Small tribal casinos’ dilemma: Growing gaming in Indian Country

October 23, 2018 12:00 AM
  • John L. Smith, CDC Gaming Reports
October 23, 2018 12:00 AM
  • John L. Smith, CDC Gaming Reports

After listening to tribal casino executives during the recent Global Gaming Expo offer their insights into how small Native American gaming operators expand their business, it was hard not to be left less than enthusiastic.

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The presentation was interesting enough, but by the end I was convinced that tribes with diminutive casino offerings – especially those in lightly trafficked rural areas – face long odds of improving their bottom lines. And as gaming expands its reach and technology, many may find themselves priced out of an increasingly expensive game.

None of the speakers said this, of course. Perhaps I misread their polite musings. My takeaway from the discussion: They feel your pain, but your gains will probably be incremental.

Tribal government gaming is a $32.4 billion industry with the largest players generating most of the revenues. Some have more in common with commercial casino corporations than the slot-centric roadside oases that dot Indian Country.

If you build it, customers don’t always come – especially in an expanding industry with ever-increasing gambling options. In my summer and fall tour of tribal and racetrack gambling operations in Arizona and New Mexico, the savvy players weren’t hard to spot. And those operators clearly have learned lessons from the pros on the commercial side about running modern casinos. Suffice to say it’s a lot more complex than throwing open the doors and balancing the books.

The speakers acknowledged the irony of giving advice to small casino operators when they represent larger gaming properties. The challenges are sometimes similar, but often very different. It’s not just a question of scale.

Muckleshoot Casino GM Conrad Granito, second from left, at this year’s NIGA conference (CDC Photo)

The discussion was moderated by Conrad Granito, the experienced general manager of the Muckleshoot Casino in Auburn, Washington. Niche casinos in rural areas face obstacles not generally seen by large operators positioned on the edge of urban areas or along busy interstates, he said.

“I’m at a large casino, and our panelists are in large casinos,” Granito began, “but we’ve all had experience with smaller casinos and mid-size and developing casinos.”

The real question, he said, is “how can we be better at what we do?”

And he acknowledged, “Because the vast majority of tribal casinos are not big casinos, they’re smaller and in very rural markets that I’ve spoken about those challenges in Indian Country.”

One challenge, all agreed, is the recruiting a trained workforce to areas located miles from large population centers. That generally means training tribal members as employees. Speaker Holly Gagnon, president and CEO of Seneca Gaming Corp., suggested spending the money to bring in credible consultants capable of training and recruiting talent. It can seem expensive, the speakers agreed, but it’s money well spent if it helps improve the understanding of an increasingly complex business.

“When you’re two hours from the closest Starbucks, not everybody wants to live there,” Granito said.

But she also said smaller casinos enjoy the advantage of being “nimble” and can change directions quickly in a shifting market.

While some people see size as a weakness, she called it an opportunity for tribal operators to learn and experiment and find what works for the market.

Although size matters when it comes to revenues, the speakers noted that a small casino has the advantage of being able to change policies and marketing programs swiftly.

Beyond the obvious economic limitations associated with rural casinos, they said, many have evolved into community gathering places for tribal members. They’ve emerged as important job creators that provide a direct economic impact on the community.

The downside? A rural casino that only attracts local players can cannibalize a fragile economy and create more problems than it cures. That makes a professional approach to management and a willingness to change marketing concepts important for the health of the casino and the tribe as well.

Skyelar Perkins, senior director of slot operations for the Choctaw Nation of Oklahoma, has worked in tribal gaming for 16 years and has seen the difficulties some smaller casinos face. But a smaller size can mean less frustration when it comes time to making changes in systems and marketing plans.

There’s a substantial learning curve when it comes to running even a small casino, the panelists agreed. Granito made a note of reminding those in attendance that building networks is important and can begin with a simple collection of business cards. And focusing on the relationship between tribal members and the casino is also important.

Marketing miscalculations, or those based on flimsy analysis, can be costly. Granito recalled one proposal for a tribal casino in rural South Dakota that featured a $6 million uber bar with $1,000 bottle service.

Although Dennis Hendricks, treasurer of the California Nations Indian Gaming Association, expressed concerns that tribal exclusivity pacts are under political pressure in that state and face political pressure elsewhere, many casinos in Indian Country will remain the only legal gambling offerings for many miles.

Rural casinos often serve as hubs of community activity, but they can also end up catering mostly to the local population. It’s a double-edged proposition

That may limit bottom-line profits, they agreed, but it shouldn’t limit the creative innovation of the operators.

Perkins said it’s essential to remember that, with tribal gaming, “it’s not about tomorrow, it’s about the next couple generations.”

Contact John L. Smith at jlnevadasmith@gmail.com. On Twitter: @jlnevadasmith.