Luring gamers to play longer, play harder

Go to Harrah’s Cherokee Hotel and Casino on any given day, and there’s a good chance you’ll encounter a promotion of some kind. You could win a cruise. Or a car. Or $10,000. Or just more chances to play the slots.

At the height of the pre-recession glory days in 2007, the casino was running different promotional ploys to attract customers five days out of seven. These days, it’s scaled back a bit. But the number of ways the facility is trying to bring in potential gamblers is still into the hundreds a year. And it’s Leann Bridges’ job to think up new ways every day.

She is the vice president of marketing at Harrah’s, and she has a team of people who come up with new and different ways to make Harrah’s a more enticing place to come.

“We do a lot of brainstorming,” said Bridges, because it’s a challenge to keep the same product new and fresh.

Gambling, of course, will always attract the committed players. But getting the occasional gambler — and getting them to come back again — is the job of the marketing team. Because, unlike a clothing store or restaurant, there aren’t often new lines coming out and the gambling menu doesn’t often change.

So creativity is paramount for Bridges and her colleagues to get players to spend more and play longer. And they do come up with some interesting ideas. There was a long-running trout challenge for a shot at the $100,000 purse, where players earned points over two weeks of play toward a shot at fishing for the winning trout.

There are cash pots to be won by swiping your casino card, only to see the ante upped — keep the money, try for more? There are retail promotions, car giveaways, vacation getaways. Imagine a promotion, and Harrah’s has probably done it.

Around Bridges’ office, you can see the detritus of promotions gone by. A large disco ball sparkles in the corner, holdover from some past event.

But really, she said, for all the different spins they put on them, those in the business know that there are essentially three types of promotions. And making people think this or that one is special, day after day and year after year, is where the real talent comes in.

“It’s very, very difficult keeping things fresh,” said Bridges. There are some big breadwinners they can fall back on time after time, that people know and look forward too, such as the casino’s long-running take on the car giveaway called Fast Lane Frenzy.

“We have some brand equity in that, but if we tried to run that every single month it wouldn’t be successful,” said Bridges. So on top of that brainstorming, a lot of what they do in her department is borrowing. She trawls the internet regularly, looking for interesting deals.

Every time she hears a commercial on TV offering some new, hot setup or contest, she perks up. Part of the job is hearing other marketing ploys and thinking, ‘I know how that works, and how could we make it work better?’

Just last weekend, said Bridges, she stopped by a Chick-fil-a and picked up some ideas from its current pitch.

And unlike on the casino floor, the house doesn’t always have the advantage when it comes to promotions. What brings people in is sometimes as surprising to Bridges and her crew as anyone else, and much of their success comes from a minutely analyzed process of trial and error.

Say there’s a $15,000 prize giveaway. Analytical programs calculate how many people will be lured to play and how much — an ultimately how much revenue it would generate. Would it bring in enough to make up for the prize payout?

“There a lot of different ways that we can slice and dice the data to tell us this drove people in there, people opted in, there was a high level of interest in this,” said Bridges.

And, as with most business propositions, it’s revenue generation that matters. In the past, that has meant more money and customers in the casino. Until now, that’s been the name of the game: casino customers.

Their base demographic has always been the 55-year-old female slot player, and that was the crowd that the contests, giveaways and sweepstakes were playing to.

But with the massive expansion that’s remodeling the place, the focus is shifting entirely.

“There’s still a lot of people that think we’re just a little slot house. People don’t even know what we are in some cases. So we have that group of people that we need to address and talk to and educate,” said Bridges. These days, the buzzword around Harrah’s Cherokee is resort. Once, they say, we were a casino with a hotel. Now, we’re a resort. And not everyone that comes to a resort even wants to play the slots. At a casino, it’s all about the gaming. At a resort, it’s all about the experience.

So Bridges and her team are changing their game to get those people. What if some people came to Harrah’s and never spent a dime gambling?

That is the new goal.

They’re not leaving their old, core clients behind. And the gambling will always be there. But the new challenge is creating wild and wildly enticing promotions that are still doable.

In the past, they tweaked the contest to the clientele. One game had a giveaway that was valid for only five minutes after the winner’s name was called. Hear your name, you have five minutes to get to the prize redemption window. With that one, Bridges heard complaints because, well, Harrah’s clientele on the whole aren’t exactly young, lithe athletes. They couldn’t make it across the building in time to claim the prize. The time limit will be upped in response.

The same mindset, said Bridges, is what they have to take forward if they want new people to come.

“We are changing everything about Harrah’s Cherokee,” she said. “It’s almost like starting from the ground up. This is going to be a totally new facility, a new experience. And for us, no two days are ever the same.


Gardener sees casino as a canvas

Finding a custom fit 2,000 times over

Dishwasher extraordinaire

A masterful game of musical chairs

Behind the casino curtain: Keeping a 56-acre complex running no matter what

Harrah’s Cherokee Hotel and Casino towers over the landscape in Cherokee, its three hotel towers only surpassed in height by the mountains providing its backdrop.

The polished product it offers patrons — legal gambling in a refined setting with a high-class feel not found elsewhere in the region — is only a fraction of what happens on the 56-acre footprint that Harrah’s occupies.

Running the operation is a machine, and keeping all the working parts moving 24 hours a day means it must be immaculately oiled.

Laundry for the hotel alone amounts to around 12,000 pounds a day. There is so much, in fact, that it has to be taken to a large warehouse laundry a mile up the road.

The casino and hotel complex has 4.46 miles of walkways and corridors that must be vacuumed and kept trash free. Thousands of windows have to be washed.

Powering the campus is a monstrous feat in itself, and in a non-stop video gambling palace, there can be no such thing as a power outage. The casino employs eight generators, capable 16 megawatts of power. It’s enough power to light up the entire Cherokee reservation. It’s so much power that, on particularly toasty summer days when air conditioners are running full tilt across the state, Duke Energy calls up to ask Harrah’s a favor: can they switch over to their generators to free up power load on the grid?

Speaking of AC, the units that serve the new gaming floor each move 35,000 cubic feet of air every minute — designed to continuously pump out the cigarette-smoke laden air and pump fresh, clean air in.

And how, exactly, do you keep a place with miles and miles of corridors and gaming floors and restaurants and hotel rooms and lobbies full of fresh air?

“We pay for it,” says Norma Moss, laughing bluntly. Moss is in charge of operations at Harrah’s, so she knows precisely which cogs must turn in which wheels to keep things running smoothly.

And with 2,000 employees and a 24-7 schedule, the logistics can be slightly nightmarish, with cleaning being a particular challenge. It seems somewhat uncouth to clean around customers, but the customers never fully leave, so Moss and her team have to get creative in their efforts. On top of that, though, they just put a lot of man hours into it.

