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In January, Wipfli surveyed chief financial officers (CFOs) from more than 20 prominent tribal casinos to gauge their outlook for 2023. Here’s the good news:

Tribal casinos are financially stable

Over 70 percent of tribal casino CFOs say their financial stability is much higher today than it was five years ago. None reported deterioration.

With record revenues of over $39 billion reported by the National Indian Gaming Commission in fiscal year 2021, and revenue expected to be even higher for 2022, it’s likely that financial stability is stronger than pre-pandemic. This means that tribes are investing in their facilities and not transferring all the profits back to the tribal governments. Investments that have led to stronger financial stability include investments in technology, paying down debt and keeping larger cash reserves on hand.

Revenue is expected to rise

Despite inflation and rising costs, the majority of CFOs expect revenue to increase in 2023. By how much? Two-thirds of those polled think revenue could rise between 1 percent and 10 percent.

With a lot of unknowns going into 2023, it’s great news that CFOs expect a continued increase of revenue in 2023. This will help offset inflation from 2022, as casinos cannot simply raise prices like many other businesses have done to combat inflation.

Concerns are relatively minor

CFOs are trying to fund bold futures in a wild macroeconomic environment—yet they reported few major concerns. The ongoing talent war and rising labor expenses are their biggest worries. Cybersecurity may have ranked as a moderate concern in the survey, but once a breach occurs, it becomes a high concern, so ensuring proactive actions to address cybersecurity are critical. Otherwise, for the most part, CFOs feel prepared for the challenges ahead.

Most CFOs are optimistic

More than half of tribal gaming CFOs are at least somewhat optimistic about 2023. About a third are neutral about their business outlook.

What’s in their favor? Record-high revenue from the past two years that can help them overcome pricing hikes and labor shortages. The right incentives and marketing offers continue to draw guests in. And casinos still have efficiencies to gain through supplier agreements and technology.

While there is no doubt about the fact that some uncertainty is coming for the remainder of 2023, there is also no doubt that CFOs of large tribal gaming operations are dialed in on the trends for 2023 and plan to act appropriately as we face new challenges.

The gaming industry has always had its technological pioneers—many, like the predecessors to Caesars Entertainment and MGM Resorts International, have forged new practices that are now standard in the casino business.

But more often than not, first adopters of industry-changing technology are found in Indian Country. Indeed, the very fact of a Class II gaming product that is barely indistinguishable from its Class III cousin is testament to tribal dedication to developing technology—in that case led by the Seminole Tribe of Florida, which worked with vendors and won legal battles to develop what is now standard in Indian casinos.

“The Seminoles started with Class II, working with (Reno supplier) Sierra Design Group,” recalls Knute Knudson, vice president of Native American development for slot supplier IGT. “Those products were developed through interpretations of the Indian Gaming Regulatory Act (IGRA), and the use of effective technology really became prominent. Now, even internationally, people refer to Class II. It is uniquely tribal in its legal interpretation, but now it’s used as a product for all segments of the industry.”

He adds that Class II technology led to the development of central determinant systems such as those now used in Washington state and New York.

Knudson has been involved in Indian gaming since its start in the early 1990s, when he was vice president of Sodak Gaming, a major supplier to gaming tribes. He says as Indian gaming matured, mastering new technologies was a necessity in overcoming a number of regulatory challenges and achieving success—which, in turn, has strengthened tribal sovereignty.

Over his long career at IGT—which led to his 2021 induction into the American Gaming Association’s Hall of Fame—Knudson has had a ringside seat as new technologies have been pioneered by tribal casinos. He offers ticket-in/ticket-out (TITO) as an example. A tribal casino, the Oneidas’ Turning Stone Casino in Verona, New York, proved as early as the 1990s that a slot floor could be run without coins. The Oneidas’ deposit/carded-play system for years stood as a model of cashless casino operations.

