Matt Harkness was named chief operating officer, Four Winds Casinos, by the Pokagon Band of Potawatomi Indians last May, placing him in charge of three Four Winds properties in the Michigan towns of Hartford, Dowagiac and the flagship in New Buffalo, one of the Midwest’s premier gaming destinations with a 415-room hotel, Hard Rock Cafe Four Winds, gourmet steakhouse, buffet, and state-of-the-art events center. Harkness recently met with Casino Journal executive editor Charles Anderer in New Buffalo to discuss the growing success of Four Winds Casinos and how the gaming operation has leveraged the Pokagon Band’s willingness to invest in tough times. Here are some excerpts from that conversation:
In regional gaming today, it seems it’s probably best to plan on increased competition and invest accordingly. Is that part of the thinking behind your business plan?
Harkness: I think we’re well situated, whatever happens in the future. You don’t want to be overly confident, obviously, but I think the infrastructure that the Pokagon Band has put together with the three Four Winds properties is substantial. The two satellite properties are as beautiful as this one. The brand recognition follows through from property to property. Our Net Promoter scores, in terms of what people think of the casinos, are off the charts. I think we are very well positioned. In a very difficult economic environment, we have been able to expand this property significantly and add two satellite properties that are right sized for their markets.
Tell us how your gaming company and structure has evolved.
Harkness: The Hartford property opened about two and a half years ago. It has 550 slot machines and nine table games. It has a Timbers casual restaurant as well. That was the first satellite casino. The second opened about a year ago in Dowagiac. That’s smaller; 300 slot machines and five table games. When we opened Dowagiac, the Pokagon Gaming Authority, who is the Board of Directors representing the owners, changed the operational structure. It was basically me and the assistant GM here, Frank Freedman. He was promoted to GM of Hartford and Dowagiac and I was promoted to COO and am still the GM of this property.
What was the thinking behind adding the other two properties?
Harkness: The Pokagon Band, under their recent compact negotiation with the state of Michigan, had the ability to open two casinos in those two cities. So they ran feasibility studies, assessed the potential of those two markets and proceeded with those two locations. They both do very well.
Your loyalty program extends to the three properties now?
Harkness: Yes; they’re all Four Winds Casinos, co-branded and co-marketed. When you receive a piece of mail, whether you played at one property or all three, your points are all combined. We’ll see people who play at one of the satellite properties during the week as a convenience gaming experience and come to New Buffalo on the weekends so they can dine here, stay at the hotel, go to a show, and go to the Hard Rock Cafe.
What is the competitive landscape from your perspective?
Harkness: We compete with four casinos in northwest Indiana, as well as Native American casinos in Michigan that are closer to our two satellite casinos. The closest casino to this property is about a 15-minute drive away (Boyd’s Blue Chip Casino/Michigan City).
Where are your customers coming from?
Harkness:The tri-state area; Michigan, Indiana and Illinois, in that order. Between Michigan and Indiana, the share is pretty close.
How about on the high end?
Harkness: That skews more toward the Chicago area.
Do you get many Asian players out of Chicago?
Harkness: Some, but we also get some from cities in Michigan that are close by.
I noticed one of your billboards coming into Indiana from Chicago. What’s your marketing radius for this property?
Harkness: It’s pretty large, certainly compared with the satellites, but it’s still regional gaming and a drive-in market. The radius is a comfortable drive time, which is 90 minutes to two hours away. But the reason why we’re here in New Buffalo is because Chicago is the third largest metropolitan area in the country and that 90-minute to two-hour drive time fits a lot of people. That’s why we’re able to maintain a property this size, expand it, as well as add two satellites.
What are some of the legislative issues you keep an eye on at the state and federal levels?
Harkness: Internet gaming is something we keep a very close eye on. Right now, it seems to be developing on a state-by-state basis. We’re not sure what the state of Michigan or the federal government is going to do, nor are we sure what impact any state policy coming out of Michigan would have on what we do here. We’re looking very closely at all of that. As far as other legislation, there’s always the very real potential for expanded gaming in Illinois. I’m not sure it’s quite so real in Indiana at this point. There are a lot of question marks out there as far as what could affect our business competitively and from an Internet gaming standpoint.
What is your thinking on the social gaming/free play angle?
Harkness: It’s an expensive thing to do. We might be years away from being allowed to pursue for-money Internet gaming, so we’re being careful about how we look at the whole thing.