“We have people that do nothing but pull trash out of trash cans off the casino floor,” says Moss. “They pull trash out of cans and put in a new liner. That’s their whole job, that’s what they do every day. They’re not reassigned.”

There are people who come in the dead of night to do heavy cleaning in the parking garages. There are people who constantly empty ashtrays.

There is an on-site upholsterer who repairs and replaces the multitude of furniture, from hotel room sofas to stools on the gaming floor. There are people who roam the halls, replacing thousands and thousands of light bulbs.

That alone is a challenge, given the dozens of different light bulb types found throughout the casino and hotel, some highly specialized and very expensive indeed.

Basically, if you see something wrong anywhere in Harrah’s, there are probably people for that.

The place is gargantuan, so there are going to be problems. The goal, says Moss, is not just staying on top of them but staying ahead of them.

Even though there is a specialized job for just about everything — about 250 different job descriptions in all— the philosophy is that everyone should be responsible to the whole thing.

See peeling wallpaper? Tell somebody, make sure it gets taken care of.

Burned out light bulb? Missing trim? Cracked window?

When it comes to staying ahead of the avalanche in a non-stop business, Harrah’s has taken a leaf from the Department of Homeland Security’s book: if you see something, say something.

And it shows in their maintenance record. When things break, a form, of course, gets filled out. When the thing is fixed, the form is closed out. They close about 700 a week, says Moss. There are fewer than 20 that are two weeks old, ever.

It’s how they keep the machine from spilling out into the front of the house, this seemingly paradoxical philosophy: something is specifically your job, but everything is everyone’s job.

Paying no attention to the man behind the curtain is much easier when there are 2,000 wizards running the machine.

Luring gamers to play longer, play harder

Gardener sees casino as a canvas

Finding a custom fit 2,000 times over

Dishwasher extraordinaire

A masterful game of musical chairs

It’s time to approve dealers at Harrah’s casino

Been to the Harrah’s Cherokee Casino? Even if you don’t gamble, I’d encourage a walk through. My bet is you’d be absolutely astounded at what is happening in Cherokee.

I took a media tour a couple of weeks ago and, honestly, couldn’t believe what I saw. The reality that there is something that huge, that glitzy and that busy juxtaposed so near secluded mountains, vast wilderness areas and all of our very quaint, very small downtowns at first take seems a little odd.

What’s not odd, though, is how Harrah’s has changed the fortunes of the tribe — and the region — for the better. In fact, as this recession lingers, it’s painful to imagine how Cherokee, Swain and Jackson counties would be faring without the casino revenue.

The casino, in what is admittedly an understatement, has blossomed. It now employs more than 2,000, and that will go up to 2,400 once the current expansion project is done. It attracts about 3.6 million gamers annually, making it the state’s largest tourist attraction.

And now the Eastern Band of Cherokee Indians wants approval, to use a poker term, to go all in: it wants dealers instead of video machines, a move that it estimates would add at least another 400 jobs. Along with those dealers, say gambling industry insiders, would come tens of thousands of more patrons.

The governor and the tribe are both playing hardball in the dealer negotiations, and reportedly the two are not very close to a deal. The state wants an agreement with the tribe for a percentage of casino revenue for its coffers before allowing dealers. While we agree that the state should gets its fair share, we also hope state leaders take into account what Harrah’s provides for a region that has little industry, few large corporations, and traditionally doesn’t get the attention that is lavished on the coast or the urban centers in the Piedmont. I suspect every leader in this part of the state wants the casino to continue to prosper.

Here’s what leaders in Raleigh need to understand: the casino is the right kind of tourist attraction for the mountain region. It doesn’t pollute like a traditional factory (and thereby spoil the attraction of the mountains), doesn’t add to urban sprawl, doesn’t strain infrastructure, and its patrons come for a few days, spend their money and leave.

The state spends millions on tax breaks to attract jobs in other parts of the state, and yet it could shackle the next planned casino expansion because it wants more revenue than the tribe has so far been willing to relinquish.

It’s been more than a decade since the state let the genie out of the bottle when it comes to gambling. Not only did leaders roll out the welcome mat for the casino, it has since set up a lottery. So there’s no moral or ethical argument for delaying approval of the tribe’s attempt to win approval for dealers. It’s all about the money.

The governor, state leaders and the tribe need to get a deal done so Western North Carolina’s lead economic engine can reach its full potential.

(Scott McLeod can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..)

High stakes casino expansion tests the theory: If we build it, will they come?

When a new federal law in the 1990s opened the door for Indian tribes to build casinos, it set the stage for economically-depressed reservations to become masters of their own destiny, to create wealth where none existed before and improve the quality of life for their people.

“Some have and some haven’t,” said Darold Londo, general manager of Harrah’s Cherokee. “Cherokee was willing and able to make tough decisions that didn’t come easily within the tribe. They were wise and courageous to have done what they did.”

While the casino appears from the outside to be a shining beacon of money, launching the enterprise took more than flipping on an “open” sign and watching the money roll in.

“It took a lot of smart, difficult work with a lot of people in the tribe and Harrah’s to market this operation,” Londo said. “It blew the expectations of the tribe and Harrah’s away. It was more successful than people had ever expected.”

A decade later, Cherokee found itself once again at a crossroads. Since the casino first opened in 1997, there had been growth spurts followed by plateaus.

“We knew there was another plateau coming,” said Principle Chief Michell Hicks said. “At some point, like any product, it gets stale. The customer loses interest. If you don’t keep it fresh there is a risk of losing the customer base.”

The risk of doing nothing — of watching the casino grow old and tired — seemed much worse than the leap of faith by the tribe to go for another expansion.

“It is making sure the casino stays ahead of the customer wants and needs but also make sure we can push the profit level as high as we can possibly can,” Hicks said.

The tribe embarked on a massive $633 million expansion in 2007 to remake the casino and hotel into a luxury resort.

Since then, however, the recession has taken its toll on casino profits. Revenue fell for three consecutive years following a high in 2007. Cherokee was not alone. The trend was industry-wide.

But the decline led many in the tribe to question whether the massive expansion was ill-conceived.

The outlook is improving. Profits are up 10 percent for the first six months of the year over the same six months last year. It’s a sign perhaps not so much of a better economy, but that pieces of the expansion coming on line: the third hotel tower is humming, the concert venue is in full-swing, new restaurants are opening every few months.


Was it worth it?

A big question still looms in the minds of tribal members: was the expansion worth it? It came at a cost — $633 million to be exact. And now the tribe must pay off that debt using its cut of casino profits.

The expansion must reap enough new business to justify the cost — otherwise it could hurt the tribe’s bottom line instead of help, the massive debt eating away at profits.

But that seems unlikely.

