Natives get upper hand, say casinos

River Cree Casino and Resort minutes away from West Edmonton Mall casino

Kevin Libin
National Post
November 27, 2006

Fake pirate ship battles, Egyptian pyramids and medieval jousting may thrill them on the Vegas strip. But Edmonton's dream casino? It has to be all about the hockey.

The city's newest gambling refuge already has two NHL-sized ice rinks, overlooked by a sports bar with dozens of brands of beer on tap. Next year, general manager Brian Lee hopes to break ground on two more.

The River Cree Casino and Resort, Alberta's first native casino, already has a four-star hotel and plans for a "high-end" retail complex -- all conveniently located just west of the city limits, 10 minutes from West Edmonton Mall.

Or inconveniently, if you run that mall.

Gary Hanson, the general manager and chief operating officer of Canada's largest shopping centre, has a casino, too.

He also has a hotel. Even an ice rink. And retail stores, of course.

What he does not have is a special arrangement with the province allowing him to spend casino revenues on tourist amenities. None of the other casinos or hotels in Alberta do either, except the River Cree.

That has some Alberta hospitality operators furious, claiming the province has created a fierce competitor for them with a gaming licence so advantageous that it might as well be a licence to print money.

"Casinos in the rest of the province of Alberta do not have access to this fund," says Howard Worrell, vice-president of Alberta operations for Gateway Casinos. "No other hotel in the province of Alberta, no other hockey rinks in the province of Alberta has access to it -- or any similar fund."

Local casino owners are already cranky about losing gamblers who enjoy a cigarette with their slots: On the Enoch reserve, home of River Cree, where the region's smoking laws don't apply, 30% of the gaming floor is reserved for smokers.

"At our place, if you want to smoke today, and it's 20 below, you have to go outside," says Barry Pritchard, senior vice-president of Casino ABS, which runs Edmonton's Casino Yellowhead.

Being out of reach of municipal authorities provides another enviable edge: the River Cree pays no property tax.

"As soon as we open our doors, we're paying $22-million in taxes, where they don't pay anything," Mr. Hanson says. "If we had that opportunity, we'd definitely invest that money into our infrastructure and upgrade it."

But what really alarms hotel and casino operators is Alberta's First Nations Gaming Policy.

Until now, whenever someone dropped a loonie into the slots at one of Alberta's 18 casinos, the bulk of it went to the public: 70 cents to the province's lottery fund and 15 cents to the charities that provide casino volunteers. Owners keep the remaining 15 cents to cover expenses and, ideally, turn a profit. (Money from the less-lucrative table games is split 50/50 between the owner and charities.)

Not so at the new River Cree Casino, where most slot money and all table-game income stays on the reserve. Some goes to social programs. A small portion is made available to First Nations projects elsewhere in Alberta. But the biggest slice, 30%, is to be spent on "economic, social and community development," according to Alberta Liquor and Gaming Commission terms. That could mean anything that lures business -- from hockey rinks and more hotels to a shuttle bus service or live events.

The same deal applies to the Tsuu T'ina nation, which opens its casino on Calgary's doorstep in 2008, and the five other Alberta bands with new gaming palaces in development.

Investors clearly like the sound of those strategic advantages. The River Cree, with help from Vegas-based partner Paragon Gaming, was built with $178-million raised from U.S. and Canadian institutional investors. And it shows: There's the 600 slot machines, 40 tables and a 24-hour poker room, the 255-room Marriott and, of course, the rinks -- which Mr. Lee predicts will make River Cree a choice destination for Canadian hockey tournaments.

The 33,444-square-metre complex also offers a nightclub and three restaurants featuring the haute interior designs of Elizabeth Blau, whose clients include Vegas's Wynn and Bellagio casinos as well as the Taj Mahal in Atlantic City.

Industry rivals concede the Enoch reserve could use an economic boost. But they say creating an unfair competitive environment is not the way to do it.

"This isn't a First Nations issue," Mr. Hanson says. "This is a level-playing field issue."

The Enoch were once among Canada's richest bands. In the 1980s, just 250 residents shared an oil reserve bringing in millions in annual revenues. The oil dried up and the wealth was lost to bad investments and today, with 1,500 reserve residents, unemployment is estimated to be more than 70%.

Crime and addiction are rampant. But despite an aggressive pro-native hiring policy, only 200 residents have taken jobs at the River Cree Casino; there's room for 720.

There is no guarantee the enterprise will solve the rest of the Enoch's ills: U.S. native casinos have a record of leaving reserves worse off, with soaring rates of gambling addiction only complicating social problems.

Edmonton's veteran casino owners are already skeptical that a sixth gambling joint in a city with one of the highest per-capita concentrations of casinos on the continent can earn enough to buy off the growing despair, even with all of its competitive advantages.

But the River Cree is different from its local competitors, notes its manager. With its Vegas-style offering, it is designed to draw gamblers from around North America, Mr. Lee says. "People are already hearing about us and coming to visit."

And wait until 2009, when he will add a second hotel, as well as a 2,000-seat live entertainment venue "modelled on The Joint at the Hard Rock casino in Las Vegas," he says.

But Gary Hanson can't help but see some similarities with another theatre -- one he's been planning for his mall for years. "On the drawing board, we have an 8,000-seat multi-use complex," Mr. Hanson says. "But you know what? I can't afford to build it."