Ismail Vali, senior consultant for iGamingLeaders.com, has authored an exclusive three-article series for CasinoBeats. The Three Acts of Gaming explains how Las Vegas set the blueprint for the first and second acts, or eras, and the lessons both Vegas and global resort gaming can teach online gaming as we move through the third.
Following yesterday’s first act, the second focuses on Macau, the success of America’s tribal gaming industry and the legacy of each.
Act Two: Macau and tribal gaming – The Conflict
Las Vegas, and the growth and evolution of resort gaming, proved a business case, across the gaming landscape. One that was studied, followed and eventually offered, around the world – inevitable conflict resulted from this within the US, as Vegas operators faced destination dilution from resorts on Native American lands.
Macau, long referred to as the Vegas of the East, would become, in many ways, a safety valve for some publicly traded Vegas brands – with expansion in Macau soon outstripping domestic performance in Nevada.
Tribal gaming: “Just like Vegas, only closer” for most Americans
The Tribal gaming phenomenon is likely the most overlooked in gaming – this is despite the fact that more than 200 tribes operate nearly 400 gaming establishments, contributing hugely to state treasury by way of state/tribe agreements, or “compacts”, as they are known, all across the US.
It may be because tribal casinos are more spread out, geographically, not all clustered in one place as with Las Vegas, or it may be due to the tensions that the Indian Gaming Regulatory Act 1988, created with other, competing, stakeholders in gaming, and indeed within the tribal community itself, once federally-recognised Tribes began, aggressively, leveraging their rights to offer Class 1, 2 and 3 products, and showing healthy returns from doing so, especially from Class 3 verticals like slots and table games.
The development of tribal gaming, where many operations evolved from traditional social gaming (Class 1) and bingo operations (Class 2), initially, may also explain the lack of “respect” that some in the industry show this sector – unreasonably so, in my view, given the many learnings gifted to the industry, generally, by tribal gaming specifically.
After all, the single-product specialism that tribal gaming initially exhibited is exactly the same as the later development arc of igaming, where the whole business began by just offering one product, really well – in the style of PokerStars or bwin.
IGRA’s aims were to provide for gaming operations by Indian tribes to promote economic
development, self-sufficiency and strong tribal governments. Much room for development, and improvement, continues to this day, but the broad aims of IGRA, whether satisfied or not should not detract from tribal gaming’s achievements and lessons for the gaming industry, generally.
Those tribes lucky enough to be located in or near major urban centres have, unsurprisingly, reaped the largest rewards. That isn’t just because of their geographic proximity, to be clear.
The Seminole Tribe of Florida, close to south Florida’s huge tourist centres, is one of the many net winners of tribal gaming, with operations that have grown, in just over 30 years since IGRA, to become a force to be feared in competitive gaming, globally, especially by virtue of their prescient purchase of the Hard Rock brand in 2007, which is now leveraged across four continents.
The Seminole community gained fame and notoriety for being the only Tribe to refuse to sign a peace treaty with the US, and perhaps it is this “unconquered” attitude that drives and fuels their trajectory in the gaming business. Their initial operations, specialising in high-stakes bingo from 1979, led to legal battles with the state at around the same time many other tribes were facing similar struggles of their own – culminating in the precursor case to IGRA, California v Cabazon Band of Mission Indians, which, like Christie v NCAA – the case that effectively repealed PASPA and enabled states to legalise sports betting in 2018 – ended up in a Supreme Court decision that opened the gate on gaming for tribal communities.
Since 1988, the Seminole have up-scaled and up-sold the Experience for their players, never remaining “comfortable” and always challenging themselves to do more, bigger, faster and better.
The commitment to performance across all aspects of the business of gaming by the Seminoles, whether bricks or clicks, across all product verticals, and embracing diversified revenue streams, in the style of Las Vegas’ focus upon profitable gaming, retail, rooming, nightclubs and entertainment verticals, is a shining example of the Experience being at the forefront of this (tribal) gaming operation.
“Labelling the Seminole achievement simply a success for ‘tribal gaming’ would ring-fence a story THAT RIVALS any in the industry“
Labelling the Seminole gaming achievement as simply a success for “tribal gaming”,
however, would be attempting to ring-fence a business story that rivals any in the history of the industry. And it’s one that is just about to meet its next distribution channel and
opportunity – the internet – by way of an igaming deal in February, 2018, with sector disruptor, Gaming Innovation Group.
By virtue of restricted space in an article of this nature, I’m not able to go into all the examples and anecdotes I’ve learned from exposure to tribal gaming over the years – and their many positive impacts upon the player experience.
I would, however, like to share one headline about the Foxwoods mega-resort in Connecticut, operated by the Mashantucket Pequot Tribe.
Launch day for Foxwoods slots: East coast players were so looking forward to experiencing Foxwoods, that on opening day for slots at the resort, in 1993, there was an “11-mile tailback of cars happily waiting to get in and gamble”.
That same year, the first of legalised slots play, the tribe delivered, under its Compact with the state, the incredible sum of $110m – the state’s 25 per cent share of revenue.
Macau: by revenue, the world’s biggest gaming resort
A former Portuguese colony, Macau stands today as the shining example of why monopoly
operations, in gaming, should never be entertained – competition created a bigger, better market, for every entrant. The player experience, more than anything, benefited to the point that this Vegas of the East now regularly beats Las Vegas results, quarter on quarter.
The monopoly background of Macau is dominated by one figure: Stanley Ho. His Sociedade de Turismo e Diversões de Macao, gained the gambling “concession”, as such things were known at the time, in 1962, on a 40 year licence. The move back to control from mainland China, in 1999, came with a notice that the monopoly, due to expire shortly in any case, would be open to new bidders.
Three emerged with concessions for the imminent 21st century Macau:
- SJM (Sociedade de Jogos de Macau): a division of Stanley Ho’s STDM
- Wynn Resorts
- A combination of Las Vegas Sands and Galaxy Entertainment (since split as a concession, although both brands remain in Macau, separately)
That the new, competitive marketplace was of benefit to all should be in no doubt. Today, there are 41 casinos in Macau, including among them some of the largest contained structures on earth. The former monopoly, SJM, still leads by a number of venues, with 20 casinos, but all the new entrants have expanded, including Wynn, doubling its presence, and Las Vegas Sands, now re-named Venetian Macao for local operations, dominating the new breed, with five casinos.
The pack has also been joined by entrants Melco (Melco Crown, formerly) and MGM. All of the resorts are incredible properties, with venue themes, gaming floors and player experience assets among the best I have ever seen in the business – they stand as monuments to the thriving market they have engendered, much loved by the players and visitors to Macau, especially during the seasonal Golden Week highlights of National Day and Chinese New Year.