Cherokee Nation Businesses based in Oklahoma, last week revealed it had reached an agreement with MGM Resorts to buy Gold Strike Tunica, the only casino the company owned in the northern Mississippi market. A subsidiary of the CNB, Cherokee Nation Entertainment Gaming Holdings, will pay $450 million for the 1,100 room property, with a 50,000 square foot casino.
It’s the first gaming venture outside of Oklahoma for the tribe and its first investment in commercial gaming. The tribe owns and operates Hard Rock Casino Hotel in Tulsa and nine other tribal gaming enterprises across the state.
“Cherokee Nation Entertainment has a rich history of operating award-winning hospitality destinations in Oklahoma, and we are proud to continue our growth in gaming and bring the level of excellence we are known for to the Tunica area,” said Mark Fulton, president of Cherokee Nation Entertainment (CNE). “We are excited for the team at Gold Strike Tunica to join the CNE family.”
Gold Strike Tunica was built in 1994, one of the second wave of Tunica casinos built in a region closer to Memphis, Tunica’s principal market, that includes the Horseshoe casino. At the time, the 32 story building was the tallest building in Mississippi.
For MGM, the sale of the property was a shedding of a secondary, but successful, asset.
“Gold Strike is a wonderful property with a bright future,” said MGM Resorts CEO Bill Hornbuckle. “Strategically, though, we decided to narrow our focus in Mississippi to a single resort, Beau Rivage (in Biloxi on the Gulf Coast), and dedicate more of our time and resources to continuing to drive success there.”
Complicating the sale a bit was the ownership of the real estate by VICI Holdings, which recently closed on the sale of MGM Growth Properties. To complete the Gold Strike sale, VICI agreed to reduce the annual rent payment on the property by $40 million. .
The $450 million sale price indicates an 11 times valuation of property EBITDA from 2021.
“This is a great outcome for the company, as we can reprioritize future capital expenditures toward opportunities that will enhance the customer experience at our other locations,” said Jonathan Halkyard, CFO and Treasurer, MGM Resorts International. “We appreciate VICI, as the real estate owner of Gold Strike, working constructively with CNE to facilitate a new lease agreement.”
The deal is subject to regulatory approvals and is expected to close in the second quarter of 2023.
“We look forward to expanding our gaming and hospitality businesses as we execute on our strategic plan to grow our footprint outside of the Cherokee Nation Reservation,” said Chuck Garrett, chief executive officer of Cherokee Nation Businesses. “This acquisition will enable us to better serve our mission of growing Cherokee Nation’s economy while also having a significant positive impact on the local economies we serve.”
The Cherokee Nation is just another in a growing list of tribes that have used their gaming expertise to venture in the commercial gaming world. That list now includes the Seminoles, the Eastern Band of Cherokee Indians, San Manuel Band of Mission Indians, the Chickasaw Nation and the Poarch Band of Creek Indians, along with several others.
