Rodney Butler was simply thinking out loud during a panel discussion of tribes pursuing commercial licenses at the National Indian Gaming Association convention in Las Vegas.
He’s been thinking about it in the days since.
His Mashantucket Pequot Tribal Nation, where he serves as chairman, is teaming with the Mohegans in Connecticut for a $300 million joint commercial venture in East Windsor. The tribes are hoping to start the project in the fall and open by late 2019 or early 2020. The Pequots own Foxwoods Resort Casino and the Mohegans own the Mohegan Sun.
Butler, who said this this would be one the biggest joint commercial ventures between tribes. He said last month’s announced acquisition of the Sands Bethlehem in Pennsylvania by the Alabama-based Poarch Band of Creek Indians for $1.3 billion has raised the ante for tribes on what’s possible for them to achieve.
“It’s something that tribes are looking up to aspirationally and saying wow,” Butler said. “That is a big deal that a small tribe deep in the heart of Alabama buying a $1.3 billion asset from one of the largest gaming properties in the world. I look at that as inspiring. It’s something we have been pursuing with limited success and seeing tribes like Poarch do what they have done encourages all of us to keep looking at deals and pursuing opportunities.”
It was also an inspiration in the days prior to the convention began was Reno-based Eldorado Resorts announcing it was partnering with Gaming and Leisure Properties. Inc. to acquire Carl Icahn’s Tropicana Entertainment for $1.85 billion. Tropicana owns eight casinos, including two in Nevada.
“Why couldn’t the tribes have done that,” Butler said. “We know the gaming industry and what is out there for sale. We have some of the best gaming analysts in the country working for us. We can analyze these deals and know what a fair price is to pay. We don’t give ourselves enough credit in Indian country of how well we run these facilities in comparison to the commercial operators out there. Many tribes have 10 to 20 years of gaming operations and that translates perfectly to the commercial gaming world.”
The Pequot tribe is pursuing a commercial venture in Mississippi. Butler’s background is in finance and he doesn’t think the concept is “far-fetched.” Several tribes have partnered on smaller hotel deals. Why not leverage their casino expertise for the same thing, he asked. It’s time for tribes to discuss coming together and thinking big.
“It was in the moment thinking big and reflecting on the deal that Poarch Creek did, which is amazing in itself, and saying how do we get bigger than that,” Butler said. “It was free-flowing conversation, and maybe that leads to further conservation with other tribes in talking about it. There are a lot of assets out there that are available that we can buy collectively, and we can compete with anybody. We would be putting our capital together and spreading out the risk. We would be going after large assets that we know we can manage and know are profitable.”
If there was a consortium of tribes that came together and bought multiple assets “at a decent earnings multiple of eight to nine times, that would be a great example,” Butler said.
The Mohegan tribe is involved in joint venture for a commercial casino project in Korea, showing there are opportunities abroad.
“The extreme example is what if a consortium of tribes come together and made a serious play in something in Japan or Brazil or one of the major markets that are going to open hopefully in the next few years,” Butler said. “That is how we have to think.”
Robert McGhee, vice chairman of the tribal council for Poarch Creek, said he liked the concept of tribes coming together to look at larger markets and how it could create a fund or management company to pursue commercial ventures. His tribe created a hotel investment fund in which has been working with tribes, McGhee said.
Gene Johnson, executive vice president of Victor-Strategies, which provides gaming advisory services with a focus on Indian country and who hosted the panel at NIGA on the pursuit of commercial licenses, said he sees more tribes working together for commercial ventures as part of that next frontier in the industry.
If the Mohegans and Pequots can come together after a difficult history over the last several hundred years, then there’s opportunity in the future for other tribes to purse commercial ventures, Johnson said.
“I think this is an omen for the future and working together on projects,” Johnson said. “There have been many instances around the country where tribes are competing against each other, and one tribe will work to make sure other tribes does not get a casino. So, this is heartening to see them work together. It isn’t required but you will see it in the future if it makes sense to work together to do a project one might not be able to do on their own.”
Johnson said the Mohegans and Pequots could work together in Massachusetts with an offer to buy Wynn Resorts’ $2.4 billion casino project outside of Boston should state gaming regulators revoke the company’s gaming license.
