Members of the United Auburn Indian Community used to live in poverty in Northern California, sleeping in cars or hunkering down in rundown houses with plastic sheeting for windows.

 

Yet since the 2003 opening of their Thunder Valley casino near Lincoln, Calif., the 275-member tribe has left the shacks for upscale housing, opened a pre-kindergarten to 12th-grade school and have provided members with health care coverage.

 

Although tribal casinos profit reports are confidential, Nevada gambling experts estimate that Thunder Valley takes in $500 million to $600 million annually and probably surpasses the revenue of all the casinos in the Reno city limits.

 

With the federally recognized sovereignty of the Auburn Indians, Thunder Valley doesn't pay California taxes on the profits that flow into the tribal treasury. Tribal members each get a per capita cut of the profits, as long as they have a high school diploma or GED and have taken courses in personal finance.

 

The tribe's spokesman boasts that the Auburn Indians have become one of the most generous philanthropic organizations in Northern California, donating $1 million to Sutter Auburn Faith Hospital.

 

"This is their hospital, the one that they went to primarily to the emergency room, because they didn't have their own doctors," tribal spokesman Doug Elmets of Sacramento said. "They had to go there, wait in line for hours to get medical care for years and years. Many of the tribal members have had kids in that hospital and now they are able to give back $1 million."

 

Yet what is good for the Auburn Indians and other casino tribes in California, Oregon and Washington, has not been so good for the casino industry in Reno, Lake Tahoe and Carson City.

 

For nearly a decade, gamblers from northern Nevada's primary feeder markets of Northern California have dwindled since the advent of California tribal gambling in 2000.

Gravestones of failed Reno casino properties, pushed to the edge by tribal properties, could fill a parking lot.

 

Last week, Fitzgeralds Hotel Casino, a downtown icon since 1976, was added to the graveyard. The Fitz's closure and the loss of about 475 jobs comes in the midst of a 16-month slide in casino win numbers for Washoe County and a 10-month slide for the state, according to the state Gaming Control Board.

 

The Fitz closed just weeks before the planned Dec. 17 grand opening of the latest tribal property in northern California, the Red Hawk Casino near Placerville. The tribal casino of the Mewalk Tribe could help grow the northern California gambling market but it also will cut into the profits at Thunder Valley and some other tribal properties, analysts said.

 

Its proximity to Lake Tahoe makes it a serious threat to that market, as well as Reno, experts said.

 

"Clearly, it is going to have a significant impact on Thunder Valley and also the Jackson Rancheria as well," said Bill Eadington, the director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

 

"It will be a quicker trip for a lot of people compared to Jackson Rancheria or Thunder Valley.

 

"As for Reno and Tahoe, it is obviously not good news," Eadington said. "We already have the recession going on and although the price of gas has gotten better, it is just one more choice for customers who otherwise would come over the mountain" to Reno.

 

Like counterparts in Reno, Las Vegas and Atlantic City, the tribal properties across the nation are feeling the effect of the recession.

 

"To be honest, our figures are not at the levels we had last year," said Bruce "Two Dogs" Boszum, of the Mohegan Tribal Council, which runs the Mohegan Sun casino in southern Connecticut. "But I think everybody in the United States is feeling the same thing we are."

 

That applies to northern California as well, said Dennis Conrad, president of Raving Consulting Co. of Reno, whose clientele includes many tribal casinos.

 

"They are seeing slowing gaming growth," Conrad said. "There are markets that are staying pretty vibrant, but California is slowing down."

 

Yet slowing down is not closing down.

Tribal gaming revenue in the U.S. could exceed that of the 12 commercial gambling states, including Nevada, in the near future, industry experts say.

 

"It is possible, and I also think it is likely," said Kristi Jackson of Bank of America Securities in Los Angeles, a primary lender for tribal sites.

Last year, tribal gambling brought in more than $26 billion while commercial gambling revenue totaled $34 billion, said Frank Fahrenkopf, the president and CEO of the American Gaming Association.

 

"For a number of years now, tribal gaming revenues have been growing faster than the commercial side of gaming," Fahrenkopf said.

Overall, tribal casino revenues will continue to increase by more than $1 billion a year, predicted Michael Anderson of Washington, D.C., the former deputy assistant secretary of Indian Affairs at the Interior Department.

 

He also said increases in gambling revenue will increase tribal political power on a national scale and that both Democrats and Republicans court Indian contributions.

 

"If you go to the big fundraisers in Washington, you'll see tables of Indian tribes and supporters there in force," Anderson told Indian County Today. "That is something new. I've been in Washington for 28 years and certainly in the last decade it's something that's grown."

 

A key difference between the potential growth of commercial and tribal gambling is the accessibility of investment capital, experts said.

While Nevada properties mourn the loss of cheap and accessible credit to expand or renovate, tribal properties have less of a problem, Jackson said.

 

"Bank of America, being a primary lender for a large proportion of tribal gaming business across the country, can look at the data and can see that with a few exceptions, you see fairly steady revenue," Jackson said. "In some markets obviously, larger markets, there is some decline.

"But on a net basis, we would expect to see increases," she said.

 

The credit market, however, was to blame for the October suspension of the $300 million expansion of the River Rock resort near Santa Rosa, Calif., according to news reports.

 

Thunder Valley recently announced it was stopping construction of its proposed 23-story hotel but the suspension was not because of the credit market, Elmets said.

 

"This is simply a reassessment of the scope of the project and has nothing to do with the credit market," Elmets said. "It has everything to do with the present economic climate and future market demands. It is simply a decision by the tribe to look at the scope of the project and make sure that it is the most prudent approach."

 

The expansion project might have been halted partially because of its impact on the tribe's per capita payments, Eadington said. Or, tribal leaders might have reassessed the need for the expansion.

 

Original plans called for a 23-story hotel tower, a nine-story parking garage, a 3,000-seat theater, two 30,000-square-foot ballrooms plus a spa, pool and other amenities.

 

"Strategically, did they really need that much?" Eadington said. "They are ultimately a locals casino and realistically, do they really think that people are going to fly into Sacramento so they can drive to Thunder Valley? The answer is probably no."