What’s the current size of Oklahoma in terms of gaming tribes and total operations?
Morago: There are 39 tribes in Oklahoma; 33 have gaming. There are 116 operations total, and they range anywhere from the second largest casino in the world, WinStar in Thackerville, to fuel stop-style operations… they run the gamut here. Oklahoma is one of those great markets that continues to grow. The market is strong, knock on wood. There haven’t been any dips. We’ve had a few casinos open up but by and large the activity has been casinos reinvesting in and adding to their properties.
A Brand New Strategy
Margaritaville hasn’t always been synonymous with maturity, but in gaming markets around the country, it is becoming a go-to solution for operators looking to boost visitor volume and build a destination-style appeal.
The latest example is in Tulsa, Okla., where River Spirit Casino’s Phase II development project will feature a Jimmy Buffett’s Margaritaville Casino and Restaurant, a 22-story, 500-room upscale hotel tower; and a 2,500-seat branded theater; a world class spa; and a convention and meeting center along with other new restaurants. The project will break ground this fall and take 18 to 24 months to complete, said Pat Crofts, chief executive officer, Muscogee (Creek) Nation Casinos.
For Crofts, the decision to brand the expansion with the Margaritaville name made sense on multiple levels. “It’s a fairly finite market in Tulsa; each of the four casinos, ours in particular, are locals casinos,” he said. “Most of our customers live within 25 to 50 miles and drive in and gamble several times a week. We have been planning a hotel expansion with a major addition of amenities for several years. Just to do a hotel and split up the existing market further didn’t make any sense economically to us. We wanted to find some kind of national brand to really grow the market here.”
To help get it right, Crofts retained industry consultant Innovation Group to do a feasibility study that included intercept surveys with gamblers around the country to develop a list of potential brands. “Here in the Tulsa market there is already Hard Rock,” said Crofts. “When looking at the demographics of the Margaritaville customer they were nearly identical to our current customer demographics as far as age, likes, gambling habits and spending habits, so it just looked like the best fit for us. Hard Rock and Margaritaville already compete around the country. When people think of Hard Rock and they think of a younger crowd. It has been tried and successful in some places but not in others. We think Margaritaville crosses more age and demographic groups.”
Margaritaville presently has four gaming properties: in Biloxi, Miss.; Bossier City, La.; Atlantic City, N.J.; and Las Vegas, Nev. Crofts said River Spirit will do some cross-marketing, both to the Margaritaville portfolio and to the Creek Nation’s 10 other gaming properties, but growth will come primarily from the Midwest. “We’re looking at becoming a regional destination that pulls people from all over the Midwest,” he said. “We’ll be aiming 500 to 750 miles out, to people who can fly in or drive in and spend a few days at our new hotel.”
Dallas-based architecture firm HKS is coordinating the project’s design. HKS is working with Margaritaville’s architect McBride Companies in the overall design. A joint venture between the local Manhattan Construction and Redstone Construction companies has been selected as the construction manager/building contract. Tulsa-based Program Management Group Native will serve as the owner’s representative.
The costs of construction are expected to be $250 million and an estimated 1,800 local construction-related jobs will be created throughout the course of the 18-24 month project. The two year construction project will support an income of $161.9 million and a total of $226.5 million in the production of goods and services throughout the Tulsa region.
A lot of that investment is on the non-gaming side, right?
Morago: Yes, which I think is the sign of a maturing market. It’s not about putting more machines on the floor at this point. So you’re seeing things like Choctaw putting in Gilley’s at a couple of their properties. You’ve got Toby Keith’s over at Hard Rock; you have the Creeks over at River Spirit branding their new expansion as a Margaritaville. Non-gaming amenities such as hotels, spas and golf courses are being added to make facilities appeal to a wider variety of folks.
So the commitment to reinvest is obviously there.
Morago: Yes, not just in their properties, but also in the surrounding communities. It’s a sign of faith in both the economy and their communities that they’re going to be able to sustain those investments.
Texas is obviously the big feeder market, but there is a lot of other cross-border gaming traffic coming into Oklahoma…
Morago: We border six states and Texas, Missouri, Arkansas and Kansas are the main feeder markets. But we get traffic even from a place like New Mexico, which has gaming, but will go to our facilities in the Panhandle area. Our properties in the rural areas are primarily locals-based.
We know that Texas with its energy-based economy held up relatively well doing the economic downturn. Can the same be said for Oklahoma?
Morago: It did. We have not taken a dip at all, no matter what study you look at.
How would you characterize the level of acceptance of tribal gaming in the state of Oklahoma?
Morago: The tribes have a very good reputation here. You can see it in the numbers of people from this state that visit our facilities and stay there and gamble. And you can see it in the level of community involvement that the tribes have. They are involved in very large-scale efforts like cancer research and Susan G. Komen for the Cure to smaller efforts around the state. The tribes also step up in unfortunate times of tragedy, such as the El Reno tornado in the Oklahoma City area in May. The tribes not only gave to each other but made sure their local communities were taken care of.