It was no surprise, says Knudson, that when cash-out tickets were first deployed in a cash-in/ticket-out setup (to be followed by IGT’s EZ Pay ticket-in/ticket-out system), it was the tribal casino market where it occurred. “The first time I ever saw a cash-out ticket was in tribal casinos,” Knudson says. “I saw it in Southern California, I saw it in Oklahoma, I saw it in Florida. And it obviously changed the manner in which casino floors are managed.”

Electronic table games (ETGs) are another product area that matured in the tribal casino market, in states such as Arizona, Minnesota and others that initially prohibited live table games. Tribal casinos were among the first to host ETGs, in the early days utilizing video of dealers that were the precursors to today’s live-dealer ETGs.

“From the start of Indian gaming to the present, tribal governments have been leaders in the use of gaming technology,” says Knudson. “This tribal innovation has been driven by tribal government’s desire for economic self-sufficiency, and by the lack of preconceived thoughts on what worked in the past in traditional gaming.”

Buddy Frank, the longtime slot executive who last month was inducted into the EKG Slot Awards Hall of Fame, agrees that tribal casinos have always been among the first adopters of new technology. After establishing himself as a slot executive in Northern Nevada, Frank capped his career in Indian Country in California, first with Viejas Casino and finally as vice president of slot operations at Pechanga Resort & Casino.

Frank says his time at Pechanga brought many pioneering innovations, beginning with the move to electronic communication among the slots on the floor—from serial cable to Cat 5, Cat 6 and ultimately Ethernet high-speed transmission between slot machines. “That opened the door to everything else, from the video screens you see on machines today to the live bonusing and electronic tournaments,” he says.

These days, tribes are more likely to be pioneers in adopting business intelligence, data visualization and the use of artificial intelligence in host programs. There again, says Frank, Indian casinos such as Pechanga led the way. “Pechanga was a leader in first working with EMC and then Dell to build the hardware necessary to have a good artificial intelligence environment,” he says, “and then hiring people skilled in data warehousing and data analytics.”

Quick and Agile

There are any number of inherent reasons tribes have embraced new technologies. “I think it’s a mixed answer, to be honest,” says Victor Newsom, senior vice president, product management and payment solutions for Everi Holdings. “In some cases what we’ve seen is for specific initiatives, they are better positioned to be more agile. If there’s a tribal initiative, and the council is supportive and working with appropriately qualified partners, yes, they tend to move faster.”

That speed increases once a new technology catches on, he adds. “If in a market where you have many competitive properties, such as Southern California, when you start to see something catch on with patrons, then there’s a fast-follower mindset that takes over, and I absolutely will see it move much more quickly across the regions.”

Knudson says the absence of a large corporate structure, in which there is a quarterly drive to produce results for shareholders, also helps tribes move quickly to new technologies. “It’s much easier for them to make decisions,” he says. “At IGT, we’re in every market in the world, and we’re in regulated gaming segments—the scale of everything is quite large. With that, we inherently have more process when implementing new ideas.

“Tribes, on the other hand, in many instances have been through the battles to get where they are today, and had to be innovative and may be more agile when it comes to new ideas.”

Frank says the other factor that has placed tribes at the forefront of technology is the use of private testing labs like Gaming Laboratories International (GLI), BMM Testlabs and Eclipse Compliance Testing to certify new equipment, getting new products to casino floors ahead of many state-run labs.

“Almost every tribe subscribed to (the private labs),” Frank says. “Everybody says the Nevada lab was the model and the best, and they’re very good. And then Atlantic City came along and did their own, and they were decent. But GLI got input from everybody. Plus, as opposed to being government, they were for-profit and therefore they attracted better talent… Tribes got ahead of commercial casinos in technology, and some of it was really beneficial.”

But most of all, leaders of tribal casinos have been very open to new ideas, says Andrew Cardno, co-founder and chief technology officer of business software supplier Quick Custom Intelligence (QCI). “Tribal casinos have always been innovative, and among the very diverse tribal nations, I see real innovation leaders,” Cardno says. “Certainly for QCI, the tribal business partners have been right at the front of our business all the way through and are definitely willing to jump in, be great business partners and to innovate with us.”

