2006: Native American Casino Owners
Monday, July 11, 2011
Native American casino operators, already established as major players in the gaming industry, are becoming increasingly prominent in the golf business, where they are making lavish investments in new courses and expanding at a pace that outstrips much of the industry.
This has resulted in an infusion of buzz-generating new layouts from top architects such as Tom Fazio and Rees Jones. The Golfweek’s Best lists of top resort and public-access courses increasingly are populated by courses built at Native American casinos, as is the magazine’s first list of top casino courses (p15). More importantly for the tribes, it has helped generate and retain lucrative customers.
“Golf has an even greater impact in the
way it brings additional gamblers to casino destinations,” says Matt Robinson of KlasRobinson Q.E.D, a Minnesota consulting firm that works extensively with American Indian nations. “The sport is more marketing tool than anything else for the tribes, and it not only lures customers to casino properties but also keeps them there longer, which means those people are spending more money on rooms, food, drinks and shows during their stays as well as on the games and slots in the casinos.”
Robinson notes that golf attracts an extremely desirable, high-end demographic of people who tend to enjoy gambling.
“Anecdotally, the profile of a golfer is very synergistic with the types of customers casino destinations hope to draw,” he says.
Diversification into golf has become especially important to certain Native American leaders who are concerned that their casino operations eventually will level off now that there are so many competitors in the gambling market.
Clyde Barrow, director of the Center of Policy Analysis at the University of Massachusetts at Dartmouth, says that a rule of thumb in the industry is that the percentage of residents who patronize a casino falls 50 percent for every 30 miles you move away from the casino. So once
a casino reaches a saturation point within its immediate market, its revenues can only be expected to rise in tandem with population and income growth.
“So they need some sort of amenity that allows them to expand their geographic reach,” Barrow says.
Tribes also fret that government authorities might impose new and Casinos, p18 >>>
taxes or restrictions on their casino operations. So casino operators are trying to expand their non-gaming operations. Barrow says that major casino resorts typically draw 17 percent to 24 percent of their revenues from non-gaming activities, such as golf, conventions or retail.
Only a handful of Indian-owned golf courses existed when the boom began roughly a decade ago. But as Indian gaming evolved as an industry from bingo halls to destination resorts, the number of courses grew dramatically.
According to a recent KlasRobinson Q.E.D. report, there are more than 66 tribal-owned courses in 18 states, with at least 25 more under construction. That’s remarkable growth, particularly because the spurt is occurring while the rest of the golf course construction industry has been slumping.
“Getting into golf has made a lot of sense for a lot of tribes, and for a lot of reasons,” says Ray Halbritter, nation representative of the Oneida Indian Nation and chief executive officer of its enterprises, which includes Turning Stone Resort in Verona, N.Y. “And it provides our customers a very special amenity.”
The idea of golf at Indian casinos is fairly new. It generally is recognized that the first tribal-owned golf course in America opened at the Mescalero Apache’s Inn of the Mountain Gods outside Ruidoso, N.M., in 1975. But it wasn’t until the federal Indian Gaming Regulatory Act became law in 1988 that the sport got its first boost. That piece of legislation set off the explosion of Indian gaming, sending the industry from a smattering of miniscule bingo operations to one that today produces some $19 billion annually in revenues for nearly 230 tribes running more than 400 gambling businesses in 30 states.
Flush with cash and land, the tribes have embraced golf. For example, the Pimas and Maricopas at Wild Horse Pass outside Phoenix spent roughly $170 million to build two Gary Panks-designed courses, a clubhouse, hotel and conference center on reservation land. In Connecticut, the Mashantucket Pequots bought some 900 acres across the street from their Foxwoods Resort Casino in North Stonington, where they constructed their two Lake of Isles layouts. In Michigan, the Grand Traverse Band of Ottawa and Chippewa Indians paid $45 million for the Grand Traverse Resort, which included three courses, 600 guest rooms and a 100,000-square-foot spa complex. They then poured $11 million into renovating the property.
Whatever the tack, the goals of the various Indian nations are more or less the same. “Golf was a way for us to meet our long-term goal to be the preeminent lifestyle destination resort in New England,” says Bob DeSalvio, executive vice president for marketing at Foxwoods. “And if you are going to qualify for that, if you are going to be truly upscale, you have to have a strong golf component.”
DeSalvio is quick to add that business diversification also is a strong motivation for many tribes. That sentiment is echoed most loudly by those Indian leaders such as Halbritter, whose Tom Fazio-designed Atunyote course at Turning Stone hosted the B.C. Open in July 2006 and, beginning in September 2007, will begin hosting a regular PGA Tour event, the Turning Stone Resort Championship.
By and large, the Indian tribes seem to have gotten what they want from golf: a new attraction for well-heeled guests and a modest new profit center for their overall businesses. “Our annual revenues for our two courses range from $6 million to $9 million,” says Kimberly Lewis, general manager of the Development Authority at Wild Horse Pass, which built its courses in 2001. “And when we combine the revenues we now generate there with those from our hotel, spa and conference center, we are catching up with the casino.”
The tribes have spent heavily to get into golf, but it appears their investments are paying dividends.