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Arnold M. Knightly

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Michigan casino on track for summer opening

21 Jan 2010

By Arnold M. Knightly

LAS VEGAS, Nevada -- A new American Indian casino managed by Station Casinos should be ready to open by the end of summer, about the same time a management agreement with another tribe expires after seven years.

Construction on the $157 million Gun Lake Casino in western Michigan is two weeks ahead of schedule due to a mild winter, a tribal spokesman said Wednesday.

"Assuming all goes well, we're on track to achieve the grand opening at the end of the summer," Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians spokesman James Nye said. "Right now we're ahead of pace and we'll have to do the best we can throughout the winter months into March."

Station Casinos, which is helping oversee construction of the project, will manage the property for seven years once it opens. Station Casinos will receive a percentage of the property's income based on its performance.

The casino, which will be the only source of revenue for the 385-member tribe, will include an 83,000-square-foot casino with slot machines and table games, a restaurant, food court and an entertainment lounge.

About the same time, the United Auburn Indian Community near Sacramento, Calif., will take over operations of its Thunder Valley Casino. Station Casinos' management contract with the United Auburn tribe expires in June.

Station Casinos received a flat fee of 24 percent of the property's net income.

Union Gaming principal analyst Bill Lerner said in a Wednesday note to investors that Station Casinos generated as much as $20 million to $25 million per quarter from the contract.

Nye said Station Casinos' current bankruptcy has had no impact on the construction of the Gun Lake Casino, which is financed by the tribe.

And Station Casinos spokeswoman Lori Nelson said the United Auburn tribe had always intended to take over the Thunder Valley Casino once the seven-year agreement ended.

"It was always important to the tribe, and set forth in the management agreement, that we were to provide them with the resources to manage the facility by the end of the agreement," Nelson said. "That was always the goal from day one."

Alan Meister, principal economist with California-based Nathan Associates and author of studies on the American Indian casino industry, said while some tribes do renew contracts, many tribes choose not to at some point.

"In cases where they don't renew such contracts, the tribes have often gained the expertise and capital to run the gaming facilities themselves," Meister said. "Therefore, they may not feel there is a need for a management company any longer."

Harrah's Entertainment was granted a five-year extension in December to continue managing the Harrah's Ak-Chin hotel-casino south of Phoenix. Harrah's has managed the property since it opened in 1994.

Station Casinos will continue to oversee construction of an expansion at the Thunder Valley Casino to add a new parking garage, hotel tower, additional casino space and other amenities.

Station Casinos has three other casino management agreements with tribes in California that are in various stages of having land put into trusts so they can develop casinos.

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