Red Hawk Casino is doing better, but the troubled resort faces new competition in addition to the financial pressures that have confronted the tribal casino for years.
Without disclosing financial details, casino operator Lakes Entertainment Inc. said Tuesday that Red Hawk is making progress. Tim Cope, Lakes' chief financial officer, cited "continued improvements in performance at this property" during a conference call with investment analysts to discuss Lakes' fourth-quarter financial results.
Yet Cope said the Graton Rancheria Casino, set to open this fall in Rohnert Park, will increase competitive pressure on Red Hawk and other casinos in greater Sacramento.
"A customer in San Francisco will now have another choice," he said. "I'm sure there will be some impact."
Since opening in 2008, Red Hawk hasn't lived up to expectations. Testimony in a lawsuit filed by a former business partner showed that the Shingle Springs casino's revenue was running about $100 million a year below projections. Red Hawk's owner, the Shingle Springs Band of Miwok Indians, stopped making principal payments on a $66 million loan from Lakes two years ago.
The business partner's lawsuit resulted in the tribe being ordered in late 2011 to pay $30 million because of a contract dispute. The verdict is on appeal, but the tribe has warned it's so short of cash, it might be forced to close Red Hawk if the award isn't overturned.
The tribe negotiated a new compact with Gov. Jerry Brown in November that would sharply reduce how much casino revenue the tribe sends to the state. The new compact acknowledges that Red Hawk can't make enough money "for the tribe to cover its financial obligations."
But the state deal is contingent on the Shingle Springs band restructuring $500 million in debts, including the $66 million owed to Lakes.
Lakes CEO Lyle Berman said talks with the tribe have not yet reached an agreement.
Lakes, based in Minnesota, earned $2 million in the fourth quarter, or 7 cents a share. That compared with a loss of $12.7 million, or 48 cents a share, a year earlier.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.