Betting on the future: Major changes in gaming could affect Wisconsin tribes

Brandon Thoms couldn’t picture the changes headed for Wisconsin’s casino industry.

In the 1990s, he was just glad to have a job at the Lake of the Torches Casino in Lac du Flambeau. He rubbed elbows with professional athletes, politicians and judges.

Walking the same casino more than 20 years later, the 41-year-old Thoms pointed out signs of the transformation it’s undergone, following the lead of powerhouse Las Vegas venues.

“You can’t put a slot machine here anymore and expect people to come,” said Thoms, who works in the Lac du Flambeau tribe’s communications office.

Payouts with paper slips replaced slot machine coin payouts. Interest in table games such as blackjack and roulette has waxed and waned. Casino patrons want entertainment off the floor, from reality stars to comedians to music acts.

His tribe’s addition of restaurants and entertainment acts were big steps, but he predicts more change is coming for tribal gaming across the country.

Nationally and here in Wisconsin, the casino industry is in a state of flux.
Customers’ changing demands, combined with great unknowns such as online and off-reservation gaming, create an uncertain path for the industry and Wisconsin’s tribes, which depend enormously on gaming.

“We’re not in the early stages of the industry in Wisconsin anymore,” said Jeff Crawford, attorney general for the Forest County Potawatomi. “The market’s been flat or slightly down over the years. It’s not like a gold rush day where you can set up shop and the cash flow starts.”

Nobody knows if and when the federal government will legalize online gaming; any movement could impact the revenue streams of existing land-based casinos and riverboats.

For now, casino revenue for tribes is steady for Wisconsin, but it remains down from a pre-recession high of $1.3 billion in 2007 and 2008. Still, the Menominee Tribe of Indians plans to build a new casino in Kenosha, sparking concerns from other tribes who fear that a Kenosha casino would cut into their existing profits.

Many tribes still struggle to turn their casino profits into start-up investment enterprises or small businesses that could generate new jobs and bring greater financial independence to more members.

“Tribes, as we always are, seem to be behind the times,” said Thoms.

When, not if

As tribes in Wisconsin and elsewhere pursue new casino locations and expansions, some of Las Vegas’ biggest casino operators continue to push for federal legislation allowing online poker and other games.

“I liken it to,” said Tom Wilbur, an Oneida Tribe of Indians of Wisconsin member who worked on reservation economic development in 2008. “Ten years ago, nobody cared. Now, they’ve eroded brick-and-mortar (shopping).”

If online gaming is inevitable, it’s not a guaranteed loss for Wisconsin’s tribes.

Online gaming could be an equalizer for tribes with casinos on rural reservations, which struggle to keep up with tribes running casinos in Wisconsin’s large cities such as the Potawatomi Bingo Casino in Milwaukee or the Ho-Chunk Gaming Wisconsin Dells location.

But if small tribes don’t have the resources to get started and keep an online system running, they could fall even further behind, said Ernie Stevens, chairman of the National Indian Gaming Association. His group advocates for member tribes on gaming issues and has refused to back the language of proposed federal laws on online poker.

“The bills out there, the smaller tribes start way behind the eight ball,” Stevens said.

Stevens said that getting his group’s support will take some major changes. Among those: making tribal online gaming available to customers wherever playing online is allowed and agreeing not to change the Indian Gaming Regulatory Act.

The 25-year-old federal law requires tribes and state government to negotiate agreements about the type of games allowed and other rules.

At least two Wisconsin tribes are betting early on the online gaming movement.
The Lac du Flambeau Band of Lake Superior Chippewa and the Bad River Band of Lake Superior Chippewa are the first members in the country of the Tribal Internet Gaming Alliance. Nicknamed TIGA, the proposed treaty brings tribes together to compete with corporate online gaming operations if it is legalized nationwide.

Tom Maulson, the Lac du Flambeau president, said he and other tribal officials didn’t want to be caught off guard if online gambling moves forward.

“We’re going to be ready to make that happen,” he said.

The Lake of the Torches Casino on the Lac du Flambeau reservation already runs online slots, table games and poker — without betting — as a marketing tool.

Bill Guelcher, the casino’s CEO, said online gaming seems inevitable in a culture where everything from banking to education is becoming web-based.

“I don’t think it’s a question of if; it’s a matter of when,” Guelcher said.

Attracting a crowd

For now, at least, Wisconsin’s tribes don’t expect gamblers to flee the experience of a physical casino.

Despite revenues stagnating or shrinking during the last several years, several tribes have completed or are in the midst of multi-million dollar renovations at their casinos.

The Oneida Casino is adding four new restaurants to its properties in Ashwaubenon and Green Bay as part of a $28 million expansion project expected to be completed in the spring. The Potawatomi tribe has a $150 million hotel under construction in Milwaukee.

The Potawatomi, Wisconsin’s most profitable tribe in gaming according to federal audits, is watching the discussions about online gaming and off-reservation casinos closely but has no plans to pursue either.

“We could be very wrong, and if you’re getting in early (on online gaming), you could look like a genius years from now,” Crawford said.

Several tribes have applied for off-reservation casino approval from the Bureau of Indian Affairs, including the approved $800 million Menominee Tribe project in Kenosha.

Gov. Scott Walker still has to approve that project before it can move forward. He has given no time frame for making a decision.

Wisconsin’s outlook

Over the years, the Wisconsin Legislature has taken steps to limit the spread of tribal casinos. Tribes have added seven casinos here since 2003, including several complete renovations.

A total of seven new casino facilities have been added since 2003.

Consequently, a number of states with legalized gaming added casinos at a faster pace.

The United States is home to more than 460 casinos run by 242 tribes. Tribes nationwide have added approximately 170 new facilities since 2003, according to Alan Meister, an economist with Nathan Associates and author of the Indian Gaming Industry Report.

The total includes facilities that closed but re-opened. It doesn’t include replacements of existing facilities or the 95 closures Meister found during the same period.

Fred Risser, a Democratic state senator in Madison since 1962, has been one of Wisconsin’s most outspoken opponents of expanded gaming. He said some tribes have used the revenue effectively, but argues more access to casinos makes it easier for gamblers to become addicted.

“I suspect sooner or later, the gambling will be so prevalent and problems so large that society will change its mind and go back,” Risser said.

Republican state Sen. Tom Tiffany’s district in northern Wisconsin is home to several casino locations. He said the industry has “been a mixed bag” for the area, sometimes redirecting residents’ discretionary income away from other local businesses.

“(Gaming) is here to stay, and I don’t know what that’s going to look like in the future,” Tiffany said.

It’s easy to see why tribes continue to focus on traditional gaming: A review of tribal audits by Gannett Wisconsin Media found at least half — and often much more — of tribes’ annual budgets comes from gaming.

The Menominee, for example, got more than three-fourths of their government revenue from gaming last year. Tribal leaders recognize they must continue to diversify and invest in other business ventures.

“Maybe if there ever comes a day there’s no gaming, it wouldn’t be as devastating as people think,” said Keith Tourtillott, a tribe member who runs the Menominee Thunderbird Casino property. As a young man, he feared working in gaming and believed it could disappear anytime at federal officials’ order.

But he’s run the Thunderbird since it opened in 2011, catering to people with homes around Menominee County’s Legend Lake. People can fill up at the gas station and wind up playing on one of the 29 slot machines at his business. Tourtillott said the Thunderbird business could survive without the slot machines on purchases from the convenience store and restaurant.

“I certainly wouldn’t want to be around when that happens because I guess I’d be one of the people trying to find a way to stuff the holes,” he said.