Gaming representation is ‘simple math’

Tribal enterprise gaming captures nearly half of the industry, yet commercial interests ignore the Indigenous talent pool.

California voters served up dramatic lessons about gaming in November.

There were two gaming initiatives on the state’s ballot. The first, Prop 27, was a rush by the “commercial” gaming industry to legalize sports betting in the largest state in the country. The ballot initiative was crafted based on the idea that voters would approve a new law just in time to bet big on football. Only that plan also included rolling over the interests of tribal enterprises, casinos and hotels.

So tribal enterprises offered their own initiative, Prop 26. It was mostly considered a ploy to derail the original initiative by overloading voters. When confused, voters tend to vote against initiatives.

Then truckloads of cash were spent arguing the pros and cons of each approach (along with advertising about poverty, social welfare, and “how is that related?” pitches). All told some $420 million was spent for or against Prop 27 and another $127 million on Prop 26.

The tribal enterprise’s ploy worked, voters said no to both. Prop 27, the measure supported by commercial gaming, was crushed, with more than 80 percent of the polls against. Here is the lesson: The commercial interests ignored tribal enterprises – and wasted millions of dollars.

That leads to another lesson: What would have happened if the boards of directors for these gaming companies had Native American voices serving as members?

Despite representing nearly half of the national gaming industry, tribal gaming enterprises have almost no representation on any major public gaming company board of directors. This despite tribal gaming enterprises being among the industry’s top producing casinos and resorts.

A review of publicly-traded gaming companies by ICT could not find a single Native American serving on a public company’s board of directors (with one exception, the Mohegan Tribal Gaming Authority is structured as a public company).

Tribal enterprise gaming represents nearly half of all legal gaming in the United States, or 44 percent, according to the American Gaming Association. “Since the passage of the Indian Gaming Regulatory Act (IGRA) in 1988, tribal gaming has become an integral component of the United States gaming industry,” the association said.

Except, it would seem, when companies select boards of directors.

“The boardroom has a lot of energy and a lot of influence. And you know, to me it’s real simple math,” said Ernie Stevens Jr., chairman of the Indian Gaming Association. “It’s so simple that they don’t want to say it. And they don’t want to be able to acknowledge our tribes as sovereigns … the bottom line here is that you gotta do the math.”

That math includes a history lesson. Fifty years ago when Indian gaming was rising many tribes turned to Nevada and New Jersey professionals for advice and management. Now it’s the tribal enterprises that represent some of the best run and most prosperous casino resorts.

“We’re no longer outside looking in. We’re no longer going out there and telling someone to help us. We are the professionals. We’ve grown in this world and we are the experts,” Stevens said. “Work with us and share the knowledge and we’ll get this figured out.”

At a meeting of tribal gaming leaders at Fort McDowell, Arizona, the election message was go against the tribes and you will lose.

Thomas Reeg, chief executive officer for Caesars Entertainment, said he carried that message to commercial gaming executives before the initiative process began.

“’You are going to lose,’ I told them that before they ever launched,” Reeg said. “But you have to get on the same page with Indian Country if anything is going to happen in California. That’s very clear. They got very poor advice. And they believed what they wanted to believe and we saw the results.” He said Caesars declined to participate because of its support for tribal partnerships.

In an interview, Reeg said there is a lack of representation by Native Americans on corporate gaming company boards.

The Caesars Entertainment board has nine members that are elected annually. The board has been formed largely through acquisitions, Reeg said.

“So basically we merge with a company, and a couple of their board members survive,” he said. This form of membership has not led to much turnover, which is likely where recruitments that target people of color could take place, Reeg said.

“Where we do very well with the measurements of women on boards, we do less well with minorities, and that’s something that we’d expect to change in the future with the tribal community,” he said. “Given the growing role of partnerships, is that something that makes it even more important? Certainly for us.”

A recent report by the Las Vegas Review-Journal found that 70 percent of gaming companies’ boards were composed of white men. Of the 53 directors on the boards of the top six gaming companies — MGM Resorts International, Caesars Entertainment, Wynn Resorts, Las Vegas Sands, Red Rock Resorts and Boyd Gaming — and only six are people of color.

Rose McKinney-James is African American and serves as a director of MGM Resorts International. She told the Review-Journal that boards “should reflect the communities where companies do business.”

Indeed, a California law – currently on hold because of litigation – would require public companies to have more diverse boards. Companies traded on NASDAQ face a similar requirement. The NASDAQ rule requires companies to have at least one female board member, and at least one who identifies as an underrepresented minority or LGBTQ. Or explain why there is not that level of representation.

Caesars Entertainment is traded on the NASDAQ exchange. And the company does meet the minimum standard for female and minority representation.

Serving on a corporate board is also a lucrative gig. Directors pay at Ceasars starts with a base pay of $100,000 and then there are additional fees and stock options that increase that compensation substantially.

In the company’s Environment, Social, Governance report (or ESG) it says by 2025 half of leadership roles will be held by people of color and 19 percent in senior leadership positions. The ESG report makes no mention of the board of directors.

Other gaming companies pay even higher salaries and are generous with stock grants to board members.

Tribal gaming enterprises do have growing representation in the industry’s trade associations. The American Gaming Association, for example, includes a number of representatives on its board, including tribal leaders Mark Macarro, chairman of Pechanga Band of Luiseño Indians, and James Siva, vice chairman of the Morongo Band of Mission Indians.

Victor Rocha is conference chairman of the Indian Gaming Association and publisher of Pechanga.Net. He says this is not a new issue. Twenty years ago people were asking about representation in the commercial gaming industry.

“Everyone’s making all this money off of Indian country, yet you don’t see any representation,” Rocha said. “And now you bring this up 20 years later and nothing has changed whatsoever.”

Rocha said there are now two generations of potential leaders that are untapped and unrepresented on gaming boards.

“There’s a next generation of young people coming in that are just so brilliant and talented, and there’s all these older people like myself who’ve been in the industry a long time,” he said. “And yet they’re not represented anywhere. So it’s a real crying shame and it’s kind of a travesty really.”

Rocha said he is optimistic.

“We are in a moment of change again,” he said. “The pandemic has sped everything up, and I think it’s important that the tribes keep their eye on the ball. Don’t relax for one second. You know, I think all the success that we had for the last 30 years is on the line again. And it’s very important that we keep focused and don’t be distracted by other things. And, gaming is the thing that brought success to the tribes, and it’s very important for them to retain this opportunity for the next generation means being vigilant, forever vigilant.”

Back to the lessons from the election. Rocha said there is a “East, West” divide where commercial gaming and tribal enterprise gaming don’t meet in the middle.

“The tribes are driving the engine, and yet, they don’t own the tracks. Again, it’s a travesty” he said. “And I think these are the questions tribes should be asking, ‘Why aren’t we being represented? Why are we driving this industry? And yet there’s no one that looks like us on these boards?’”