The Shakopee Mdewakanton Sioux Community, owners of Mystic Lake Casino Hotel in Prior Lake, Minnesota, operates the state’s most successful tribal enterprise, based on conservative management, strategic alliances, a favorable location, a small membership and a casino operation estimated to generate more than one billion dollars in annual revenue.
SMSC legal counsel William Hardacker noted Stanley Crooks, tribal chairman from 1992 to 2012, focused on the long view, with “the principle of planning seven generations ahead, and it underlies all the decisions that are made here.” Hardacker noted SMSC’s commercial enterprises exist strictly to endow the community and help provide for its well-being.
Ed Stevenson, president and chief executive officer of the SMSC’s casino operations added, “We take a long-term view, not a quarterly one.” He explained, “One of my first tasks here in 1992 was long-term planning. Our master plan was conservative. We knew the opportunity but weren’t sure how big ‘big’ was. It has exceeded anything I expected.”
One reason for that is because the SMSC has grown and avoided risk-taking by making partners of longtime competitors, for example, its alliance and investment in Canterbury Park racetrack in 2012. The track had lobbied the state legislature for years to become a racino. Randy Sampson, president and chief executive officer of Canterbury Park Holding Corporation said, “Ed Stevenson called me. Horse racing was in a death spiral. We were making a hard push for racino. Legislators kept asking, ‘Can’t you work together?’ It was a decade-long effort for racino, and because of it we couldn’t work with the SMSC on anything.”
Ultimately, with the approval of the tribal membership, the SMSC offered Sampson $75 million over 10 years to enhance purses and increase marketing—in return for Canterbury dropping its racino campaign in the legislature. SMSC has no management role or stake in Canterbury. Sampson said the SMSC “believed Canterbury was complementary to their businesses and didn’t want it to die at their hands and damage the tribe’s reputation. It’s been fantastic for us. It has turned racing around in Minnesota.” Sampson noted the track currently generates 29 percent of its revenues from horse racing and 56 percent from poker and other table games.
In addition to Canterbury, the SMSC also teamed up with the Valleyfair and the Renaissance Festival, marketing the area as RiverSouth. Executive Director Bill Von Bank said ultimately the goal is to attract “other entertainment-type businesses and increase visitor spend. We want to be viewed as a branded tourism destination like Wisconsin Dells.” Noted Stevenson, “A day may come when we have to look beyond our borders. For now we’re focused on RiverSouth and improving our operations here.”
The SMSC also invested $105 million in the JW Marriott Hotel at Mall of America. However, Stevenson said, “It is a passive investment, not a harbinger of things to come.”
Another change driving SMSC success has been its 2012 change in policy toward serving alcohol, which was forbidden under Crooks . Today the SMSC does not comp alcohol but sells it at Mystic Lake. “Alcohol brought conventions and customers. We studied adding alcohol extensively and it beat our projections.”
Stevenson said the new business generated by alcohol sales helped pay for the addition of a nine-story, 180-room hotel tower and 700,000 square foot Mystic Lake Center at Mystic Lake. “The new hotel tower and Mystic Lake Center will meet a growing demand from our guests for additional accommodations and space for groups of all sizes The grand opening of the hotel tower and Mystic Lake Center could not be better timed, as we reflect on our mission to give our guests the best possible full-service entertainment experience in the Midwest.” The project will create 400 construction jobs and 100 permanent jobs, Stevenson said. SMSC also will completely remodel its existing 586 hotel rooms this summer.
With Stevenson retiring this fall, his successor will face the challenge of how the SMSC can attract millennial gamblers, who prefer table games to slots, which represent more than 90 percent of the SMSC’s casino revenue.
Stevenson agreed younger customers are “not typical slot players. They are social, group-oriented, and prefer skill games like blackjack.” Mystic Lake is “creating lounge-like areas where you can bet and socialize” to appeal to these players. One challenge is Minnesota tribes are restricted to random-number games and blackjack. New compacts would have to be drawn up to add “skill-based” games such as poker, roulette, craps or sports betting, leaving tribes open to making tax concessions or commercial competition.
Furthermore, noted tribal gaming reporter Dave Palermo, “Internet gaming is the major threat to tribes. Gaming is going mobile like everything else.”
In the meantime, the SMSC is thought to have billions of dollars held in trust for the community. “The community’s savings portfolio evolves,” Stevenson said.
