TribalNet: Small Michigan tribe can make a profit on internet gaming against bigger competition

TribalNet: Small Michigan tribe can make a profit on internet gaming against bigger competition

  • Buck Wargo
November 10, 2021 11:08 PM
  • Other

A small tribe in northwest Michigan is performing like the Little Engine That Could when it comes to internet gaming that was rolled out in the state in January.

The Little River Casino Resort is showing that a small tribe can punch above its weight, make a profit, and draw more players to its property in a saturated marketplace with a lot of big-name competitors.

Little River, which partnered with Rush Street Interactive, ranked number four in Michigan through the end of September with a 6.7% market share. They were bested only by the MGM Grand Detroit (BetMGM) with 37.4% and MotorCity Casino (FanDuel as a partner), also in Detroit, with 17.2%, along with and Bay Mills in the Upper Peninsula (DraftKings as a partner) with 16.5%. It had a higher market share than WynnBet, Golden Nugget, Barstool, Fox Bet, Caesars Entertainment, TwinSpires, and PointsBet.

“What is really key in this is you have to be part of that initial launch,” said Andrew Gentile, Little River’s general manager. “You have to be live on day one. Trying to buy back that market share afterwards is going to harm you a lot.”

Gentile laid out the tribe’s strategy and gave advice to tribal executives Wednesday at the TribalNet Conference & Tradeshow in suburban Dallas.

Little River had online gross gaming revenue of $6.6 million in September and is even outperforming the market share that was proposed to them, Gentile said.

On the sports-betting front, Little River had $3.44 million in total handle in September, which ranked eighth, but was fifth in adjusted gross receipts, thanks to not trying to match the marketing and promotional spend of other properties.

The crowd in Gentile’s session was eager for help with their path going forward, because many tribes have yet to take the leap into sports betting and igaming.

Gentile said 18 months prior to Michigan going live, Little River received 20 proposals for partnerships to supply their platform and marketing. Some of those 20 were different packaging from the same provider.

“Through that process, there’s a lot of trying to figure out what you want to do and who you are,” Gentile said. “I’m not here to tell you what the best way to do it is. It’s up to the size of your tribe and if you’re willing to accept some losses. The tribe I work for, it’s not part of their program to accept losses. It’s not a huge facility or a huge tribe, so we went about it in a different fashion than some of our competition. Some of our competition in Michigan white-labeled the solution, so they went out there and contracted with a provider. Others decided they’d try and build their own platform. Neither one of those two options was viable for Little River, just because of the cost that was involved.”

Gentile said it’s important to know what you’re capable of doing. Caesars Entertainment spent $20 million in six weeks to launch a new app, a total that would be 10 years of their advertising budget. “We can’t compete with that.”

They also can’t go up against MGM, which launched an aggressive advertising campaign and has 10 times the database that Little River had at the launch, Gentile said.

Before partnering with Rush Street Interactive, Gentile said they narrowed 20 proposals to five and invited those groups to make presentations to the executive team and tribal council. Rush Street was the only group that brought its president and CEO, who spent time with the counsel to answer their questions.

“Some people might not have been influenced by that, but it told me they were invested in their proposal,” Gentile said. “The other thing I liked about Rush Street is that it owns Rivers Casinos and understands the importance of brick-and-mortar and how the two can work together. And they have to work hand in hand.”

That contrasts some proposals whose operators wanted only to run online gaming on behalf of the tribe, but not be involved in the retail sports book, Gentile said.

What helped with Rush Street Interactive is that their online gaming goes by the name BetRivers, which makes for more seamless marketing.

“It is a great match, because we’re Little River Casino Resort and our online brand is co-branded with BetRivers,” Gentile said. “Having someone that runs brick-and-mortar casinos and having that co-brand with advertising and sharing players back and forth are important.”

Gentile said his only regret and what he would do differently if he had to do it all over again is partner with a company like Chalkline Sports, whose COO Joe Kustelski shared the panel with him. The company helps with customer acquisitions.

Gentile said it’s important for tribes to build their database before a launch online, due to the “significant difference (in revenue) when (a partner) markets and gathers that player and when play is coming from your existing database.”

Michigan has a cap on free play for online gaming, but none for sports betting. During their negotiations, Little River capped it for both, to eliminate the possibility of an “outrageous amount of free play that limits the revenue share for the tribe. I’d advise you that whoever you’re looking to partner with should be willing to put a cap on their free play to determine what that net adjusted revenue is. For me, that was a non-starter, because there’s no way of guaranteeing revenue back to the tribe. We had some that came in with huge guarantees on an annual basis, but they had no actual performance results to say they could achieve that.”