Oklahoma tourism booms as tribal casinos plan million dollar expansions

Tribal gaming in Oklahoma began with small community bingo halls. But voter approval of Vegas-style games has caused the industry to explode across the state, including hundreds of millions of dollars spent in Tulsa.

With each $100 million expansion, tribal casino officials say it’s no gamble. It’s just a good investment with high returns.

“We don’t just jump out there and do things,” Cherokee Nation Businesses CEO Shawn Slaton said about making the leap in 2009 to expand the Cherokee casino in Catoosa. “We had done our homework and did our studies.”

The move to rebrand the Cherokee Casino and Resort into the Hard Rock Hotel & Casino Tulsa was one of several major expansions of Tulsa-area casinos since Oklahoma voters — in late 2004 — approved Vegas-style games at tribal casinos.

Since then, casinos including the Cherokee Nation-owned Hard Rock, Osage Casino-Tulsa, and Muscogee (Creek) Nation’s River Spirit Casino have produced expansion after expansion, including a quarter-billion-dollar project recently announced to expand and rebrand River Spirit Casino with Jimmy Buffett’s Margaritaville logo.

“It (expanding and rebranding) was an immediate success for us,” Slaton said. “It brought instant recognition and credibility. This property has just blossomed over the years.”

Expansion impact

River Spirit Casino officials revealed the $250 million expansion and partnership with Margaritaville at their location along the Arkansas River, 8330 Riverside Parkway.

The expansion includes a 22-story, 500-room hotel, a new casino, restaurants, beach-bar area, a new theater and a new event center – all bearing the Margaritaville brand.

Tulsa Regional Chamber President Mike Neal said the casino boom has helped the Tulsa area grow in terms of jobs and entertainment opportunities that lead to more growth.

“The Tulsa region thrives on the foresight and ingenuity of businesses like the Creek Nation,” Neal said at the expansion’s unveiling. “I think success breeds success.”

Neal said the casinos reach outside Oklahoma to bring in tourism and attract international entertainment opportunities to Tulsa in the same way the BOK Center has.

Pat Crofts, Muscogee (Creek) Nation Casinos CEO, said the expansion and Margaritaville brand are designed to draw people from outside the Tulsa market.

“It’s not an endless market,” Crofts said about the Tulsa area. “There are limits in the market. We would not be doing this expansion if we didn’t think we are expanding the market.”

Though the Tulsa-area casinos are highly competitive with each other, Crofts said recent expansions have been focused on reaching outside of Tulsa rather than fighting for more of the market in Tulsa.

“We could all make our boxes bigger, but we would just be taking business away from each other,” Crofts said. “It’s not a bottomless pit. There’s no reason to beat up on each other. We’d all be making less money.”

The River Spirit Casino expansion will add to the casino’s own $200 million construction plans announced in 2005.

The new expansion is projected to add 800 new jobs and 1,800 construction jobs through 2014, according to a Creek Nation news release.

The annual economic impact of the expansion is projected to be about $135 million, with an annual payroll of about $38 million, according to a report prepared by Bob Ball, an economist for the Tulsa Regional Chamber.

The $16.5 million Osage Casino-Tulsa opened in 2005 – then named the Million Dollar Elm Casino – at 36th Street North and the L.L. Tisdale Parkway.

The Osage Nation is currently upgrading its seven casinos across northern Oklahoma – setting a standard of spending at least $9 million on each, as previously reported.

Although Muscogee (Creek) Nation Casinos officials denied a Tulsa World request for data on their casino revenues, Crofts said their gaming revenues have increased since 2006 by 86 percent. Since 2009, when they opened “Phase 1” of the River Spirit Casino, revenues have increased by about 50 percent.

“We are bullish on the market, but we would not just build a bigger box,” Crofts said.

A request for information about Osage Casino revenues was also denied.

As private businesses, state open records laws do not apply to casinos, and many tribes have policies against releasing data on their operations.

However, the Cherokee Nation provided details of its financial operations, showing a 171 percent increase in profit at the Hard Rock between 2004 and 2012.

Last year, the Hard Rock earned the Cherokee Nation $122 million – up from a $45 million profit in 2004, according to information provided to the World.

According to a 2012 report, the Cherokee Nation – as a whole – surpasses $1 billion in economic impact to the region every year.

Gaming exclusivity fees

Oklahoma tribal casinos have grown in terms of Vegas-style gambling revenue by more than 770 percent since 2006, the first full year for most tribes to have class 3 gaming compacts with the state, according to data from the state Office of Management and Enterprise Services on fees collected by the state.

In 2012, the state collected more than $123 million in gaming exclusivity fees established by the 2004 law that allowed Vegas-style games.

Individual tribes have grown in varying degrees depending on how much they had already invested in gaming before 2006.

Gaming exclusivity fees are a sliding percentage of class 3 gaming revenues that are paid to the state each year – averaging about 7 percent, according to several state and tribal officials familiar with the compacts.