Hot New Tech

Tribal leadership as first adopters of new technology has continued to manifest itself in today’s fast-moving tech environment, as operators across the industry examine alternatives to cash in the form of digital wallets and other new payment solutions. Business intelligence for marketing purposes has been another huge growth area, as efficient data collection solutions merge with artificial intelligence to create new efficiencies for player development executives in casinos.

John Fernandez, director of player development at California’s Morongo Casino, is one tribal operator known as an early adopter of new technologies—like the QCI Host module, which has streamlined the casino’s player development efforts.

“I’ve got a pretty good-size VIP services team, and it’s a very data-driven sales team,” Fernandez says. “But I know that most of the time, not all hosts are willing to accept the technology because they’re salespeople first, and they’re not analysts. I don’t want to turn my team into a group of analysts. They need to be salespeople first.”

The business intelligence software, in this respect, has simplified the process of utilizing data. “They like the QCI product because it tells them things like, ‘I haven’t talked to Frank in two months. It’s time to.’ And it will send them an email that Frank is here playing and, and it gives you where he is (in the casino). You’re able to go out there and see your customer right away.”

The system also provides actionable alerts in direct response to real-time play. “Without a tool like that, we have over 4,000 machines out there,” says Fernandez. “In the old days, the host would just walk around. How do you figure out who’s playing, and what they’re doing? This tool gives you all that. It tells me one of my hosts has a customer that has played 15 hours and is down $37,000 right now. A host can go out and talk to that player, and intervene (with a comp or a bonus).

“And here’s an unhosted guy that’s played seven hours and is losing $10,400. Either my host or my VIP agents, who are in the VIP lounge, will see that and assign a task to the host to run out there.”

One of the hottest new technologies these days can be found in the Acres Foundation system, which not only provides a gateway for cashless play through a digital wallet, but can draw real-time data from every slot machine on the floor, alerting marketers in real time for any number of interventions to keep the best players playing, while ensuring that they return again and again.

While some major commercial casino operators like Penn Entertainment are spreading the footprint of the Acres Foundation system, there are plenty of first adopters of the technology in Indian Country as well. One of the most recent adopters is the Rolling Hills Casino and Resort in Corning, California.

“Over the last several years, we’ve really put an emphasis on trying to leverage every ounce of technology we can get to make us better and make us more efficient,” says Steve Neely, general manager of Rolling Hills. “Acres really personifies that. What’s available today is really just the tip of the iceberg for what Acres will be able to offer us as this evolves. Foundation really does represent an ever-evolving solution to a wide array of challenges we have at the operations level.”

Neely says Rolling Hills is in the pre-installation phase, and in the coming months will begin installing Acres hardware on its 840 slot machines.

“A number of marketing benefits are in front of us,” he says. “Imagine you have a high-value player whose actual loss is trending so far away from their theoretical loss that they’re just getting crushed, and they’re going to be upset. They’re having a bad day. All of a sudden, something pops up on the screen of the slot machine and tells them to push this button to reveal your bonus, and suddenly, it’s enough to keep them interested… We don’t want our players to leave having had a bad experience.”

Another tribe known to embrace new technology is Minnesota’s Mille Lacs Band of Ojibwe. Robert Sawyer has worked with the tribe’s casino operations, Grand Casino Mille Lacs and Grand Casino Hinckley, for some 25 years. Late in 2021, when he was vice president of gaming at Grand Casino Mille Lacs, Sawyer was tapped as chief operating officer of a new Mille Lacs Corporate Ventures division called SlotCo.

SlotCo acquires slot machines for casinos from major suppliers, but also helps the Mille Lacs and other tribes get the most of all new technology arriving on the floor—including a source of capital for new technology purchases and property improvements. SlotCo also brings state-of-the-art analytics and data networking to help customers better understand patron behavior.

