Jackpot!
Fire Rock's success spurs plans for 3 new casinos

The Navajo Nation's Fire Rock Casino is seen from the air on the during the grand opening on Nov. 19. — © 2009 Gallup Independent / Brian Leddy

Copyright © 2009
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — The Navajo Nation’s Fire Rock Casino has surprised everyone in terms of the actual revenue it is producing. In fact, it’s doing so well that the Navajo Gaming Enterprise is hoping to build three more casinos as soon as possible.

Robert Winter, enterprise CEO, told the Budget and Finance Committee this week that Fire Rock has “almost a 60 percent EBITA” — an acronym that refers to net profit before interest, tax, and amortization expenses. “There’s probably no casino in the United States that has that number. In fact most of their numbers are going down. This is a fantastic number and it seems to be going up.

“We had an initial expansion of 70 slot machines about two weeks ago, and we are now building an expansion in the bingo hall for another 110 slot machines. That expansion should net $23 million a year after all expenses.” A grand opening for the expansion is set for March 28.

Winter said the board now has selected three Class 3 gaming projects it would like to proceed on as quickly as possible.

One is Twin Arrows along Interstate Highway 40 in Leupp, which will be designed to be a major resort. The project is estimated to cost more than $500 million, he said, with the initial phase estimated at $200 million.

Another project — a permanent facility that most likely will have a hotel attached to it — is proposed along the eastern boundary of Upper Fruitland on Navajo Route 36, just southwest of Farmington. That project is probably in the area of $70 million to $80 million, Winter said.

A third project — a travel center-type facility with a casino — is proposed for Pinta Road, also off I-40 in Arizona between Navajo and Petrified Forest National Park.

“Altogether, in first phase construction, you’re talking probably close to half a billion dollars for all three of facilities, but more importantly, what this means is jobs. We project that all of the facilities (including Fire Rock), once they’re up and operating, will employ 3,000 people,” Winter said, and almost all of those employees will be Navajos. “We project that the payroll for all four casinos will amount to close to $90 million.”

Winter said construction at Twin Arrows will be elaborate, and as with Fire Rock, most of those construction jobs will go to Navajos, “so that’s additional income going into Navajo families as a result of this project.

“We project that the overall net profit after all expenses and all financing will be in excess of $100 million to the Nation. It might even be more. We estimate on a conservative basis,” he said. They are approaching three times the figure originally estimated for Fire Rock.

Sean McCabe, chairman of the Navajo Gaming Enterprise board, said that every quarter the state of New Mexico puts out a report on what each tribe pays in revenue share back to the state. From that number they get an estimate of how each tribe did on its gaming net win.

“Fire Rock Casino, at the end of the third quarter, Dec. 31, had only been in operation five to six weeks. But one of the key gaming indicators that we use to measure our performance is a number that we call ‘win per unit per day.’

What that number tells us is that for each slot machine we have on the floor, this is how much this slot machine is winning for us every single day.

“We did a quick analysis for each tribe based on the estimated number of machines that each tribe is reporting, and their revenue, and Fire Rock Casino is actually the second biggest win per unit per day number in the state.

Sandia Casino holds a number for $211 per unit per day. What that tells us is for Sandia’s 1,600 machines, every single one of those machines is winning that tribe $211 every single day.”

Fire Rock’s numbers were at $201 per unit per day with 485 machines. Now, they’re reporting around $360 a day. “The average for the entire state, I believe, was $160,” he said.

“These are numbers you can pull off the Web site. This isn’t numbers we made up. This is coming from the state.”

Budget and Finance member Nelson Begaye questioned who makes up Fire Rock’s customer base.

Winter said they have done customer tracking and though the majority of players are Navajo, most of the market is coming from existing gamblers who have been going to other casinos.

“What we have shown is we have seriously depleted the market from Sky City and Dancing Eagle. They are running marketing programs giving away $80,000. So, yes, the players are Navajo, but they’re not necessarily new players. They’re players who are playing at other facilities.

“We have not been able to market to any great extent because we had not enough machines for the people that want to come. You can’t go out with a marketing program and say, ‘Come to this casino’ and then when they get here, they stand around,” he said.

With the expansion in slots, however, the Enterprise kicked off its first marketing initiative, designed to bring in non-Navajo players, on St. Patrick’s Day.

“We have shuttle buses now that go to the hotels. They’re bringing in players from those hotels. The tourist season is just beginning. We have a very, very involved marketing program for the tourists, so you will see a change,” Winter said. The marketing program runs through October.

They also have had a lot of interest from hotels. “I’ve been asked to put a term sheet together for a group that represents Hilton Hotels. They’re interested in putting a 100 room hotel next to the casino,” Winter said. “The deal is we must put a ‘no smoking’ casino in the hotel. You can do that with Hilton, and you can do it in New Mexico, but you can’t do it in Arizona,” where casinos and hotels must be separate.

The only security for the financing of the hotel would be the machines that are in the hotel, Winter said. The hotel would either be a Hilton Garden Inn or an Embassy Suites. “They’re also interested in doing something like that at the other sites that we just mentioned.”

After giving a brief presentation on options for financing the three new casinos, the committee went into executive session to further discuss details.