“Any business decision you will look back and say ‘should we have done it, should we have not,’” Hicks said.

But for Hicks, he still believes it was the right move, particularly given the bargain interest rates the tribe could get.

As for the recession, however, Hicks admits the timing wasn’t ideal.

“With regards to the economy it didn’t match up as well,” Hicks said.

Cherokee is smart for remaking the casino into a resort, according to Vin Narayanan, a national casino industry expert and managing editor of Casino City Press.

Had Cherokee remained static and not pushed for a massive expansion, its outlook five years from now would not be good. The casinos faring poorly right now are those offering little to guests other than a gaming floor lined with slot machines.

But resort-style casinos, with onsite hotels, shopping and dining: “that has been a proven formula for success,” Narayanan said.

Cherokee had been somewhere in between: not a simple slot-parlor, but not a full-fledged resort either. The new resort amenities will not only attract new guests, but also younger guests.

It will also diversify their revenue stream. Less than a decade ago, 80 to 85 percent of revenue for Vegas casinos came from the gambling side.

“Now it is almost 50-50. Almost half their revenue is coming from dining, hotels, the shopping, that whole thing,” Narayanan said. “It is not just about gaming.”

Cherokee’s casino competition doesn’t just come from Atlantic City, the Gulf Coast or Vegas. It is competing against cruise lines and Disney World — the whole sphere of entertainment dollars.

At least revenues are climbing again now. If not for the expansion, they could be flat or still dropping.

Londo predicts the Cherokee casino won’t get back to past profit levels until 2012 — three years ahead of the rest of the industry.

“In the industry they are not projecting a return to those types of levels until 2015. That is a testament to the capital investment in this property that we’ll return much sooner to previous levels,” Londo said.

Hicks points out that 2010 would in fact have held steady from 2009 if not for three bad months in the winter, when Cherokee was surrounded on three sides by landslides blocking the way to Western North Carolina. Rockslides shut down Interstate 40, U.S. 64 and U.S. 441, essentially blocking all routes to Cherokee from points west.

“We had some variables there we couldn’t control,” Hicks said.


Protect the monopoly

While the economy has tempered the tribe’s hopes for the expansion, things could be much worse: gambling could be legalized in North Carolina or a surrounding state.

That should be the tribe’s biggest fear, according to Narayanan.

“States are in a world of hurt from a revenue standpoint,” Narayanan said. “If the North Carolina budget becomes bad enough, they might bring in an industry that is willing to get taxed at a ridiculously high rate. A few hundred million in revenue starts to look pretty good.”

That’s exactly what’s happened in some New England states, putting a major dent in Atlantic City’s monopoly, and thus its profits.

“It is like McDonald’s and Burger King, there is a finite amount of fast food revenue that the industry is competing for,” Narayanan said.

Closer to home, the state of Ohio sanctioned four casinos in the throes of recession budget woes. Each will rival the number of games offered at Cherokee, and two are resort-style casinos carrying a construction price tag of close to $1 billion.

As the only game in town, Cherokee has a clear advantage. The next closest casino is a day’s drive any way you slice it: the Mississippi River, the Gulf Coast, Atlantic City, or the many casinos run by northern and mid-western Indian tribes, from Oklahoma to Iowa.

But that advantage only goes so far. The rest has taken the blood, sweat and tears of an entire tribe to realize.

“The thought that we aren’t in a competitive market based on our geography is a false perception,” said Londo, general manager of Harrah’s Cherokee. “There is a percentage of gamers that are relatively promiscuous. They will travel to the right environment for them. In some cases, it is just as easy to hop on a plane. Nobody has the lock on that business, even if they have a geographic advantage.”

The lack of competition can even be a turn-off. Some gamers like the action of casino-hopping.

“Some people if they are going to make an effort to game they want options and choices,” Londo said.

Cherokee’s sprawling casino expansion does its best to make up for that.

“Here we were very deliberate in creating zones, so it had a different look and feel because people do want that change in scenery,” Londo said. Different lighting, different music, a different mood — and different luck.

The marriage between the tribe and Harrah’s has been a happy one. Harrah’s brings the expertise and know-how to running a casino. The tribe benefits from its name recognition and cross-marketing of other casinos.

In return, it gets a management fee, based on a percentage of the profits.

“As we’ve grown in our capabilities, Harrah’s has learned as much from us as we learn from them,” said Erik Sneed, construction oversight liaison for the expansion. “We’ve been very smart in the way we do our business to stay ahead of the curve.”

Ultimately, Harrah’s is a corporation, while the tribe is beholden to social, cultural and civic goals. Their goals aren’t mutually-exclusive, but there are differences, Londo said.

“What you will find inherent for tribes is they want to prevail over a longer period of time, whereas companies beholden to Wall Street want to focus on short-term results,” Londo said.

Cherokee is more interested in ensuring revenues will still be strong five years from now and less concerned about the current state of business affairs, Londo said. And the tribe also wants to provide jobs for tribal members and see them promoted in the company.


In the trenches

When 46-year-old Londo took the helm at Harrah’s Cherokee in 2006, the tribe was eyeing an expansion in the neighborhood of $400 million.

Not big enough, Londo thought. He believed Cherokee had more market potential than that. It meant “going bigger, and a lot bigger in some cases,” Londo said.

But there’s a fine line.

“Nobody wants to be in a facility that feels empty, that lacks excitement and enthusiasm,” Londo said. “If you were going to err you would err on the side of being just a little smaller than a little too big. It feels energetic.”

Londo has Ojibwa ancestry, though he didn’t grow up on a reservation. His parents ran a restaurant in Milwaukee. His first memory is as a five-year-old boy, filling an ice chest in Londo’s Lounge.

He went to West Point, and became a captain in the military, flying Cobra attack helicopters and then training other pilots. He got his MBA on the side, then quit the service and went to law school. After working 10 years in the field of business law, he landed a job with Harrah’s in Atlantic City 2002 and rapidly rose through the ranks.

Londo is cool and calm by nature, to be expected from his West Point education and military training. He exudes the virtue of self-discipline.

The expansion on the horizon was a major drawing card for Londo to leave Atlantic City and move to comparatively rural Western North Carolina.

Londo lives in Sylva with his wife and three kids, ages 12, 16 and 17. As far as the family is concerned, it stacks up to their past life just fine.

“My wife probably enjoys it the most. She says if you have a Wal-Mart and a Lowe’s you are good-to-go,” Londo said.

“I would have been a lot less excited to come here if Cherokee wasn’t on the eve of exploiting its growth potential,” Londo said.

Londo instantly immersed himself in the master planning for the expansion.

No decision seemed to small for Londo to weigh in on. Where should valet parking drop-off be? How many seats should the buffet have, or the concert venue? Which would be better, a new Italian restaurant or a steak house? As for retail, a ladies footwear shop or consumer electronics?

