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Tribal Gaming Investment Opportunities Could Represent Substantial Returns

Tribal gaming is and will continue to be a significant investment opportunity as regulated gambling continues to grow in the United States

a foxwoods casino van is parked outside the entrance to the casino in connecticut
Photo by AP Photo/Susan Haigh
Derek Helling Avatar
4 mins read

As the expansion of regulated gaming continues across the United States, the state-by-state landscape has involved several different models. In some places it’s a private industry with state oversight. In other locales, the state governments themselves are involved. Many jurisdictions represent a hybrid of those forms.

Yet others integrate tribal gaming authorities within their borders, either leaving gambling exclusively to them or comprising a yet different type of hybrid. For as much gaming expansion as has occurred over the past five years, there is still so much more potential. Tribal gaming authorities are well-positioned to play a big part in what’s left to unfold.

For that reason, tribal gaming represents an attractive investment opportunity. There’s certainly no such thing as a sure thing in the investment game but there are reasons to believe that the future of tribal gaming represents as close to that as could possibly exist.

Past expansion has already fueled growth in tribal gaming

While investment is by nature forward-looking, wise investment decisions rely on past performance as vital information. For tribal gaming within the US, the existing data shouldn’t act as a deterrent by any means.

For example, tribal casinos in Arizona contributed more than $27 million in revenue sharing payments to that state for the third quarter of their fiscal year. That represented a 20% increase from the previous third quarter.

Tribal casinos in Michigan distributed more than $30 million in 2022 to local and state governments as part of their compact agreements. Furthermore, the Mohegan Tribal Gaming Authority shared that its revenue for the second quarter of its fiscal year was up 13%.

Those are just a few examples, too. Among the things that all those examples have in common are recent expansions of tribal gaming in those states to include online gambling. In all three states, the various tribal gaming authorities were part of those expansions.

Online gambling providing new revenue streams

In Connecticut, the Mashantucket Pequot Gaming Commission and Mohegan Tribal Gaming Authority operate both of the active online real-money casinos and two of the three legal online sportsbooks. In Michigan, 12 tribal authorities offer online casino play and sports betting.

Arizona is the site of 10 tribal authorities who operate online sportsbooks as well. Again, those are just three examples. There are others and many more could emerge in the near future. BOK Financial Senior Vice President of Native American Financial Services Damian Libutti said that tribal gaming authorities are bullish on expansion.

“We’ve seen both tribal and commercial operators pushing for expanded gaming opportunities and most notably for sports betting,” Libutti said. “I think we will continue to see tribal casinos pushing to expand gaming and sports betting in jurisdictions where it is not allowed today, especially those where tribes would have an exclusive right to conduct sports betting. Alternately, there are states where tribes are opposed to expanding gaming with sports betting, as it could allow commercial gaming operators to infringe on their exclusive right to conduct certain types of gaming. While sports betting has not been a significant cash flow driver for many tribes, it has been seen by some as an initial entree into the much more profitable business of internet gaming.”

Libutti added that online gambling enabled some tribal gaming enterprises to weather the COVID-19 pandemic. While profitability and resiliency are elements that make an investment opportunity attractive, Libutti points to another important aspect of tribal gaming.

Gaming is vital to local communities

The independence that gaming revenues afford tribal communities make them very attractive to groups, Libutti said. Additionally, the impact of tribal gaming operations on surrounding communities is significant.

“Tribal gaming has been a focus of BOK Financial for more than two decades largely based on the significant role tribes have played in the communities in which we operate and the impact that tribal businesses have on the local economies we live and work in,” Libutti elaborated.

In support of Libutti’s point, a March study from the Federal Reserve Bank of Minneapolis determined “that tribal gaming is responsible for sustained improvements in employment and wages on reservations and that American Indians benefit the most.”

Because of its importance, tribal gaming is here to stay. That also fuels interest in expansion. Fortunately, that interest is meeting opportunity.

Prospects for even further tribal gaming expansion appear strong

There are some prospects already on the horizon for potential tribal gaming expansion. Tribes will soon offer legal sports betting in Maine, for starters. There is broad support for tribal exclusivity over legal sports betting in Minnesota.

The state of Florida already has an agreement in place with Seminole Gaming for online sports betting there. While that’s currently suspended pending litigation, a tribal monopoly in that state on online gambling could be quite lucrative.

It also appears that if any form of online gambling in California is to ever proceed, it will have to meet the approval of tribal casino operators there. Outside of online gambling opportunities, there could be further chances to open new brick-and-mortar gambling facilities as well.

Late last year, the US Department of the Interior’s Bureau of Indian Affairs (BIA) announced revised regulations aiming to make it easier for the BIA to take land into trust for federally recognized tribes. That’s an important component of offering compact gaming for tribes and one that Libutti thinks tribes will take advantage of.

“The new fee to trust process will likely open the door for many tribes that are looking to move into gaming” Libutti added. “Some tribes have land that is not advantageous for gaming, but this streamlined process could allow tribes to acquire land near metro areas and bring it into trust more easily, which could lead to an expansion of the gaming industry.”

Expansion has already elevated the profile of tribal gaming and several components are aligning for even more. There’s comparatively little reason to dismiss tribal gaming as an investment opportunity.

Derek Helling Avatar
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Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

View all posts by Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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