http://www.dailybreeze.com/news/ci_22911535/card-clubs-warring-over-no-collection-baccarat
[h=1]Card clubs warring over "no-collection" baccarat[/h]<!--subtitle--><!--byline-->By Sandy Mazza, Staff Writerdailybreeze.com
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<!--secondary date-->March 31, 2013 11:3 PM GMTUpdated: 03/31/2013 04:03:27 PM PDT
Dealer Eden Meconnen, center, works her table at Normandie Casino in Gardena. (File photo)
The owners of Normandie Casino in Gardena just want to let gamblers play baccarat - the fastest-growing card game in California - for free.
But other Los Angeles-area card clubs and a group of American Indian tribes aren't going to let that happen without a fight.
Some opponents say the promotion is illegal because it amounts to card clubs offering the same game as in Las Vegas and Indian casinos (baccarat without player fees). Others believe Normandie's suggested business model is flawed and will cause other card clubs to lose money - a scary proposition not just for the clubs themselves, but also for cities reliant on tax revenue from the profitable businesses.
Normandie club managers are sticking to their guns and firmly believe "no-collection baccarat" is a safe gamble that will bring a profit windfall for the casino and the city of Gardena.
"This is like owning a sandwich shop and not being allowed to have a half-off sale for a weekend," Normandie Casino President Michelle Miller-Wahler said. "We really didn't expect this kind of opposition."
Card clubs profit by charging players small fees for each hand of cards they play because the clubs aren't allowed to have a "house bank" and instead rent tables to third-party bankers. In the no-collection promotion, the club charges bankers reduced collection fees and allows players to play for free.
The Normandie Casino began
allowing baccarat players to gamble without paying collection fees in January, after the club was approved to run the promotion by the state's Bureau of Gambling Control. The promotion was wildly successful, resulting in baccarat profits doubling from the same time period last year. But when Gardena city officials learned about it, they told the club to stop because city approval is required before the clubs can change their collection fee schedules.In a letter to the Normandie club in January, City Manager Mitch Lansdell asked casino operators to stop the promotion and questioned how officials expect to increase revenue long term while collecting significantly less fees from bankers. Miller-Wahler responded with promises of increased revenue that would result in roughly $1.5 million more in taxes paid to the city this year because she believes the promotion will entice enough new customers to the club to make it successful.
Gardena's two card clubs - the Normandie and the Hustler - account for the second largest stream of income to city coffers. Only sales taxes bring in more than the casinos, which contributed 17 percent of the city's $46 million general fund last fiscal year, according to city records.
California's 91 card clubs are still recovering from the national economic recession that set back the entire gaming industry. Economist Alan Meister, author of the annual Indian Gaming Industry Report, said Indian casinos and card clubs reached prerecession revenue levels in 2011 and that card clubs are growing slightly faster than their tribal counterparts. Still, total card club revenue statewide is a fraction of that generated by Indian casinos. In 2011, California card clubs took in $853 million compared to $6.9 billion for Indian casinos, Meister said.
Gardena city staff recommended that the City Council deny Normandie's request to stop collecting fees on baccarat games because they said it is too risky, and Hustler Casino managers argued that their revenue will actually decrease if the game is allowed.
"The information requested from the clubs conflicts," reads a staff report on the issue. "The Normandie Casino indicates a potential positive impact on revenue; the Hustler Casino predicts negative impact on revenue ... close to $500,000 for baccarat. Due to the uncertainty regarding revenue projections, staff is recommending denial."
On Tuesday, the City Council voted to delay any vote on the issue until next month. But Mayor Paul Tanaka and Councilman Terry Terauchi expressed support for the Normandie.
"Our order of concern is the city, and then the Normandie and the Hustler," Tanaka said. "I'm also thinking about something central to America, that's called competition and business."
Hustler Casino President Tom Candy said the club also obtained permission from the state Bureau of Gambling Control to have no-collection games in case Normandie receives the city's permission. He said the club would have to offer no-collection games as well to compete with the nearby Normandie. But he maintains both clubs will lose money in the long run.
