to casinos under the umbrella of Caesars Entertainment, Harrah’s parent company — but only 476,000 of those have actually come to Harrah’s Cherokee Casino. That leaves 1.7 million customers within half a day’s drive who have been known to visit casinos but for whatever reason haven’t ventured to the existing casino in Cherokee.

“We should be able to pick up a significant portion of those gamers,” said John Houser, chairman of the Tribal Casino Gaming Enterprise. The Cherokee County location is about an hour closer to Chattanooga, Nashville and Atlanta.

 

Tribal members question plans

Enrolled members asked how the new casino would affect tourism to downtown Cherokee and wondered if Cherokee was putting too many eggs in the casino’s basket.

“If you want to keep growing gambling, that scares me,” said enrolled member Amy Walker. “I don’t like the idea of becoming Reno with so many gambling joints.”

Enrolled members have asked tribal leaders to invest in more varied and more cultural attractions for years.

Frady said she would like to see the tribe invest more in downtown Cherokee businesses rather than the casino. The Cherokee County casino would only draw people away from the main part of the reservation and harm locally owned businesses, she added.

“I see us hurting more from it than benefitting,” Frady said.

Tribal Casino Gaming Enterprise member Ray Rose argued the exact opposite: that gambling has improved Cherokee. Gaming revenue is a substantial part of the tribe’s budget, which funds services for enrolled members, from housing to health services to education. It also pays for cultural attractions such as the Oconaluftee Indian Village and Cherokee Indian Museum, and language preservation initiatives.

“Our culture has benefitted,” Rose said. “Our culture is stronger because of gambling.”

Officials with the gaming enterprise also pointed to the number of jobs the new casino will create.

Projects leaders estimate that the Cherokee County casino would add 800 jobs. The bulk of the new jobs created would include hotel staff, card dealers and customer service employees.

Enrolled members expressed concerns that those jobs would not go to unemployed tribal members. Only about 300 of the 2,640 employees at Harrah’s are enrolled members.

However, Houser countered that enrolled members are not applying for gaming jobs. About 45 enrolled members applied for the 700 new jobs the casino added last year, he said.

“That’s a shame,” Houser said.

Despite questions and apprehension from enrolled members, Houser said from where he stands, the new casino would be good for Cherokee County and the reservation.

“I can’t figure out what’s bad about it,” Houser said.

Among the other benefits listed during the meetings last week: an increases to enrolled members’ per capita checks. Half of the income generated from casino operations goes toward tribal operations and services. The other 50 percent is distributed to tribal members twice a year in the form of a per capita check — an amount pushing $7,000 a year.

According to projections provided by the tribal gaming enterprise, that amount could increase by $579 per person during the Cherokee County casino’s first full year of operation. By its sixth year, that number is estimated to reach $1,990.

“When we reinvest in ourselves, it pays off,” Jacobs-Madden said.

The tribe added the sale of alcohol in the casino in 2009, in hopes of luring more business and resulting in larger checks to enrolled members. The recession hit at the same time, however, and took its toll on casino profits across the nation. The timing makes it difficult to measure what kind of bump alcohol sales would resulted in had it not been for the overall economic decline.

But “Alcohol did not deliver like it was expected to,” Rose said, arguing that such will not be the case this time around.

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