Red Hawk Casino, underperforming since the day it opened and struggling to pay its bills, moved a step closer Thursday toward gaining financial relief.
Gov. Jerry Brown signed into law a new gambling compact that reduces the revenue the state will collect from Red Hawk and its owner, the Shingle Springs Band of Miwok Indians. Brown signed AB 1267 by Assemblyman Isadore Hall, D-Compton, which ratified the new compact the governor signed with the tribe last November.
Despite the governor's signature, the Shingle Springs casino isn't out of financial trouble yet. The tribe has to restructure $500 million in debt owed to private creditors before the new state compact takes effect.
The new compact recognizes the dire financial issues confronting the casino and tribe. The document says Red Hawk "cannot currently or in the coming years generate enough revenue for the tribe to cover its financial obligations."
Since 2011, the tribe stopped making principal payments on a $66 million startup loan from Lakes Entertainment Inc., the company that operates Red Hawk. Most of the rest of the tribe's debt is held by bondholders who financed construction of the casino, which opened in late 2008.
It's not clear if the Shingle Springs tribe has made any headway in renegotiating its debt; tribal officials couldn't be reached for comment Thursday.
Lakes Entertainment's chairman, Lyle Berman, told investors earlier this month that his company is "continuing to have conversations" with the tribe about debt restructuring.
The tribe pays the state up to 25 percent of Red Hawk's slot-machine winnings. That's apparently more than any other tribal casino. The new compact would reduce the payout to 15 percent.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.