A master planning committee of the casino’s top management and architects had their own “situation room” dedicated to the expansion, where such details were hashed out.

“There was a time when I was in design, construction and right-sizing type meetings three-and-a-half days a week,” Londo said.

But it was his forté and he loved it.

“The military trains you to plan, plan, plan. Planning is important,” Londo said.

When the tribe set its sights on a major expansion of the casino, one of the first steps was a critical casino-hopping tour in Atlantic City to check out the competition. Far from a sightseeing junket, however, the team had a rigorous itinerary, visiting several casinos a day with notepads in hand.

Those on the trip each had their own take-away goals. Rather than honing in on the price points for buffet menus, Sneed was on a big-picture quest.

“For me, it was about the quality of the experience. How do you design a space that is beautiful and fabulous but is still functional?” Sneed asked.

He also wondered how amenities were integrated into the gaming floor. Restaurants and shops were one thing the casino lacked, and in addition to sheer square-foot expansion of the gaming floor, the amenities would be a major focus of construction.

How are drink windows tucked in to the gaming floor? How close does the food court come to the tables?

The master plan team didn’t close the books once ground was broken. They were constantly refining.

“That blueprint or playbook that you established isn’t set in stone, so as conditions change you can adapt to it,” Londo said.

Most notably, the advent of alcohol. Talk about a game changer. The casino was dry — like the rest of the reservation — until just last year. Plans were rapidly redrawn to include bars and walk-up drink windows on the gaming floor.

The recession also led the casino to scale back the square-footage for the spa.

The expansion is taking the casino from 1,600 to 2,400 employees. Londo makes an hour each week to drop in on the new hire training sessions — averaging about 30 new hires a week right now.

“How are we expanding when the rest of the economy is contracting?” Londo asked after hitting the highlights of the expansion. “It’s magic. We can’t figure it out either.”

Cherokee is consistently a top performer out of 17 Harrah’s casinos in the country. Once a week, the general managers from every Harrah’s hold a conference call to compare numbers.

Likewise, Londo reports to his boss at Harrah’s corporate headquarters almost daily. Londo has goals to meet — not just for the year, but every month and every weekend. Every Monday, his boss wants to know: how was weekend performance? Did you meet your goals? Did the promotions do as well as expected?

“If not, what do we do about it?” Londo said. “That’s how myopic we get.”

It’s hard to gauge just how high the bar should be for Cherokee. Harrah’s expects growth from one year to the next, but setting revenue goals has been complicated by the economy, with even the most well-versed industry experts flummoxed over how much of a hit casinos could expect in the recession.

But in Cherokee, it’s been doubly complicated. Will new revenue from the expansion off-set the recession? Or for that matter, finally introducing alcohol?

Londo flipped an imaginary coin in the air with his thumb when asked how Harrah’s even begins to set profit expectations for a property in such flux. But he quickly donned his business demeanor and returned to casino-speak.

But Londo’s remaining time in Cherokee is probably short. With the expansion due for completion next year, Londo is looking for that next move.

Extortion or fair share? State wants cut of casino revenue in exchange for live dealers

To hear many Cherokee leaders on the eve of last week’s tribal elections, the tribe is incredibly close to striking an agreement with Gov. Beverly Perdue that would allow live dealers at the casino, perhaps within weeks.

Two letters from the governor’s office to the tribe in August indicate the truth is murkier than the political message, however.

In return for those live dealers Cherokee maintains would lead to a surge in gaming dollars, North Carolina wants a slice — perhaps more accurately described as a chunk — of the casino-revenue pie.

Exact dollar amounts aren’t detailed. But reading between the lines of a politely worded argument between the tribe’s attorney general and general counsel for the governor, the two parties are clearly at odds over exactly how much the cash-poor state can realistically expect to squeeze out of the Eastern Band of Cherokee Indians.

“They are not close,” said Perdue’s spokesperson, Chris Mackey, when asked Tuesday how near negotiations are to finalizing between the tribe and Perdue.

The state, under federal law, can’t tax casino profits or sales taxes on casino purchases, because the tribe enjoys sovereignty. The state can, however, demand a percentage of gaming revenue in exchange for giving the tribe gambling privileges.

The state initially wanted the tribe to give up a share of all revenue from the entire resort: the existing gaming machines, the new table games, along with hotel, restaurants, spa, concert revenue, retail shops, you name it.

That tack was sidelined, however, by the Department of Interior, which ultimately has to approve any “revenue sharing” arrangement between the state and the tribe. Oversight by the federal agency attempts limit what states demand of tribes to a reasonable amount.

But there’s the rub: What’s reasonable? While the state was forced to back off demands for a cut of all resort revenue, the sides are still at odds over what’s on the table: all gaming revenue, including existing gaming machines, or only revenue from newly introduced table games with live dealers. Another option being debated is a direct, flat payment to the state each year rather than a percentage based cut.

Negotiations with former Gov. Mike Easley several years ago reached an impasse, but were rekindled with Perdue this year. Easley had demanded too great a share of revenue, and neither side was willing to budge.

The tribe can’t play hardball forever, however. Getting live dealers at the casino is critical to the tribe’s financial wellbeing: The Eastern Band has a $633-million expansion to pay for at a time when the recession has taken a toll on casino business.

“If they don’t get table games it is hard to see any of this succeeding,” said Vin Narayanan, Managing Editor of Casino City Press in Atlantic City and an expert on the industry. “That is the first thing.”

The casino can’t diversify its audience, or attract a younger generation of gamblers, without table games and live dealers, according to Narayanan.

“Young players play table games. Young players don’t play the slots,” Narayanan said. “Casinos know they have an aging demographic that is attracted to the slots. If you have 4,000 seats of all slots your demographic isn’t going to get any younger.”


Action in Raleigh next week

If the tribe can reach an agreement with the Democratic governor — which state Sen. Tom Apodaca, R-Henderson County, sympathetically described as akin to hitting a rapidly moving target — the Eastern Band does appear to have the votes necessary for passage in the General Assembly, Apodaca said.

The General Assembly is expected Sept. 12 to signoff on allowing the tribe and Gov. Perdue to renegotiate a gaming compact that would allow live dealers. Perdue noted in the proposed legislation that she “desires to amend the compact,” provided the tribe and state can reach an actual agreement.

Despite the blessings of the General Assembly anticipated next week, the letters from the state reveal the critical agreement with the governor might not be easily won anytime soon, however. Cherokee hasn’t exactly gotten the cart before the horse, but this horse sure is proving difficult to saddle and ride.