You’ve made very significant non-gaming investments. Tell us a little more about your underlying approach there.
Harkness: Everything we do on the non-gaming side is to accentuate the overall experience for our guests, whether they are gamers or not. The Events Center, for instance, is to drive in new guests who may not have experienced this property before. A common reaction is, “Wow, this is much nicer than I expected it to be.” In addition to headline entertainment in the event center, we also do banquets and meetings, which has also introduced a lot of new people to the property. Hard Rock brings a younger demographic to the property, which has helped revitalize the property from an energy standpoint and also opens up a new gaming segment for us.
What else would you say differentiates Four Winds?
Harkness: Service. Everyone says they have great service, but we really do. From an objective, quantifiable means of reviewing service, we’re head-and-shoulders above what you’d expect in a regional market.
Let’s talk about your slot players. Are the low-denom video games as big here as elsewhere?
Harkness: Penny games have just been king for the last eight years or so, and they have continued to grow. What we’re seeing now is a little bit of resurgence in the reel product. The top three U.S. manufacturers, IGT, Bally and WMS, also seem to be revitalized. If they had their eye off the ball for awhile, it’s clearly back on the ball and they’re developing product that’s doing much better than their new products have done in the past. This is good because their libraries are more diverse than say Konami or Aristocrat who are big globally but less so in the U.S. Those companies have been great the last few years at providing the larger manufacturers an incentive to step to the plate.
People in this market have been exposed to gaming for awhile. I imagine as slot players go they are pretty knowledgeable.
Harkness: They are. What helps us relative to Indiana is they have a stagnant jackpot on their progressives; they can’t do wide-area progressives in other words. We do wide-area progressives here and have people winning jackpots as large as $1.3 million, that’s a nice competitive advantage for us.
Do you see any product gaps that you’d like manufacturers to fill?
Harkness: We think there’s still an opportunity to refresh the reels, which have been left behind by video in terms of titles and content. There’s an opportunity, I think, to take the reel product and modernize it.
How has your players’ club evolved?
Harkness: We have a two-tier system that works well for this property and also works very well for our satellites. We have a high-tier copper card and a red Four Winds player card.
Is direct mail still king?
Harkness: It is. There are people who are responsive to e-mail or no mail at all, but the vast majority of guests still are responsive to regular U.S. mail.
How do you handle player acquisition; are your hosts responsible both for hunting for new players and developing existing players?
Harkness: Our hosts do function like that. A lot of the acquisition we get is through word-of-mouth because we do have such a beautiful product here. A lot comes through advertising; we’re very aggressive with print, radio and broadcast. Internet advertising is becoming a bigger and bigger portion of the budget. Also the entertainment is a form of advertising that people sometimes pay more attention to than traditional advertising.
Everyone’s players are up for grabs, especially on the high end. How successful have you been on the retention side?
Harkness: Very successful. It goes back to the service; we fall all over the guests, and that goes on 24 hours a day. I think we’re staffed just right to provide that level of service. The slot product, the food product, cleanliness of the property, the look and feel of it, it all adds up.
Does the three property set-up help in terms of staffing development? If someone shows promise, there’s an upward path?
Harkness: There’s no question. It’s like a Triple A/Major League set-up. We’ve used that approach and it has worked extremely well. There are a lot of positive synergies administratively and at the marketing level. We’ve had a very stable executive group and a stable staff in general, as well as a very supportive Gaming Authority. That has given us the opportunity to establish and maintain a very good culture.
How many tables do you have?
Harkness: We have 61 table games in New Buffalo, mostly blackjack-type tables. We also have craps, roulette and mini-baccarat. Craps does well; we have standard craps as well as some variations. Tables do well here. This area of the country has always been one of the largest feeder markets of table game players to Las Vegas.
A lot of casino operators are investing in new marketing technologies, particularly on the data analytics side. Have you gone that route at all?
Harkness: Yes; we’re working with a company called 1010data out of New York. They basically have a spreadsheet that holds literally trillions of rows and columns. They do database maintenance for the New York Stock Exchange and we’re their first casino client. It has been a very good relationship and the technology has a lot of potential.
The key to any marketing analysis you do is to make sure that it’s profit-centric. It’s very easy to get caught up in revenue, but it’s more challenging to understand where the profit is coming from.