Challenging Times for our Country and Tribe [02.03.09]

The most important factor in the well being of our country and our Tribe is the economy. The state of our country’s economy is terrible and we are in the middle of a global economic downturn. President Bush recently declared the country “officially in a recession” which is something anyone in Mississippi could have told you months ago.

The Federal Reserve has warned that the U.S. economy’s weakness will stretch well into 2009 and that we are in for a protracted period of poor economic performance. The nation’s big three automakers are on the edge of bankruptcy; Wall Street is in trouble and Main Streets in every community are feeling the pinch.

Everyone knows what this means for the casino business. When the economy is doing well and people have disposable income, they are more inclined to spend it on non-essential items like recreation and entertainment. When our nation’s economy is doing poorly and more income has to be devoted to necessities like food and shelter, people have little disposable income.

Slot machines, cards and dice are the definition of “non-essential”. When incomes are down, generating revenue is extremely tough for gaming operations. The Poarch Creek, Pechanga, Mashantucket Pequot, Mohegan and Cherokee casinos have all taken a hit in today’s economy. And it isn’t just Tribal Casinos that are having problems. Non-Tribal Gaming operations are in trouble as well. Stock for Wynn Resorts is down 64 percent from last year. MGM Mirage is down 88 percent.

September saw the biggest drop in gaming revenues in the history of legalized gambling. Even Donald Trump’s resorts missed a $53 million bond payment last month. The list of operations halting expansions, laying off employees and seeing steep declines in revenues grows everyday and comes from gaming operations, Tribal and non-Tribal, across the country.

Thanks to some smart decisions by our Resort management, we are in better shape than most. The Choctaw Resort Development Board recently solicited a comprehensive audit conducted by PricewaterhouseCoopers. They gave our Resort a good review. They found no significant deficiencies in performance beyond those associated with the economic climate and the downturn in the gaming industry nationwide.

High rollers are betting less, they said, which is something we already knew. And it is a problem that isn’t specific to our casinos.  According to the PricewaterhouseCoopers representative, the most serious problem that CRDE faced (other than the uphill battle against a sagging national economy) is the refinancing agreement entered into under former Chief Phillip Martin. That agreement was “set up to fail” due to constant covenant breaches. These breaches are a mistake that is costing us a great deal of money in fees and higher interest rates.

In the early years of the Silver Star, the lone casino distributed around $100 million annually to the Tribe. The restrictions placed on the Resort by the Bank of America re-finance of the Golden Moon capped the annual distribution at a much lower number. Fixing this problem is my top priority for the first few months of the New Year.  

We have also undertaken a comprehensive review of operations and staffing at both casinos to determine whether there are adjustments we can make to maximize revenue. The Resort management recently met with the Resort Board members to share these recommendations. They will be implemented as soon as possible to ensure sufficient revenue continues to flow from the Resort to the Tribal Government to provide services for Tribal members.

Rest assured we are looking at every option to ensure the revenue stream coming from the Resort is not jeopardized and we will aggressively pursue the best course of action for our Tribe. I always put Chahta First. We have to make prudent business decisions, free from political pressures, to ease the financial tensions on the Tribe.

These are challenging times for us. It will take patience, resilience and strength to persevere. Fortunately, we have the talent, resources and the experience to deal with these challenges. It is important that we work together to do the best we can to survive the current economic situation and emerge stronger and more focused on what will serve our Tribe now and in the future.