While the state clamors for a cut of gaming revenue, the tribe has a wish list of its own that includes more than live dealers. The tribe also wants the state to guarantee its gambling monopoly — a promise not to allow any other casinos anywhere in the state for the 30-year duration of the gaming compact, or until 2041.

The state doesn’t appear willing to go that far.

“We believe the area of exclusivity should be focused on Western North Carolina, recognizing that this protects the tribe from an encroaching competitor while at the same time it avoids binding the hands of future governors and legislatures,” read one of the letters from the governor’s office.

In earlier negotiations that allowed the tribe’s existing casino operation, the tribe was made to give up some of its gaming revenues (at least $5 million a year) for the good of the region. The Cherokee Preservation Foundation was formed to award grants to worthy economic development or cultural initiatives across the mountains, not just on the reservation. The state is willing to reduce the amount the tribe has to funnel to the Cherokee Preservation Foundation if that’s what it takes for the state to get the cut it wants for itself.

Ultimately, the negotiations between the tribe and the state are playing out like the ultimate poker game. A cash-strapped state that’s eager to claim a cut of casino revenue; a debt-burdened tribe that needs live dealers. Only time will tell who has the better hand.

No limits

A chandelier over a high-limit gaming table at Harrah’s Cherokee Casino costs $150,000, more than the median selling price of homes in Western North Carolina last year.

Like all the luxury touches found in the casino, it was custom designed. Carpets weren’t picked from swatches. And you won’t find the light fixtures in a catalogue. A team of interior designers invented everything from scratch and had them manufactured to order.

They exude class. On average, the casino’s interior finishes cost $250 a square foot. The tile mosaics on giant columns are real slate. Any paneling is real wood.

“They didn’t skimp on quality at all. When people come in here and play, they look at finishes. They look at décor. If it looks cheap their perception is going to be this was just thrown together,” said Matt Pegg, executive director of the Cherokee Chamber of Commerce.

But in some spaces, such as the posh Asian gaming room — boasting a traditional moon gate over the entrance, thought to bring wealth to those who pass through it — interiors ran as much as $600 a square foot.

If dropped in to Harrah’s blindfolded, the glitz and glam could easily place you in Vegas. But behind the veil, the subtle influence of color and design leave no doubt this casino is in Indian Country.

“In the beginning, we created a story, what I call the backbone, of the entire casino,” said Michelle Espeland, the lead interior designer.

Native American themes had to be present, but not “in your face,” Espeland said. “It has derivatives of Native American influence, but not over the top.”

Cherokee art with highly literal images once decorated the hotel rooms and corridors. The new art package, as they call it, is much more subtle in its native themes.

Espeland was one of nine interior designers at the project’s peak working for The Cunningham Group, the architect firm over the casino expansion.

Common threads run through the casino, from the hotel’s front desk to the shopping concourse. But such a large, sprawling space needed variation, too.

Themes define four blocks within the casino: Mountain Breeze, Woodland Moon, River Valley and Earth Water. The interiors team devoted an entire wall of their office to a creative board, papering it with key words and adjectives that related to each theme.

Set into the ceiling above gaming tables in Woodland Moon, lighting shines through yellow glass set in a tangle of wooden beams, meant to convey dappled light filtering through tree branches. In Earth Water, a light display covers a three-story wall to give the sensation of falling water drops.

Also part of the Earth-Sky zone, the 600-seat buffet has a soaring ceiling bulging with angular rust red boulders. A giant two-story marble slab on one wall is inlaid with jagged, elongated mirrors representing fissures in a rock face.

“It’s the notion of being in a geologic formation,” said Erik Sneed, construction manager of the project. He pointed out the ceiling overhead dotted with constellations.

asiangamingroomThe finer points of design are so imbedded throughout the casino, it’s impossible to discover them all. Even the newly-opened food court, featuring a Dunkin Donuts, Boar’s Head deli counter and the like, is so polished that “food court” is hardly the right name for it.

“Of course, we did it with typical casino flare — spent a fortune on all the fixtures,” Sneed said.

Pegg thinks it was the right call.

“We’ve all been to that place that is supposed to be great but you get there and it is only alright,” Pegg said. “Here, there is going to be that ‘wow’ factor. People will want to come back again and again.”

Hello Bellagio, meet Cherokee

The Mirage has a volcano. There’s the Fountains of Bellagio, and the pyramid-shaped Luxor.

Cherokee will have the Rotunda, the crown jewel of the $633 million expansion to be unveiled next year and serve as the new casino entrance.

“With any casino, the notion of a grand arrival is key to create a sense of excitement,” said Erik Sneed, the tribe’s construction manager over the project. “You want a huge sensomatic, volumetric experience.”

And that’s exactly what Cherokee will have.

rotundaShining five-story trees made of colored glass, like giant Tiffany lamps, ring the Rotunda with a 75-foot waterfall cascading down the middle. A 140-foot screen wraps around the walls where choreographed shows will be projected in concert with visual manipulation of the lighting in the trees and waterfall, along with intense audio effects.

“The lights will go down, you hear thunder rumble, suddenly the trees glow an intense red, the screen comes on, the music start and the show plays,” Sneed described.

One of 15 shows will play on an hourly schedule.

A massive, floating, spiral staircase winds through the trees and wraps around the waterfall. The self-supporting staircase was designed without columns underneath.

“We wanted the effect of a staircase that looked like it was suspended in thin air,” Sneed said.

But it also took an engineering feat to float with 50 tons of twisted steel.

“The only place that could roll steel that big was in Canada. We had to buy the steel, have it fabricated, shipped to Canada and then back to Cherokee,” Sneed said.

Men at work: Behind the veil of Harrah’s $633 million expansion

As Harrah’s Cherokee Casino closes on the final year of a massive $633 million expansion, the hum of construction that’s been a backdrop to life in Cherokee will give way to a luxury resort positioning the Eastern Band of Cherokee Indians for unparalleled economic dominance in the region.

“It is unlike anything else that has ever been attempted,” said Erik Sneed, the tribe’s construction oversight manager for the expansion. “You’ve seen projects like this in Vegas or Atlantic City. Rarely have you ever seen it in Indian Country.”

The project had 1,100 construction workers at its peak and 43 architects and interior designers.

Anecdotes depicting the sheer size of the project are limitless. Sneed traveled to Korea to negotiate directly with Samsung for televisions. Nothing quite says purchasing power like an order for 800, 42-inch flat screens.

The expansion was a monumental attempt to change the face of Cherokee’s casino into a resort destination and draw a new demographic of gamer.

It was pursued at great cost, and perhaps risk. It’s the largest construction project in the Southeast, no small feat in recession times. But the tribe simply could not continue to sit on its laurels, said Darold Londo, general manager of Harrah’s Cherokee.

