Micheal Brunet, a well-known gaming attorney and former executive who spent time at Station Casinos, Affinity Gaming and several high-profile properties, discussed the advancement of tribal gaming in the Las Vegas market while at a recent panel held at UNLV’s William S. Boyd School of Law, and gave his opinion on some of the deals that have been made in the last few years.
The panel, entitled ”Future of Tribal Gaming: Convergence with Commercial Gaming,” was part of a larger symposium called “Indian Nations Gaming Past and Present.”
As reported by CDC Gaming Reports, Brunet touched on three tribal developments specifically in his comments: the Seminole Tribe’s takeover and rebranding of the Mirage via Hard Rock International; the San Manuel Band’s takeover and reopening of the Palms; and the Mohegan Tribe’s deal to manage the casino operations for Virgin Hotels Las Vegas.
At one point, he categorized the deals as being “the good, the bad, and the ugly,” as reported by CDC Gaming Reports. Going from left to right, he believes the Seminoles’ acquisition of the Mirage to be the best, or in this case, the “good.”
“They’re putting a boatload of money into it, building out that enormous guitar-shaped hotel and clearing out the jungles, dolphins, volcano, and all the silly crap leftover from the ’80s,” Brunet said in reference to the deal, as reported by CDC. “Their phenomenal beautiful property will be filled with great customers from their nationwide database. That’s a great investment long term and they’ll make their money back and then some.”
Brunet added that he feels the property could resonate with younger demographics, and could “unseat” the Cosmopolitan as “the hip property” on the Strip.
The tribe, through its business arm Hard Rock International, shelled out just over $1 billion to acquire the operations of the property from MGM Resorts International (HRI), which was just approved by regulators earlier this year. HRI has released plans to overhaul the building and then some.
When it came to the “bad,” Brunet detailed the San Manuel Band’s reopening of the Palms back in April—his insight was especially impactful given that served in an advisory capacity for the tribe prior to the deal being made.
Brunet said that while the tribe was exploring potential investments, multiple enticing deals fell through due to the pandemic, and the one they ended up going with wasn’t the best available.
“One deal was phenomenal, but unfortunately we couldn’t get it done,” he said, as reported by CDC. “Just as we were getting close to making a decision on a couple of other acquisitions on the Las Vegas Strip, COVID happened. That was the end of that plan. Many months later after the tribe had a change in management at the casino level, they acquired the Palms.”
The longtime executive noted that the property has never truly been a great moneymaker, and is not showing anything different under the new leadership—”“An EBITDA of $19 million is probably not the return on your investment you anticipated when you wrote that check for $650 million a couple of years ago,” Brunet said, per CDC.
Unfortunately, by process of elimination, that left the Mohegan-Virgin deal for the “ugly” section.
Brunet lamented the fact that based on the details he’s heard, “it’s an ugly situation,” and added there’s a clear lesson to be learned: “if you’re a tribe trying to operate outside your lands, you don’t have the exclusivity and other protections that you get via the state compact process. You’re in a highly competitive environment in places like Las Vegas, Atlantic City, Mississippi, and other more mature markets.”
Brunet concluded by cautioning tribes against reinventing the wheel—just because you can expand, doesn’t mean you should, especially in complex and competitive markets like Las Vegas.
He explained that the investment required usually doesn’t match the return, whereas most tribal properties can easily produce the same or greater revenues at a fraction of the cost.