“SlotCo had been a development idea that came from the notion that there are early adopters of technology in the tribal world, and there are some that are maybe a little more challenged,” Sawyer explains. “Our CEO (Joe Nayquonabe) and a few others of us felt that was bad for the industry—there would be young people that would go in for their first casino experience, where they may not see brand new slot machines. They’re seeing equipment that’s 20, 30 years old on floors, and how do we change that? How do we help?

“What can we do to help, maybe bring some of that new innovation and that new technology to those more rural tribes? We came up with a model that helps do that while delivering measurable revenue growth.”

“The tribes have always been quick to move into new technology, and adopt early,” says Rolling Hills’ Neely. “On the commercial side, they’re needing to make sure that the shareholders are seeing immediate share value, immediate gains in value. And on the tribal side, the shareholders are the tribal members, and they’re looking at generations forward. So how are we making sure that the investments we are making today are going to prepare and set up the organization for the long term, not just for the immediate return?”

In the end, the early appearance of groundbreaking technology in Indian Country may come down to the structure of tribal gaming organizations. “For decision-making, there’s no giant corporate board worrying about stockholders’ profits,” comments Frank. “And that makes a difference. Moreover, one thing you would think would slow them down but doesn’t is that most tribes have a long-term view. They’re not worried about this quarter’s report. They’re worried almost about generational wealth, generational profit. It gives them the feeling that they can try stuff and move ahead. Think agile.”

“Tribal country has seen a lot of growth, and that growth is driving diversification in all the locations,” says QCI’s Cardno.

“I feel privileged and honored, and proud of how we’re able to work with tribal nations. It’s been one of my great pleasures to learn about tribal nations, and to help with economic growth and be a part of that.”

The Sycuan Institute on Tribal Gaming (SITG) was established in the L. Robert Payne School of Hospitality and Tourism Management (HTM) at San Diego State University (SDSU) by the Sycuan Band of the Kumeyaay Nation in 2006 for two primary purposes.

First, the Sycuan Band created the SITG to assure quality educational opportunities on tribal government gaming and to support professional development for gaming employees who wanted a career in the thriving tribal gaming industry. At that time, Sycuan leadership was disturbed that there were a number of training courses around the country of dubious quality that were being presented by people unfamiliar with what differentiated tribal government gaming from other industry segments.

This lack of access to quality programs meant that employees of tribal gaming facilities were likely to have been trained in a “Las Vegas model” of casino operations and regulation or not trained at all. The Sycuan Band decided to take the lead in order to maintain a credible and professional presence for tribal government gaming, ultimately benefiting employees, customers and the industry as a whole.

Secondly, the Sycuan Band was interested in creating a research center that would focus on the social and economic impacts of the tribal gaming industry, including its effects on tribal and non-tribal communities, governments, employees and guests. By supporting the creation of a clearinghouse on independent academic research about tribal government gaming, the Sycuan Band committed to collaborating, funding and promoting the academic research produced and supported by the SITG.

The institute’s first public event was held in San Diego in April 2008, at the annual meeting of the National Indian Gaming Association (NIGA) to evaluate and honor the first 20 years of the Indian Gaming Regulatory Act (IGRA).

The SITG has pursued three mandates based upon feedback from that first event: 1) developing and offering the nation’s first four-year degree program (B.S. in Hospitality and Tourism Management) in tribal casino operations management; 2) producing and supporting academic research on tribal gaming; and 3) informing the public policy debate around tribal government gaming and its impacts on individuals and communities.

With the support of our gaming industry partners, the institute is demonstrating a shared commitment to the long-term goal of developing a professional class of gaming experts who will enhance the tribal government gaming industry across the United States.