“There were people who were happy with what they had, the whole ‘one in the hand worth two in the bush thing,’” Londo said. “We don’t have that luxury because our customers play elsewhere. They go to all the other gaming markets in the country. There is an incentive to keep pace with them.”

rotunda_constructionWhen the expansion is finished next year, the casino will have pulled off a five-year construction project while remaining one of the most profitable Harrah’s casino properties in the nation.

“My boss never wanted to hear construction used as an excuse. He said ‘Don’t tell me your revenues are off or your services scores are down because you’re building something new. I just don't want to hear it,’” Londo said.

Londo’s boss at corporate headquarters wasn’t the only one unwilling to give the Cherokee casino a pass on making revenue goals while in the throes of construction.

There were 13,900 other people — the enrolled members of the Eastern Band — counting on profits holding steady. Casino profits flowing to the tribe hovered around $225 million the past two years, with half funding tribal programs and the other half paid out directly to the Cherokee people in the form of twice-annual checks.

The tribe relies on casino money for many of its services, from subsidizing the hospital and the school system to native language programs for children. Families rely on their individual cut to make car payments, buy medicine and put their kids through college.

“One of the primary goals was to not affect the tribe’s distribution,” Sneed said.

The expansion won’t only double the number of games to a total of 4,600, but includes a complete renovation of the existing gaming floor.

The biggest challenge: maintain players’ experience and never, ever, go off line. Keeping the casino’s 3.6 million annual guests isolated from the construction zone around them was a feat in itself. False walls created a bubble around the operable areas of the casino while hundreds of construction workers toiled just on the other side.

“I call it the ticking dominoes,” Sneed said. “We’re cascading through a construction sequence.”

Matt Pegg, executive director of the Cherokee Chamber of Commerce, has been a doting spectator of the expansion.

“It has been impressive just to watch it,” Pegg said. “One day you walk around the corner and there is a big wall. The next day they have taken that wall away and there are 500 more machines or a food court.”

One work-around to keep the casino running amidst the construction — quite literally — stemmed from the unfortunate location of the main electrical room. It sat smack dab in the middle of the old motor coach lounge, destined for demolition to make way for an upscale steak house.

Contractors ruled out moving the main electrical room, which houses all the power panels that run the casino. Instead, they decided to demolish the building around it. Crews couldn’t mess up. Knock out the casino’s electrical power, and the lost revenue per minute was unthinkable.

“They were nervous as cats,” Sneed said of the demo crews.

Electrical crews couldn’t exactly kill the power either when it came time to move or add circuits, so specialized teams donning full-body rubber suits and helmets to work with the high-voltage live circuits.

While the guests are oblivious to the construction zone surrounding them, it’s hard to miss once you’re back-of-house.

Drill-slinging construction workers clad in blue jeans and work boots, tool belts clanging about their waists, scurry up and down the employee corridors. Drafting tables, spilling over with blueprints, are tucked into every corner of the hallways. The noise of saws and sledgehammers, somehow imperceptible on the gaming floor, is pervasive.

Even in the administrative wing, hardhats are never far from reach, looped over coat racks and stowed on bookshelves behind nearly everyone’s desk.


Taskmaster of great proportions

On a construction tour of the casino last week, Sneed made a stop over in the new 600-seat buffet, stepping around paint buckets and drop cloths, dodging men on ladders and weaving through a mine field of flying sawdust from table saws.

He excitedly started talking about the grand opening of the buffet just two weeks away without a hint of hesitation or flicker of doubt. It would all come together quite quickly, he said, not at all bothered that the flooring still wasn’t down, dining room tables were no where in sight, let alone finishing touches like napkin dispensers.

“We haven’t delivered anything late so far,” Sneed said.

Execution of the construction project was critical, and the tribe wasn’t leaving it to chance. True to form, the tribe once again proved its capacity for foresight by hiring two of its own contractor liaisons. Their job: ride herd on the construction crews, make punch lists, double check work against blueprints, even scout for the best pricing on interior fixtures.

Harrah’s corporate, with a lot riding on the expansion as well, sent two of its own experts in construction oversight.

“Because of the size and the scale, we wanted to make sure the interest of the tribe was represented in the performance of the work,” Sneed said.

There were 50 to 60 subcontractors working on the job at any given time. Sneed set up shop smack in the middle of the contractor’s encampment, a field of 20 trailers across the street from the casino that served as the central nervous system of the expansion.

As Sneed strolled through the buffet still under construction last week, he pointed to newly installed light fixtures that were the wrong kind and need replacing.

“We saw those and thought, ‘Those don’t blend very well with the architecture. Is that right?’” Sneed said. “So we had to go back and compare it to the drawings.”

The tribe switched contractors part way into the project, parting ways with the crew initially hired for the job over what Sneed referred to as “some mix-ups along the way.” Turner Construction, a century-old company and one of the largest in the country, was brought on. It was a good move, Sneed said.

“You are hiring that company because of their resources, but also their credibility. They have a reputation to protect in the industry and so they aren’t going to screw something up and leave it,” Sneed said.


A maze of construction

Most people would need a road map, if not a handheld GPS, to find their way through the maze of construction corridors and work zones, accessed to those in the know by slipping behind black curtains or ducking through the many “no-entry” doors pocking false walls on the gaming floor.

“It’s confusing. You could easily get lost on this project,” Sneed said.

But not Sneed. He knows the project like the back of his hand, a three-dimensional map of the blueprints seared into his mind.

For the directionally challenged, the casino has maps for hotel guests. Navigating the gaming floors, eateries and retail concourse is tricky enough without adding in the complexity of trekking there from one of the hotel towers and back.

But to steer the majority of guests, way-finding signs are mounted overhead, designed by an expert in such signage brought in a consultant.

“When you have a building this size, you have to make sure way finding is clear cut,” said Sneed. “It is so enormous, people have to understand clearly how to get out of this building in case something ever happened.”

At regular intervals on the casino floor, there are large interactive signboards, akin to a digital version of a shopping mall key, for resort guests to find what they are looking for and how to get there.

Getting lost isn’t the only problem. Getting around is too, especially for the older population of gamblers who make up the large part of Harrah’s customer base. They don’t have the mobility to make long treks.

“If you’re staying in hotel tower one and your favorite game is in Mountain Breeze, you are going to walk about a mile,” Sneed said. “It is a challenge.”

The solution: layover points to stop and rest and visually pleasing elements along the way.

“We designed it with a sense of journey so that as people make their way through, you have this or that to catch your eye and look at,” Sneed said.

It might be a group of sofas by a fireplace, artwork inlayed into the tile floor or balconies overlooking the gaming floor. A collection of sky bridges means players never have to go outdoors.

Londo said the casino is breaking industry norms with the lounging areas. For years, consumer psychology experts preached against places to loiter, warning that it is best to keep people on their feet browsing and shopping.