Could you talk more about that?
Morago: Going back to the Joplin tornado in 2011, Quapaw gave many people food and shelter at their hotel. In El Reno, many surrounding communities didn’t have shelters, so casinos opened their doors to make sure people were safe. There was a lot of need out there; no questions asked, casinos started delivering water and food and made sure that people were being taken care of. It’s not something we put out on press releases, because that’s just not what we do.
Oklahoma is now the third largest gaming market in the country and Class II games are still a big part of the business. How would you explain their enduring popularity and success?
Morago: Oklahoma was a Class II market for years; compacted Class III machines only got here in 2003. You have many customers in this market who still like those machines and they are money makers. It was somewhat of a shock to me coming from a Class III market in Arizona and seeing compacted Class III machines side-by-side with Class II games on a new floor and everyone’s on line to play the Class II games that they are used to.
Oklahoma Tribal Gaming at a Glance*
Total gaming revenue: $3.5 billion • Total non-gaming revenue: $493 million
Tribal gaming industry revenue ranking: #2 • U.S. gaming industry ranking: #3
Total number of gaming machines: 63,536
Class II machines share of total: 40 percent
Top five properties by number of machines:
• WinStar World Casino, Thackerville (Chickasaw Nation)
• Choctaw Casino Resort, Durant (Choctaw Nation)
• Riverwind Casino, Norman (Chickasaw Nation)
• River Spirit Casino, Tulsa (Muscogee [Creek] Nation)
• Newcastle Casino, Newcastle (Chickasaw Nation)
*All data is for calendar year 2011
You have a situation here where people really like those games. But, on the flip side, there’s also the realization that Class II games are our bedrock here in Oklahoma. It’s what we built this industry on; Class II and bingo. Tribes here in Oklahoma aren’t going to leave Class II games behind. In fact, we have done a very good job convincing other tribes that keeping Class II games strong and relevant to the casino market is a good idea. Many realize it’s a negotiating tool that they should never have given up on.
It also helps that the National Indian Gaming Commission is bringing some welcome clarity to the area of one-touch bingo.
Morago: They’ve just issued an opinion letter that is up for comment right now. There has been a lot of variation on the views of Class II games between the previous NIGC commissioner to the current one. It is refreshing to see that this commission is going back to the plain reading of IGRA.
You foresee Class II continuing to hold its own in terms of its share of games on the floor in Oklahoma?
Morago: Absolutely. As long as the Class II market continues to be innovate, which we see happening. We also see more entrants in the field. Who would have thought WMS, Bally and IGT would be creating new products for the Class II market? Combine that with what Class II represents for us in terms of our ability to have something to fall back on if compact renegotiations ever go sideways; the Class II market is very secure here in Oklahoma. The option of going to all Class II is not something we are afraid of.
As executive director of OIGA, what are some of the areas you focus on?
Morago: Apart from the trade show, which occupies a good deal of my time about five months out of the year, my job is to make sure the information is flowing and that our tribes are up to date on federal and state legislation that might impact our business. I’ve also been very fortunate to represent Oklahoma by speaking at gaming conferences all over the country, to talk about issues such as Class II. It’s a good idea for the broader industry to know what’s going on here.
What are some of federal issues that are top-of-mind for you?
Morago: Like everyone else, the whole Internet gaming discussion is top-of-mind, or non-discussion, depending what time of year it is. We’ve done a lot of work and have made sure to be at all the meetings related to Class II classifications and regulations, both Parts 547 and 543, which were published. Keeping track of land-into-trust issues and what’s happening with the Carcieri Fix is another focus. Anything that impacts our business such as the new bus regulations the Department of Transportation has come out with are just a few things we are looking at.
What’s the attitude of the Oklahoma tribes toward Internet gaming?
Morago: Tribes here are on both sides of the fence, just like everywhere else. OIGA has no formal position on Internet gaming. Tribes are considering various different business ideas. We also have to take into account that the state’s attorney general here has said that Internet gaming is illegal in the state of Oklahoma.
What can attendees at the OIGA show look forward to this year?
Morago: It’s our 19th annual show. Our floor will again be sold out and we have quite a few new vendors this year, most notably Ortiz Gaming. Attendance was a little over 2,000 last year and this year we’re expecting from 2,300 to 2,500 attendees. We’re growing constantly and the show continues to be a success.
You’ve spent time in other parts of the country and now two years in Oklahoma. What are your impressions so far?
Morago: It is a beautiful place, despite the tornadoes, the strong winds and the blast of humidity that comes with the heat. The people here are very nice. It is amazing to work with the tribes here and, to be honest, this is a region of the country that I really wasn’t that familiar with other than the casino parts of it. Getting to learn the history of the tribes here has been an enlightening experience for me and I have totally enjoyed it.