Tribal gaming accounts for almost half of all industry revenue generated in the U.S., with a solid US$35 billion in FY2019. It stretches throughout almost every state, and provides vital funding to Native American communities. It seems to be some dilemmas between commercial gaming and tribal gaming because gaming in the Indian Country has different goals, motivations and beneficiaries.
INDEPENDENCE AND EXPANSION OPPORTUNITIES
At a time when the U.S. market is expanding and evolving significantly, specifically on verticals such as iGaming and sports betting, it’s relevant to know how Indian gaming can respond to this trend. Reality says tribal gaming is governed by a different set of rules than commercial businesses. Anyone wanting to engage with the tribes needs to get acquainted with the concepts of sovereignty, compacts, state-tribal relations, tribal regulatory structure and tribal community. While new channels might offer tribes an opportunity for growth, as they exit the global pandemic, their core focus remains on ensuring that their land-based operations, a crucial source of revenue and jobs, recover quickly.
Some states like Michigan (with a strong presence of Native American properties) have recently legalized online casinos. In Washington, the Tulalip Tribe has reached a deal with the State Gambling Commission for the first sports betting contract in that state. In practice, this will allow betting on professional and collegiate sports, as well as on Olympic Games and Esports competitions, always on-site at authorized Tulalip Tribe casinos. This represents a challenge for tribal gaming. The tribes have fought for exclusive rights to gaming for decades, to ensure their operations provide returns to their communities. But amid the wave of gaming expansion sweeping the U.S., they face a dilemma over how to engage with these legalized verticals, while protecting their interests. The economic benefit from gaming is in many cases the only revenue source that allows the tribe to be self-reliant, rather than dependent on government dollars to operate social programs for their communities.
For tribes, sports betting are new offerings to consider. Some tribes have built strong relationships with sports teams, leagues and venues, even with sponsorship agreements. Others have decided to grow not only internally, but also internationally. For instance, Mohegan Gaming & Entertainment has presence in the U.S., Canada and South Korea, with plans to expand to Europe (Greece) and more Asian countries (Japan).
Many tribal gaming operators will have to define what suits their communities best: to advance with online gaming and sports betting in the U.S. or to try to grow in other markets outside their country of origin.
POSITIVE FUTURE INDICATORS
Regarding future possibilities for tribal gaming, it’s interesting to consider some indicators from the ‘Tribal Gaming Dashboard,’ which includes data from H2 Gambling Capital and the National Indian Gaming Commission (NIGC).
The dashboard reveals that, in 2020, tribal gaming revenue surpassed that of commercial gaming. This means that, from 2020 onwards, tribal gaming will account for the majority of U.S. casino gross win. Its market share is expected to peak at 55.3% this year, before falling to 50.6% as the commercial sector recovers in 2022. However, according to H2, it will continue to be the dominant force through to 2025, at which point its market share will have increased slightly, to 51.9%.
In terms of land-based casinos gross win, while commercial casino revenue will not return to 2019 levels until 2022, tribal operators will surpass that total this year, and continue to grow from there. By 2025, H2 believes tribal revenue will reach US$40.52 billion, compared to US$37.61 billion for their corporate counterparts. This represents a 17.2% increase from 2019, and a 55.4% jump from 2020.
Sources: The ICE 365 Tribal Gaming series, H2 Gambling Capital and the National Indian Gaming Commission (NIGC).