But Darold Londo, Harrah’s Cherokee general manager didn’t subscribe to that school. The casino was just too big for older guests not to stop and rest.

“It’s a haul for anybody, but if you are challenged getting around ...” Londo said.

Londo also cited insight from his current bedside reading, Why We Buy: The Science of Shopping. The author’s studies of consumer habits found lounging areas are not, in fact, detrimental to sales.

In coming weeks, the casino plans to deploy a fleet of golf carts to shuttle people back and forth to the hotel towers similar to those used in an airport. It also rents electric scooters.


Going vertical

Harrah’s hotel towers are the only structures west of Asheville in the state that are equipped with seismograph detectors. Hemmed in by mountains on a landlocked reservation, Cherokee had little choice but to build up.

“We shoehorned it all in,” Sneed said. “We couldn’t take a horizontal site and expand out. We had to think vertical.”

It’s obvious from the outside — with the soaring hotel towers and parking decks. But it also influenced the basic layout inside. A giant 600-seat buffet overlooks the gaming floor from a mezzanine, while a large 3,000-seat concert venue sits above it on the second floor. The stacked layout called for dozens of elevators and escalators.

The site limitations came at a price.

“We spent millions developing the site to accommodate an expansion this large,” Sneed said. “We went through literally months of blasting everyday getting through solid rock.”

Ultimately, construction called for nine retaining walls, including a 75-foot “soil nail” wall, the largest in the South. There was $1 million on a dewatering system for the parking garage. Another $2 million for federal stream mitigation to work around a creek that courses through the middle of the sprawling casino property.

Site work was the only portion of the construction that faced delays or cost overruns, a nasty side-effect when dealing in the unknowns of what lies below ground.

The project, once finished, will undoubtedly be a towering symbol of the tribe’s progress, a fitting monument to how a once persecuted people have bootstrapped themselves into the single largest player in the region’s economy through foresight and vision.

“It is going to attract an entirely different clientele. This isn’t just a daytrip casino any more,” Sneed said. “There’s a legacy in this also. We want to build something the community is proud of.”

Being the middleman for bulk liquor sales at Harrah’s not as lucrative as it seems

Harrah’s Cherokee casino bought nearly half a million dollars of liquor over the past year, netting almost $50,000 in profits each for the ABC stores in Sylva and Bryson City — which had the privileges of being the casino’s suppliers.

But despite the numbers on paper, it is hasn’t proved quite the windfall the two towns hoped.

“It was nothing like they said it was going to be,” said Monty Clampitt, chairman of the Bryson City ABC board.

“People thought there would be a world of money flowing in all of a sudden if we did this,” said Kevin Pennington, chairman of the Sylva ABC board. “I think it was a little surprising that there was not near as much money coming in.”

The casino began serving alcohol to customers last year. The Cherokee reservation was — and still mostly is — dry. The tribe made an exception for the casino, but lacked an ABC store of its own. So it turned to the ABC stores in neighboring Sylva and Bryson City to buy from.

Since the reservation lies partly in Jackson and partly in Swain counties, figuring out which store had dibs on being the casino’s alcohol supplier got complicated. Ultimately, the stores in Bryson and Sylva launched a joint venture with the sole mission of filling bulk liquor orders for Harrah’s and decided to split any profits 50-50.

Both towns hoped it would be a lucrative deal for them, since profits from the ABC stores go straight to town coffers.

But neither town has seen a penny yet, despite being more than a year into the operation.

“We haven’t gotten any of it yet. None,” said Pennington.

The joint venture has cleared $100,000 in profit so far, so at first blush it’s not clear why that money hasn’t been meted out to the towns along with the regular ABC dividends.

But Clampitt and Pennington said the profits to date have been used to build up working capital and inventory.

Roughly half the profits are tied up in inventory — $50,000 in liquor is stacked on pallets and shelves in the back storeroom of the Bryson City ABC store, ready and waiting to fill the weekly orders coming from Harrah’s.

Another $50,000 is sitting in the checking account, a cushion to ensure smooth cash flow, Clampitt said.

Since the state warehouse will only ship to local ABC stores once a month, they have to buy the liquor up front.

Harrah’s makes out a shopping list of what it will probably need, but its actual order may vary, so it could be weeks before the inventory moves off the shelves.

“You can’t tell a customer what to buy,” Clampitt said.

But with inventory and reserves now built up, profits made from here on out will be paid out quarterly. Sylva and Bryson City can each expect checks for $11,600 to arrive any day, a payout from the second quarter, Clampitt said.


Cherokee forays into ABC store of its own

No sooner than Bryson and Sylva’s joint venture has started paying off, however, and the end is in sight. Cherokee is well on its way to an ABC enterprise of its own and within the year will stop buying from its neighbors.

From the beginning, Cherokee has wanted to setup its own ABC store, selling the liquor to Harrah’s itself and keeping the profits for the tribe rather than sending them down the road to Bryson and Sylva.

The logistics of starting one haven’t been easy. The tribe ultimately needed a special bill passed by the General Assembly allowing it to start its own ABC venture, so it can order directly from the state warehouse without going through the Sylva or Bryson stores as middlemen.

The Sylva and Bryson stores weren’t planning on riding the casino’s liquor gravy train forever.

“I figured it wouldn’t be long before the tribe got it worked out,” said Larry Callicut, town manager of Bryson City.

“I was not at all surprised when the Cherokee said they can just buy stuff directly from the state,” Pennington added.


Delayed gratification

It will be several more months, and possibly even a year, before the new Cherokee ABC board is up and running, however. There’s a complicated computer system to set up, a staff to hire and a place needed to hold all those waiting pallets of liquor.

“They’ve got some organizing planning and what not to do,” Clampitt said.

Once that’s done the Sylva and Bryson joint venture will become obsolete. It would make sense to shut down the operation and close out the books, liquidating all that inventory and cashing out the checking account.

At that point, the two towns could expect a final payout of $50,000 each.

That’s a good chunk of change for small, cash-strapped, recession-burdened towns to clear. It’s better than nothing, Clampitt supposed, but it wasn’t exactly free money.

“It’s been a whole lot of work,” Clampitt said.

The Bryson ABC store lends its staff to the joint venture serving the casino. It takes labor to manage the inventory: keep up with what’s running low, place monthly orders with the state, parcel out weekly shipments to the casino and all the related bookkeeping.

They also personally deliver weekly orders to the casino — a perk afforded to their special customer. (Run-of-the-mill bars and restaurants have to do their own pick-up.)

The Bryson ABC store gets compensated for some of those hours. In June, for example, the store billed the joint operation for $607 worth of its employees’ time.