The Sycuan Institute at Present

San Diego County is home to 17 federally recognized tribal governments and hosts 10 tribal gaming facilities with a range of amenities. Therefore, the SITG has a unique position in the contemporary gaming and educational environment. Because of our location, the SITG, through its relationship with the Sycuan Band, other local tribes and the tribal government gaming industry, has access to world-class tribal and casino staff, lawyers and lobbyists, marketing and public relations experts, gaming regulators, gaming commissioners and other experts.

This local pool of talent provides a wealth of knowledge from an experiential, rather than simply academic, perspective. The SITG’s relationship with SDSU, and its location in the HTM Program in particular, provides additional access to academic experts and industry leaders in hospitality, cultural heritage tourism, event planning, food and beverage and hotel management, among others.

These connections have resulted in the building of a new field of academic research into tribal gaming. The SITG research agenda is always driven by tribal government and industry needs, input and collaboration. For example, tribal compact negotiations and legislative efforts require in-depth analysis and description of the economic, social and cultural impacts of tribal gaming including investments in language revitalization, educational gains, repatriation and self representation in tribal museums, best practices in tribal responsible gaming, and employee engagement and retention, as well as tribal philanthropy and nation (re)building efforts generally.

The SITG has also created a new field of tribal casino operations research with deep dives into topics ranging from the return on free play investments, the impact of slot hold percentages and the effects of non-smoking constraints on tribal gaming revenues. This research supports the industry but also supplements the course work in the academic program.

The five courses developed by the SITG cover a range of topics unique to tribal gaming, such as:

• AMIND/HTM 370   Tribal Gaming: Cultural and Political Contexts
• HTM 371   Tribal Gaming: Casino Operations Management
• HTM 372   Tribal Gaming: Legal and Regulatory Issues
• HTM 373   Tribal Gaming: Casino Marketing and Tribal Public Relations
• HTM 381   Cross-Cultural Interpretations of Gambling Addiction

Certificate In Tribal Casino Operations Management Moves Online

After more than a decade of development and growth on our campus in San Diego, the SITG began offering fully online classes in tribal gaming during the pandemic shift to remote learning. This expansion of the program’s geography has resulted in creation of a separate SITG Certificate in Tribal Casino Operations Management, in addition to the bachelor of science degree program completed on campus.

The certificate program was developed in direct response to tribal gaming industry requests for access to higher education training in casino operations, marketing and regulation.

Partnership with the Online AIS Degree Completion Program

The pandemic move to remote learning revealed academic gaps across disciplines and geographies. At SDSU, the SITG has addressed these gaps by partnering with the American Indian Studies Department and Global Studies to embed the Tribal Casino Operations Management Certificate into the new American Indian Studies Degree completion program offered fully online.

This new bachelor of arts in SDSU’s American Indian Studies major is a self-paced degree-completion program designed to be completed within 24 months. The use of an online modality facilitates program completion in two years or less and the number of units required will vary based on each students’ total units transferred into the program.

The program was designed specifically with tribal nations in mind since many tribal students have access to community and tribal college-level education but are unable to attend a university in a face-to-face capacity due to location and distance. In many parts of Indian Country, geographic isolation inhibits student’s ability to earn a bachelor’s degree and earn a respective bachelor’s level income.

Extending Tribal Education Partnerships into Indian Country

In order to extend the reach of the certificate program developed by the SITG into Indian Country, the Sycuan Band and the SITG created our first memorandum of understanding (MOU) with the Red Lake Nation College (RLNC) in Minnesota. The goals of this affiliation are to provide a combination of breadth, depth and quality of curriculum, experience and purpose that neither institution could achieve on its own, and to expand opportunities for students in both regions and at both institutions.

This partnership was forged through a combination of tribal leadership, academic partners and industry executives, including Sycuan Tribal Chairman Cody Martinez, RLNC President Dan King, Red Lake Nation Gaming CEO Angela Dauphinais, SITG Endowed Chair Kate Spilde and AIS Chair David Kamper. The timing of the launch was symbolic since the Sycuan Band of the Kumeyaay celebrated the inauguration of their new tribal council in San Diego on Saturday, January 28, and met with leaders of the Red Lake Nation and RLNC in their council chambers first thing Monday morning, January 30, to learn more about the ways this partnership can support both nations and all of Indian Country.