"We will have to work much harder to achieve the same results if we were to go to no-collection tomorrow," Candy said. "We'd have to increase our tables, increase our costs, and basically increase our business over 50 percent to just generate the same amount of revenue that we're at right now."
Crystal Casino in Compton is the only Los Angeles-area card club that has implemented no-collection games, despite opposition from other local card clubs that fear retribution from the politically powerful Indian casinos.
Haig Papaian, CEO of Commerce Casino, joins Hustler Casino in actively campaigning against card clubs offering no-collection promotions. Like other leaders in the state's card club industry, Papaian is reacting to legal threats from Indian tribes, some of which say no-collection promotions are illegal.
"Normandie is one domino in the whole chain," Papaian said. "We're trying to stop it at every level until we can sit down with the tribes and put together some legislative fix on collections. We all stand to lose money if we go down this road."
Papaian said some tribes have threatened to take legal action against all banked games - poker would be an exception - offered at card clubs, which they say are operating on tenuous legal ground. The influential legal and political sway of Indian tribes is too fearsome in this case to oppose them, he said.
Pala Casino CEO Bill Bembenek said he believes no-collection games are illegal at card clubs because they essentially allow them to profit from odds - something they are not allowed to do.
"Native American casinos make their income from the small percentage advantage they have on the various banked card games, just like casinos in Nevada and New Jersey," Bembenek said in a written statement. "Card clubs, on the other hand, are not permitted to operate banked table games. They are only permitted to earn income through the collection fees they charge players. ... If card clubs are proposing not to take collections, we conclude that their intent is to make money by having a stake in the outcome of the games."
Normandie Casino executive Lauren Miller argues that the tribes have many complaints about the way card clubs currently operate, and that the club won't offer the promotion if it is deemed illegal.
"I cannot deny that the no-collection promotion is a topic that is being talked about at the state level," Miller said. "But any resolution between the Indians and the card clubs will not be resolved easily or quickly. If a resolution is reached, Normandie won't hesitate to adhere."
Gardena city officials said they will take up the issue again only after officials from the card clubs negotiate with Indian casinos.
sandy.mazza@dailybreeze.com
[h=1]Card clubs warring over "no-collection" baccarat[/h]<!--subtitle--><!--byline-->By Sandy Mazza, Staff Writerdailybreeze.com
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<!--secondary date-->March 31, 2013 11:3 PM GMTUpdated: 03/31/2013 04:03:27 PM PDT
Dealer Eden Meconnen, center, works her table at Normandie Casino in Gardena. (File photo)The owners of Normandie Casino in Gardena just want to let gamblers play baccarat - the fastest-growing card game in California - for free.
But other Los Angeles-area card clubs and a group of American Indian tribes aren't going to let that happen without a fight.
Some opponents say the promotion is illegal because it amounts to card clubs offering the same game as in Las Vegas and Indian casinos (baccarat without player fees). Others believe Normandie's suggested business model is flawed and will cause other card clubs to lose money - a scary proposition not just for the clubs themselves, but also for cities reliant on tax revenue from the profitable businesses.
Normandie club managers are sticking to their guns and firmly believe "no-collection baccarat" is a safe gamble that will bring a profit windfall for the casino and the city of Gardena.
"This is like owning a sandwich shop and not being allowed to have a half-off sale for a weekend," Normandie Casino President Michelle Miller-Wahler said. "We really didn't expect this kind of opposition."
Card clubs profit by charging players small fees for each hand of cards they play because the clubs aren't allowed to have a "house bank" and instead rent tables to third-party bankers. In the no-collection promotion, the club charges bankers reduced collection fees and allows players to play for free.
The Normandie Casino began
allowing baccarat players to gamble without paying collection fees in January, after the club was approved to run the promotion by the state's Bureau of Gambling Control. The promotion was wildly successful, resulting in baccarat profits doubling from the same time period last year. But when Gardena city officials learned about it, they told the club to stop because city approval is required before the clubs can change their collection fee schedules.In a letter to the Normandie club in January, City Manager Mitch Lansdell asked casino operators to stop the promotion and questioned how officials expect to increase revenue long term while collecting significantly less fees from bankers. Miller-Wahler responded with promises of increased revenue that would result in roughly $1.5 million more in taxes paid to the city this year because she believes the promotion will entice enough new customers to the club to make it successful.
