Tribes are pushing beyond casinos after the ‘eye-opener’ of the pandemic
When the COVID-19 pandemic closed Connecticut’s Foxwoods Resort Casino for three months in 2020, its owners, the Mashantucket Pequot Tribal Nation, had to reckon with decades of having relied heavily on gambling as the tribe’s primary source of income.
“The fact that casino revenue went from millions to zero overnight has once again highlighted the need for multiple revenue streams,” said Tribal Chairman Rodney Butler.
The 1,000-member tribe has since stepped up efforts to get into the federal government’s contract business, becoming one of several tribal nations to look more seriously beyond the casino business in the wake of the coronavirus crisis. Tribal leaders and tribal business experts say the global pandemic has been the latest and clearest sign that tribal governments with casinos cannot rely solely on slots and poker rooms to support future generations.
In Michigan, the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, or Gun Lake Tribe, recently announced a 25-year plan to convert hundreds of acres near their casino into a corridor of housing, retail, manufacturing, and a new 15 storey hotel. A non-gambling business owned by the Little River Band of the Ottawa Indians, also in Michigan, is now selling “NativeWahl” burger franchises to other tribes after partnering in 2021 with Wahlburgers, the national burger chain which was founded by the famous brothers Paul, Mark and Donnie Wahlberg.
Some tribes, with and without casinos, have engaged in a variety of non-gambling businesses such as trucking, construction, consulting, healthcare, real estate, cannabis, and marketing for the past decade or more, while others have branched out more recently.
“While business diversification can come at a cost, the need for it became clear in the early stages of the pandemic, when tribal-owned casinos were shut down to stem the spread of COVID-19 and gaming-dependent tribes had little revenue,” a new report from the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis.
The report found that many tribes are increasingly doing business with the federal government, particularly the US Department of Defense.
Command Holdings, the Mashantucket Pequots non-gaming company, made its largest acquisition to date last year: WWC Global, a Florida-based management consulting firm that works primarily with federal agencies, including the Departments of Defense and State. WWC announced in December that it had been awarded a $37.5 million contract in support of the Federal Cybersecurity and Infrastructure Security Agency.
Jon Panamaroff, CEO of WWC Global, praised Mashantucket Pequot’s casino and hospitality business, but noted that it can be subject to “the ups and downs of the market,” making it important to gain a foothold economically. A member of the Sun’aq tribe of Kodiak, Alaska, he credited the Mashantucket Pequots tribal leaders with redoubling their diversification efforts during the pandemic rather than “shying away and trying to settle down.”
Butler said the tribe hopes non-gaming revenues, including a planned family resort with an 8,450-square-foot waterpark expected to open in 2025, will eventually make up 50% to 80% of Mashantucket’s Pequots portfolio, which has “stability.” and certainty” when another challenging event will undoubtedly occur.
“You think about the 2008 financial crisis and now about COVID. And so something will happen again,” said Butler. “We have learned from past mistakes and want to be prepared for them in the future as well.”
Even before the pandemic hit, some tribal casinos were already facing competitive pressures from the emergence of other gambling options, including legalized online betting on sports and casino games in some states. At the same time, the traditional customers of the stationary casinos are getting older.
“Tribal economies are at an inflection point as the US gaming markets mature,” said Dawson Her Many Horses, head of Native American Banking at Wells Fargo and an inductee member of the Rosebud Sioux Tribe of South Dakota. “As casino revenues flatten, tribes will look for new business opportunities in other industries.”
Terri Fitzpatrick, a member of the Sault Ste. Marie Tribe of Michigan’s Chippewa Indians and Michigan Economic Development Corporation’s Chief Real Estate and Global Attraction Officer has noted a “tremendous growth” of non-gambling tribal businesses in Michigan over the past decade. Most tribes within the state are now engaged in some form of economic development other than casinos.
The pandemic, Fitzpatrick said, has really highlighted the importance of such a strategy given the financial impact of COVID-19 on tribal schools, health centers, older adult services, day care programs and other services.
“It wasn’t about lost sales,” she said. “It was a loss of ‘What we can do for our community and in our community.'”
The Nottawaseppi Huron Band of the Potawatomi in Michigan saw their successful casino shut down in the early months of the pandemic. But the financial hit was partially mitigated by the tribe’s non-gambling businesses, including a company involved in developing drones for the federal government that was deemed “essential.”
The tribe’s economic development unit, Waséyabek Development Company LLC, has now drawn up a plan to generate at least a third of the revenue needed to support the tribe from activities other than gaming by 2040, said its President and CEO Deidra Mitchell.
This does not mean that the tribes give up gambling. Some even expand it. The gaming and hospitality company owned by the Mohegan tribe of eastern Connecticut announced this month that it is working with a New York developer to attempt to obtain a New York City gaming license and a proposed entertainment district on Manhattan’s East Side erect. Meanwhile, Oklahoma’s Chickasaw Nation is part of another consortium looking to build a casino and entertainment complex on New York’s Coney Island.
The National Indian Gaming Association reported in August that it had gross gaming revenues of $39 billion in fiscal 2021, the highest in tribal gaming history. That number, which accounts for 243 tribes in 29 states, increased 40% from the previous year.
Patrick Davison, vice president of Native American gaming and finance at PNC Bank, said he works with tribal officials who are still building casinos but also want to avoid over-development. He said the pandemic is “a real eye-opener for tribes” as officials look at their tribes’ future in the gambling business.
“There’s a lot more thought about it,” he said.
