Several years ago, when Caesars Entertainment was on the cusp of bankruptcy, an idea was floated to spin off the company’s Total Rewards (now Caesars Rewards) program. The idea was that with 60 million names of proven gamblers, the program could stand on its own as a company providing service to the parent company that could be quantified and identifiable. That never happened for a variety of reasons, but the concept of turning loyalty programs into REITs is an idea whose time has come.
And we really only have to look at a recent agreement that Caesars has made with a North Carolina tribe, the Eastern Band of Cherokees, when it sold its southern Indiana casino, Caesars Indiana to them. The tribe paid around $200 million for the operations of the property (the Caesars REIT, VICI, owns the actual facility) and it will retain the Caesars brand as well as the connection to Caesars Rewards. Now there were no details released on exactly how this is going to work, but it’s an extension of the brand that could become a blueprint for other similar deals.
Remember, Caesars runs several tribal casinos including Harrah’s Southern California and Harrah’s Ak Chin in Arizona and others, but their arrangement with the Eastern Band goes beyond Caesars operating a property for a tribe under Native American gaming, but it’s a full scale license to an operator of a commercial casino, with no distinction made between a tribe and a commercial operator. So imagine standalone tribal or regional casinos signing up for the same deal?
Other companies have also been known to extend their loyalty programs into casinos they either operate or license. For example, Mohegan Sun’s Momentum program is used at the flagship in Connecticut, the commercial casino in Pennsylvania and in Resorts Atlantic City, where it owns a small equity stake and operates the casino. It will also be used at the new Virgin Hotel Casino in Las Vegas that will open this year and where Mohegan will operate the casino.
Hard Rock International is a bit different. The company owned by the Seminole Tribe owns, operates or franchises casinos under the Hard Rock name. Because they is so much difference in how the tribe is paid, it really can’t use the same loyalty program across different properties because it’s unclear what entity would bear the expense. The revenue flows are just too diverse to fairly reward the player who might want to experience a different Hard Rock property. But reports last month indicate that the holders of Hard Rock Atlantic City’s Wild Card will soon be able to experience to two large Seminole Hard Rocks in Florida, in Tampa and Hollywood. The Seminoles are only part owners of the Atlantic City property, but a formula seems to have been devised. So it took some time to do the math, but it can be done, and this could also be a way to incorporate other Hard Rock properties across the nation.
Now MGM Resorts’ Mlife loyalty program has so far been strictly limited to MGM owned and operated resorts and casinos. MGM isn’t in the casino management business—unless you consider it is managing the casinos owned by its REIT, MGM Growth Properties. But MGM’s current emphasis on sports betting and online gaming is a good argument for expanding the Mlife program. MGM isn’t in every state where sports betting is legal for its BetMGM app, which of course is linked inexorably to Mlife.
For example, MGM just recently announced that it had launched BetMGM in Iowa, where it has no casino, in conjunction with the Diamond Joe Casino in Dubuque. Right now, it’s limited to the BetMGM app, but why now, down the road a ways, wouldn’t MGM considering allowing access to its Mlife program to customers of the Diamond Jo. We’ve learned a long time ago that gamblers love to have access to a Vegas vacation, and wouldn’t an MGM property be the perfect landing place for an Iowa gambler?
With tribal casinos, regional casinos, now mini-casinos are the big corporations missing out on a gold mine of potential customers? What would it take to extend your loyalty programs to these smaller, independent venues, thereby giving the operators of these properties the opportunity to reward their customers, build revenue and share the wealth? All it takes is some clever mathematics and some imagination.