Gardena's two card clubs - the Normandie and the Hustler - account for the second largest stream of income to city coffers. Only sales taxes bring in more than the casinos, which contributed 17 percent of the city's $46 million general fund last fiscal year, according to city records.
California's 91 card clubs are still recovering from the national economic recession that set back the entire gaming industry. Economist Alan Meister, author of the annual Indian Gaming Industry Report, said Indian casinos and card clubs reached prerecession revenue levels in 2011 and that card clubs are growing slightly faster than their tribal counterparts. Still, total card club revenue statewide is a fraction of that generated by Indian casinos. In 2011, California card clubs took in $853 million compared to $6.9 billion for Indian casinos, Meister said.
Gardena city staff recommended that the City Council deny Normandie's request to stop collecting fees on baccarat games because they said it is too risky, and Hustler Casino managers argued that their revenue will actually decrease if the game is allowed.
"The information requested from the clubs conflicts," reads a staff report on the issue. "The Normandie Casino indicates a potential positive impact on revenue; the Hustler Casino predicts negative impact on revenue ... close to $500,000 for baccarat. Due to the uncertainty regarding revenue projections, staff is recommending denial."
On Tuesday, the City Council voted to delay any vote on the issue until next month. But Mayor Paul Tanaka and Councilman Terry Terauchi expressed support for the Normandie.
"Our order of concern is the city, and then the Normandie and the Hustler," Tanaka said. "I'm also thinking about something central to America, that's called competition and business."
Hustler Casino President Tom Candy said the club also obtained permission from the state Bureau of Gambling Control to have no-collection games in case Normandie receives the city's permission. He said the club would have to offer no-collection games as well to compete with the nearby Normandie. But he maintains both clubs will lose money in the long run.
"We will have to work much harder to achieve the same results if we were to go to no-collection tomorrow," Candy said. "We'd have to increase our tables, increase our costs, and basically increase our business over 50 percent to just generate the same amount of revenue that we're at right now."
Crystal Casino in Compton is the only Los Angeles-area card club that has implemented no-collection games, despite opposition from other local card clubs that fear retribution from the politically powerful Indian casinos.
Haig Papaian, CEO of Commerce Casino, joins Hustler Casino in actively campaigning against card clubs offering no-collection promotions. Like other leaders in the state's card club industry, Papaian is reacting to legal threats from Indian tribes, some of which say no-collection promotions are illegal.
"Normandie is one domino in the whole chain," Papaian said. "We're trying to stop it at every level until we can sit down with the tribes and put together some legislative fix on collections. We all stand to lose money if we go down this road."
Papaian said some tribes have threatened to take legal action against all banked games - poker would be an exception - offered at card clubs, which they say are operating on tenuous legal ground. The influential legal and political sway of Indian tribes is too fearsome in this case to oppose them, he said.
Pala Casino CEO Bill Bembenek said he believes no-collection games are illegal at card clubs because they essentially allow them to profit from odds - something they are not allowed to do.
"Native American casinos make their income from the small percentage advantage they have on the various banked card games, just like casinos in Nevada and New Jersey," Bembenek said in a written statement. "Card clubs, on the other hand, are not permitted to operate banked table games. They are only permitted to earn income through the collection fees they charge players. ... If card clubs are proposing not to take collections, we conclude that their intent is to make money by having a stake in the outcome of the games."
Normandie Casino executive Lauren Miller argues that the tribes have many complaints about the way card clubs currently operate, and that the club won't offer the promotion if it is deemed illegal.
"I cannot deny that the no-collection promotion is a topic that is being talked about at the state level," Miller said. "But any resolution between the Indians and the card clubs will not be resolved easily or quickly. If a resolution is reached, Normandie won't hesitate to adhere."
Gardena city officials said they will take up the issue again only after officials from the card clubs negotiate with Indian casinos.
sandy.mazza@dailybreeze.com
