Red Hawk Casino continues to do better, its management company reported Thursday, but the Shingle Springs venue remains gripped by serious financial problems.
Lakes Entertainment Inc. of Minneapolis said company revenue grew during the first quarter, thanks mainly to an $800,000 improvement in management fees from Red Hawk.
Red Hawk "again showed improvements in both top- and bottom-line financial results," said Lakes Chief Executive Lyle Berman in a conference call with investment analysts.
Lakes' management fees are based on casino performance; the company receives up to 30 percent of Red Hawk's profits.
Despite the improved results, Red Hawk is having problems paying its bills. Berman said Lakes is talking with the casino's owner, the Shingle Springs Band of Miwok Indians, about restructuring a $66 million debt the tribe owes the company.
The tribe stopped making principal payments on the loan two years ago.
Red Hawk has underperformed since opening in late 2008. Court records say that in 2010, its gambling revenue was $100 million below expectations.
The tribe is in such a deep hole, it warned it might have to close Red Hawk if forced to pay a $30 million court judgment from 2011 to a former business partner. The case is on appeal.
Gov. Jerry Brown, conceding the tribe's financial woes, agreed last fall to reduce the amount of money the state receives annually from Red Hawk.
The renegotiated compact needs legislative approval and requires Lakes and other creditors to restructure their debts with the Shingle Springs band. All told, the tribe owes about $500 million in casino-related debt.
"We're still continuing to have conversations with them," Berman said, referring to the potential debt restructuring.
Although its total revenue grew to $3.3 million from $2 million a year ago, Lakes lost $333,000 in the first quarter. That compared with a $1.8 million profit a year earlier.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.