Signed on campus at SDSU later the same day, the MOU is intended to accomplish a number of concrete objectives. In the short term, faculty in AIS and the SITG will support the RLNC to facilitate student participation in the online AIS degree completion program at SDSU to include the Certificate in Tribal Casino Operations Management offered by the SITG.

In addition, the RLNC will work with AIS and SITG to determine tribal gaming education and training needs specific to Red Lake Gaming in order to assess whether current offerings are meeting industry, student and workforce development needs. We will also work together to provide exchange opportunities for students at each institution to visit and/or work at other tribal gaming properties to appreciate the diversity of tribal gaming facilities across Indian Country.

In the long term, our shared goal is to create a self-perpetuating pathway that allows for students graduating from RLNC to complete their B.A. at SDSU fully online while they are able to live and work in their chosen community. Ultimately, we plan to collect and distribute data about this successful education collaboration that can be mobilized for public consumption and in ongoing public policy debates related to tribal gaming education, research and improved gaming operations.

Future partnership exploration includes curriculum development in indigenous-focused education and food sovereignty that bridges Indian County community needs, indigenous foods and the tribal gaming industry in partnership with groups like the North American Indigenous Traditional Indigenous Food Systems (NATIFS) organization.

Conclusion

Leaders at tribal nations like Sycuan and Red Lake and educational institutions like SDSU and the RLNC are demonstrating that strategic partnerships like this one can improve business performance through strengthening gaming management resources. Affiliation also increases the depth and breadth of the academic research component of the gaming industry, including the SITG’s ability to fund independent research that addresses marketing, operations and regulation of current and future gaming opportunities across Indian Country.

Finally, this affiliation supports tribal students and communities by bridging the geographic divide between tribal nations and facilitating deep and enduring knowledge sharing and success.

Oklahoma is home to one of the largest casino industries in the United States, with well over 100 tribal casinos located throughout the state. These casinos play a significant role in the state’s economy, supporting nearly 76,000 jobs and generating $1.69 billion in tax revenue and tribal revenue share payments to all levels of government, per the American Gaming Association’s 2022 State of the States report.

In this article, we will examine the current state of the casino industry in Oklahoma, the long history of Oklahoma gaming compacts and the future outlook for tribal gaming in Oklahoma and beyond.

Market Overview

The Oklahoma casino industry is a major contributor to the state’s economy, providing significant amounts of revenue, jobs and entertainment to the citizens of the state. The Sooner State is home to 142 casinos and gaming enterprises, making it one of the largest gaming markets in the United States. The industry started in the early 1990s when the state government passed a law allowing for the development of gaming facilities. This led to a surge in the number of casinos, which now range from large, resort-style casinos to smaller, local gaming centers.

The National Indian Gaming Commission (NIGC) reports annual revenues by region. Oklahoma is split between two separate regions—Oklahoma City and Tulsa—as seen in the map at right. Unfortunately, these two regions encompass three different states, bleeding north into Kansas and south into Texas.

By using deductive reasoning, we estimate that of the $6.2 billion of revenue generated by these two regions, approximately $5.5 billion was generated by Oklahoma in FY 2021. This is roughly a 45 percent increase over FY 2020, which is to be expected given pandemic-related impacts. Interestingly, this makes Oklahoma one of the top five largest gaming markets in the country, including both commercial and tribal states.

According to the FY 2022 annual report of the Oklahoma Gaming Compliance Unit (OGCU), “the State of Oklahoma collected over $191.5 million in tribal gaming exclusivity in fiscal year 2022… based on over $3.19 billion in Class III electronic games and non-house-banked card games.”