But the Bryson board also donates some of the labor and overhead to the joint venture. It doesn’t pro-rate a portion of its utilities to the Cherokee operation, for example. Nor does it bill for the labor of unloading the truckload of orders coming from the Raleigh warehouse each month.

The two stores have finally paid themselves back for start-up loans taken from their own bank accounts to get things up and running — namely building up the necessary inventory.

The stores also had to purchase a $15,000 computer system for the joint Cherokee venture. The state ABC system is particular about the software used by all the stores, requiring a certain type of program that interfaces directly to the state warehouse, not only for placing orders but also allowing the state to track the whereabouts of every bottle of liquor.

The state wouldn’t let Bryson’s ABC store use its existing computer system, since the Cherokee venture was technically considered a new standalone enterprise, Clampitt said. So both stores dipped into their own funds to buy the computer system, cutting into profits they would have made otherwise.

Pennington said he was skeptical from the start.

“It was such shall we say a unique situation to start that combined store, I personally never felt like it was done for the best interest of the people of Jackson County to begin with,” Pennington said.

Pennington said he actually advocated against it, but the state ABC people made them do it.

“It wasn’t our idea at all,” Pennington said.

As for the $15,000 computer system? Bryson and Sylva ABC boards have already written that off and deducted it from the Harrah’s profits. But it would be nice to get a little something back for it when the joint venture is shut down,  Clampitt said. He hopes they could sell it to the new Cherokee ABC board.

Coincidentally, a countywide alcohol referendum on the ballot in Jackson County next year could lead to a new ABC store in Cashiers, which if passed, might just need a computer system as well.


Why so complicated?

Liquor sales in North Carolina are a tightly regimented affair. All liquor coming in to the state makes its first stop at warehouse in Raleigh. Local ABC stores in turn order from the state warehouse, a means of controlling the sale and distribution of liquor to the public.

Local stores act as middlemen. They get the liquor at wholesale prices, then mark it up to resell to customers, both to the general public and to bar and restaurant owners. The state dictates how much of a markup is allowed, about 25 percent.

After covering overhead and salaries, local ABC stores turn the remaining profits over to the local government, either the town or county, or in some cases both.

Cherokee election politics fixed on looming casino debt

In the current political debate, the word ‘debt’ has become ubiquitous. Cherokee is no exception, where discussion of the debt of the Eastern Band of Cherokee Indians — and how, precisely, to dispose of it — has dominated the election season since it began this spring.

With one month to go until the election for chief, vice chief and tribal council, voters are standing up at every public forum to ask questions about the debt while candidates are touting their plans to eradicate it.

Meanwhile, the finance department for the tribe has gone on a massive public information campaign: opening a forum on the tribe’s website, starting a hotline where people can e-mail questions and get an answer back from a finance officer and leafleting the reservation with brochures entitled things like “A Closer Look at Tribal Debt.”

One question seems to underlie the whole discussion: how much, exactly, is the debt?

Answers from different sources have been many and varied, and depend very much on where you stand politically. The incumbent chief and vice chief claim the tribe’s debt is manageable. The challengers claim it has ballooned out of control.

It’s often said that numbers don’t lie, and with tribal debt, these are the raw numbers as of June 30, the end of the last fiscal year.

The tribal government has two debts it’s paying off directly: $57.2 million is still owed on the $107 million school complex and $10.8 million is still owed on the Sequoyah National Golf Club.

There’s also an $8.9 million series of loan guarantees that the tribe backs for the Cherokee Historical Association’s line of credit, the Tribal Bingo Enterprise and Balsam West, a broadband enterprise the tribe has a stake in.

If you take the position of the tribe’s finance department and Principal Chief Michell Hicks, that’s all the debt the tribe has — $76.9 million.

But then, of course, there’s the casino debt.

The casino is undergoing a massive expansion project, for which the tribe’s casino enterprise has secured a $650 million line of credit. So far, the enterprise has tapped $494.3 million of it.

Deputy Financial Officer Kim Peone expects that not all of it will be spent when the expansion is complete, and she doesn’t consider that tribal debt at all.

The casino is an entity of the tribe, but is run by a separate group called the Tribal Casino Gaming Enterprise. The gaming enterprise, not the tribe itself, is responsible for the casino’s half billion in debt.

But here’s where politics comes into play. The current administration running for re-election is adamant that tribal debt shouldn’t include casino loans.

And it’s true that, if the casino defaulted, the bank wouldn’t come looking for the tribal government’s assets.

“We’re not ignoring the impact that a default would have on this tribal government and the services that we provide to this community,” said Peone. “But the casino debt is not guaranteed by the tribe, it’s guaranteed by TCGE.”

From that perspective, there’s $76.9 million in debt. Meanwhile, the tribe’s designated account it makes debt payments from has just over $134 million in it.

Simple math tells you that the tribe could pay the debt off today, but according to Peone, choose not to because that money is earning more interest than the debt is costing.

“Currently, the interest rate on that loan is less than the funds that we’ve invested in,” said Peone. “From year-to-date, that fund has earned 4.5 percent as opposed to 2 percent in a loan.”

On the current schedule, she plans to have both the school and golf course loans paid in full by 2014.


Casino debt part of bigger picture

But opponents say you can’t remove the tribe from the casino; they’re inextricably linked.

For starters, profits from Harrah’s Cherokee Casino accounts for roughly 90 percent of the tribe’s operating budget. If more of those profits were diverted to making debt payments, the tribe’s budget for providing services to enrolled members — such as schools and medical care — would be impacted.  

Patrick Lambert, a challenger for the position of principal chief, said he thinks it’s impossible to separate casino debt from the tribe.

“It’s all tribal debt,” said Lambert, pointing out that the tribe’s operating budget would plummet precipitously were anything to happen to the casino debt.

This is Lambert’s second time going for the chief’s seat, and though he lost by a slim margin in the 2007 election, he defeated Hicks in the July primary. He is a lawyer for the Tribal Gaming Commission.

Lambert said he is concerned, too, about just where the tribe is investing its money to get such good returns, asking if such investments are too risky.

“I think it’s pretty clear on debt. I come from a background of small business, and so I understand about debt and borrowing and those type of issues,” said Lambert. “Debt is a necessity, but it’s also something you can’t let get out of control. We need to control the spending so we can start applying more of the revenues we do have to overall debt.’

Right now, said Peone, the tribe puts 8 percent of every dollar it spends to paying off its non-casino debts.

The casino pays $20 million a year on its debt, plus more on interest.

Both principal chief candidates have promised to pay down the debt if they are elected, though that could be plus or minus a few hundred million depending on what you consider “the debt.”

The current administration is out to prove that the tribe is on sound financial footing, especially compared to other municipal governments.

The opposition is calling for a check on spending and reigning in the debt.

And when voters visit the polls September 1, it may be the best numbers that win.

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