Is the proposed $600 million Sonoma County casino a financially viable bet? A look at supply and demand
A relatively obscure tribe is trying to enter the Indian casino business in the North Bay, which begs the question: How many are too many gaming facilities in one region?
The Koi Nation earlier this month announced its intention to build a $600 million resort on 68 acres in Windsor that the tribe recently acquired for $12.3 million. This would be about 15 miles from its nearest competitor in Rohnert Park.
“I don’t think (oversaturation) will be an issue in the least. You have so much population up there,” said Anthony Lucas, a professor of casino management at the University of Nevada Las Vegas who has developed award-winning research on the business aspects of the global gaming industry.
Casinos in the North Bay can easily draw from the entire Bay Area, which is home to 7.75 million people in the nine county region.
With the American Gaming Association reporting revenues reaching $34.6 billion in 2019, and annual growth for the nine years prior to the pandemic, the Koi Nation wants to tap into that pot of cash, joining two established tribal casinos in Sonoma County and several in neighboring Lake and Mendocino counties.
Koi Nation is also not worried about cannibalizing the market.
“The Shiloh Resort & Casino is going to offer a different experience to customers, from the design of the facility to its integration with the natural environment, from an entirely non-smoking campus to the combination of dining, entertainment, gaming, and proximity to the Sonoma County wine country,” Darin Beltran, chair of Koi Nation, told the Business Journal. “That’s a combination we believe would be appealing to a very wide range of customers, including first-time casino customers looking for a unique experience in a unique location as well as people who enjoy gaming and are looking for a different experience.”
However, Graton Resort and Casino in Rohnert Park, which opened in 2013, is not welcoming a competitor just up the road on Highway 101. The Federated Indians of Graton Rancheria’s contention is the Koi have no ancestral connections to the land they want to develop.
Proving they have a right to the land is one of the federal hurdles the Koi will have to overcome before the first shovel of dirt is overturned.
“The Koi Nation’s attempt to push through a proposal to jump into other tribes’ territory is wrong. Moreover, this is not the Koi Nation’s first attempt at reservation shopping,” Greg Sarris, chairman of the Federated Indians of Graton Rancheria, said in a statement. “The consensus among ethnohistorians is that the Koi Nation’s ancestral roots are in the Lower Lake area of Lake County. This attempt by the Koi Nation to manufacture a connection to Sonoma County is an affront to Sonoma County tribes such as our own, who have an extensively documented presence here.”
Taxes, fees and compensation agreements
Tribal casinos are a mixed blessing for any jurisdiction in the United States. They bring more jobs, but employees don’t pay state income tax.
They offer more things to do, but it’s not necessarily the type of business local officials would have tried to lure or something tourism bureaus want to promote.
Tourism officials in Sonoma County know all about Indian gaming. In addition to Graton, there is River Rock Casino in Geyserville, which will be celebrating its 20th anniversary next year.
“Of all the motivations for people to come to the North Bay and Wine Country, or Sonoma County, casinos are not a major motivating factor for that visit,” Tim Zahner, executive director of the Sonoma Valley Visitors Bureau, told the Business Journal. “Casinos kind of rank up there with golf and other activities that people can do while they're here. That's not to say that casinos aren't a driver for some visitors, and especially day-trippers who come up just for the day, go to the casino and go back. There are a fair amount of people that do that from the Bay Area and Sacramento area. But for overnight visitors looking for a casino experience, it’s just too easy to get to Las Vegas or Reno. So we're not the draw for that kind of experience at all. Our visitors ask us about cannabis more than they ask about casinos.”
Koi Nation plans to build a 200-room hotel; the same number of rooms Graton has. Transient occupancy tax, or the hotel tax assessed on all room nights, is not collected at Indian properties. That can be a lot of money not coming into local coffers.
Sonoma County’s TOT rate is 12%, with an additional 2% accessed in the seven cities that have approved the Business Improvement Area. These two taxes pay for tourism promotion in the county.