This represents an increase over the previous year of 18 percent, outpacing the commercial market growth rate of 14 percent. The NIGC report represents total gross gaming revenue (GGR), while the OGCU only identifies the revenues on which exclusivity fees are paid—Class III revenue. Therefore, the difference between the NIGC figure and the OGCU figure is the Class II revenue generated by the state.

Oklahoma is a unique gaming market with regards to the significant amount of Class II gaming machines compared to Class III. Historically, Class II machines have been utilized to backfill markets that have surpassed their allotment of Class III machines, or to offer a different style of machine to the gaming patron. In Oklahoma, tribes have used Class II machines to help reduce exclusivity fees paid to the state while maintaining a quality gaming product, a model that has not been as successful in other gaming markets around the country.

Like the rest of the country, Covid-19 impacted the Oklahoma gaming market to the tune of 16 percent. While not the largest impact seen across U.S. gaming markets, it was significant enough to create job loss and decrease critical funding for non-gaming businesses as well as services offered to tribal members. Larger Oklahoma tribes like the Cherokee, Choctaw and Chickasaw Nations have been at the forefront of recovery and growth, and continue to invest heavily in their casino operations, build new facilities and expand existing ones.

These tribes have been successful in attracting new customers, increasing their market share and growing their revenue. The strong recovery in FY 2021 (32 percent) and FY 2022 (18 percent) indicates a resilient market and a trend that the Oklahoma market should continue to see moving forward.

The Compact Chronicle

Following the 1987 U.S. Supreme Court ruling in California v. Cabazon Band of Mission Indians and the 1988 Indian Gaming Regulatory Act passed by Congress, a framework for regulating tribal gaming activities was installed in the form of a compact.

Compacts are government-to-government working agreements on issues of mutual interest. This could cover any topic from services, land use and taxes to the use of natural resources or, in this instance, gaming. A gaming compact is a legal agreement between a Native American tribe and a state government that allows the tribe to operate certain types of gambling activities on their tribal lands in the state. Tribal gaming compacts are required by federal law for Class III gaming, which includes slot machines, casino-style games, and certain types of parimutuel betting.

The first compact in Oklahoma was signed in 1992 with a more substantial statewide compact being enacted in 2004 by state legislature and voter approval. This included significant expansion of the types of Class III games being offered as well as an agreement from the tribes to pay a Class III exclusivity fee in exchange for the prohibition of non-tribal gaming in the state. That compact expired in 2019, but was extended for another 15 years following a ruling by the Oklahoma Supreme Court.

Shortly following, the state and Governor Kevin Stitt negotiated new compacts with four tribes in a multifaceted effort to: 1) increase tax revenue to the state, which is used to support education; 2) bring Oklahoma more in line with what other states receive in exclusivity fees; and 3) allow some of the state’s smaller tribes to benefit from new and more lucrative casino locations.

Signed in the months after the majority of tribes in Oklahoma believed the Model Gaming Compact had automatically renewed, these compacts with the Otoe-Missouria Tribe, Comanche Nation, United Keetoowah Band of Cherokee Indians and Kialegee Tribal Town were controversial from the beginning, and by 2021 the Oklahoma Supreme Court had ruled them illegal. With that decision, Oklahoma tribes have reverted back to the original compact that was extended for an additional 15 years, now set to expire December 31, 2034.

Commercial Expansion of Oklahoma Tribes

Historically, tribes with extra resources generated by casino revenues often have focused on diversification outside of gaming. According to a piece by Michael Soll and Jeff Hartmann published in last year’s edition of Tribal Government Gaming, “many had ownership positions in a variety of businesses, but investment capital was limited and risk was quite measured.” This has led tribes to look in a different direction, a direction they are much more familiar with—the gaming industry.

In recent years, tribes have recognized the value they bring to the industry after being such a vital part of it for so long. Most tribes have compacts that limit the number of casinos they are allowed to have or the number of machines they are able to operate. Further, in many cases, opening a neighboring casino would simply cannibalize existing revenue streams instead of creating new ones. The obvious next move? Redirect much of the investment money previously used for outside investment back into the gaming industry, and more specifically, into the commercial gaming market.

As mentioned in the same article by Soll and Hartmann, “the road to commercial gaming investment by tribes dates back more than 15 years, having gained momentum following the Mohegan Tribe’s entry to the Poconos market in 2005, followed closely by the Seminole Tribe of Florida’s acquisition of Hard Rock International in 2006.” The Mohegan and Seminole Tribes paved the way for what has become a much more common outlet for tribes across the country, and Oklahoma is no exception.

In the early 2000s, the Cherokee and Chickasaw Nations entered the commercial market with the renovation of the Will Rogers Downs racetrack and casino in Claremore, Oklahoma, and the Remington Park racetrack and casino in Oklahoma City. Since then, the commercialization of Oklahoma tribes had cooled off until recently.

In today’s U.S. gaming environment, new markets are relatively rare. Areas of the country that accept gaming already have legalized casinos, while the ones against it have made their stance clear, even going so far as to enact legislation to prevent it in some cases. Accordingly, tribes looking to enter the commercial gaming environment must either: 1) purchase an existing commercial operation; or 2) wait for existing markets to expand.

Acquisition has been a major driver over the past several years, most notably with the Poarch Brand of Creek Indians’ purchase of Sands Bethlehem and the Seminole Tribe of Florida’s purchase of the Mirage in Las Vegas. Earlier this year, the Cherokee Nation became Oklahoma’s first tribe to enter the fray, finalizing their purchase of the Gold Strike Casino Resort in Tunica, Mississippi from MGM Resorts International. Chuck Garrett, president and CEO of Cherokee Nation Entertainment, told Business Wire, “This acquisition is a natural evolution for our company. Building our business outside of Oklahoma is a huge step that strengthens our ability to boost the Cherokee Nation economy while also building on our reputation of being a strong community partner and industry leader.”

Though less prevalent, expansion opportunities do occasionally emerge. After a long history of slot operations, Arkansas passed an amendment in 2018 to allow four full-scale casinos in the state. Its Pine Bluff license was awarded to Oklahoma’s Quapaw nation in 2019, marking the tribe’s first venture into commercial gaming.

“The Nation spent over five years working to bring a casino to the Jefferson County area, and to get the support of local government to make this happen made it all the better,” said Quapaw Nation Chairman Joseph Byrd. “The ability for tribes to leverage our level of expertise and grow into new markets is great for tribes as a whole.”

Aside from being awarded the license, Byrd also was extremely satisfied by the nation’s ability to open and operate a casino of this category during the middle of a pandemic: “When so many other businesses were failing, I am proud of our ability to move forward and open this casino.” The Arkansas facility generates nearly $150 million in GGR to support members of the nation.

While the Cherokee and Quapaw Nations are the only two Oklahoma tribes currently operating commercial gaming facilities outside of the state, they may not be the last. The Cherokee and Choctaw Nations both are vying for the final license in Arkansas, and the Osage Nation is exploring an opportunity to build a casino at Lake of the Ozarks in Missouri. The Chickasaw Nation also has partnered with several other entities proposing a $3 billion casino resort in Coney Island, New York. These nations join other large tribes across the United States seeking diversification in the gaming sector versus outside of it, a trend we believe will continue into the foreseeable future.

Conclusion

The Oklahoma gaming market is as unique as any that exists in the country. It creates tens of thousands of jobs, millions of dollars of revenue to the state, and billions in economic impact to direct and indirect entities associated with the industry. It is also a market approaching severe saturation.

To move forward, the state and its tribes must adapt and find new ways to grow to create long-term sustainability for the industry. As we’ve examined, both show a willingness to do so, but how these moves evolve the industry locally and the tribes in the context of a national, and possibly international, gaming industry will be interesting to watch.