Class 2 gaming – bingo-based games – do not pay state fees but still populate casino gaming floors.

Based on a 7 percent estimate of revenues paid to the state, about $1.7 billion is wagered through Vegas-style games in tribal casinos in Oklahoma every year, according to a Tulsa World analysis.

The annual amount is up from about $228 million gambled in 2006 – the first year that many state casinos included Vegas-style gaming.

The estimated gambling revenue does not include revenues generated through entertainment venues, food and drink or other revenue streams at casinos.

The Cherokees, who already had several casinos open before entering the state compact in 2005, had a 235 percent increase in gaming exclusivity fees from 2006 to 2012, when they paid $13.1 million to the state.

The Muscogee (Creek) Nation’s gaming fees paid to the state grew by more than 1,300 percent from 2006 to 2012 – from about $700,000 paid in 2006 to $10 million paid in 2012.

In 2012, the state collected more than $123 million in gaming exclusivity fees established by the 2004 law.

Political contributions

Sheila Morago, the executive director of the Oklahoma Indian Gaming Association, said Oklahoma has the third-largest revenue generated from gaming in the United States, behind Nevada and California, respectively.

In terms of Indian gaming, Oklahoma only trails California, she said.

Since 2006, Oklahoma tribes have given a combined $5.8 million to candidates for federal, state, judicial and county offices, as well as political action committees, a World analysis of state and federal records shows.

Three tribes – the Choctaws, Cherokees and Chickasaws – have accounted for 93 percent of the candidate contributions, with the latter tribe comprising about half of the total, or about $2.9 million.

The Choctaws have contributed about $1.5 million while the Cherokees have given $1 million to various candidates and causes.

Tribal campaign contributions during election years have also increased 43 percent from 2006 to 2012.

Since, 2006, Oklahoma Democrats have received about 57 percent of all tribal contributions in state races.

But as the balance of political power has shifted to Republicans in Oklahoma, so have the tribal contributions.

Republicans have led Democrats in tribal funding every year since 2009, with the exception of 2010.

‘A boon to our economy’

Terri Miller, who has owned Catoosa Flowers for 32 years, said she remembers when just trees and a gas station occupied land now home to Hard Rock Hotel & Casino Tulsa – a resort generating hundreds of millions every year in revenue that benefits the small town.

“They’ve been a boon to our economy here,” said Miller, a Catoosa resident. “What it has done for me personally is that they have a ton of employees there, and they get lots of flowers.”

“This whole area has been waiting for Catoosa to grow,” Miller said. “We got the Port (of Catoosa), and we thought it would grow then. We got the casino, and it’s beginning to grow.”

Miller sold flowers down the street as she saw Cherokee Nation Bingo Outpost open north of Interstate 44 at 193rd East Ave. in 1993.

“Everyone was kind of excited,” she said when the bingo hall opened. “We went up there every week or so and played with my mother. You saw everyone you knew there. It was packed. … Then, it exploded.”

The bingo hall turned into a casino, the casino became a resort, and then in 2009 it became the Hard Rock – last week finishing a $100 million expansion that includes a new hotel tower to complement its existing 19-story tower.

Miller said she sometimes sees the problems of gambling addiction, but she considers every other aspect of the casino a godsend that could keep her business running another 30 years.

“I love having traffic, myself, as far as people going by my shop,” she said about the casino traffic in Catoosa.

In 2010, the Cherokee Nation donated $12 million to a $45 million overhaul of the heavily trafficked I-44 interchange in front of the casino, finished in 2011.

“Delivering flowers has been heaven,” she said.

Tulsa tribal casino timeline

November 1984: Creek Nation Tulsa Bingo, the tribe’s first bingo facility in Oklahoma, opens on the east bank of the Arkansas River at 81st Street.

October 1988: President Ronald Reagan signs into law the federal Indian Gaming Regulatory Act, establishing regulations for Indian gaming and an agency to oversee it.

September 1993: Cherokee Nation Bingo Outpost, later renamed Cherokee Casino, opens north of Interstate 44 at 193rd East Ave. in Catoosa.

July 2004: Bingo ends at Cherokee Casino.

November 2004: Oklahoma voters approve State Question 712, authorizing compacts with Indian tribes to operate casino-style games.

December 2004: Cherokee Nation holds grand opening of $80 million casino in Catoosa. The 80,000-square-foot facility has more than 2,000 gaming machines, a 150-room hotel and convention facilities.

February 2005: Bingo ends at Creek Nation Tulsa Bingo.

March 2005: Creek Nation breaks ground on a $6.8 million expansion of its existing casino.

August 2005: Osage Nation opens 47,000-square-foot Million Dollar Elm Casino at 36th Street North and the L.L. Tisdale Parkway. The $16.5 million casino has 1,000 gaming machines, 12 card tables, a restaurant, outdoor seating and a stage.

March 2005: Creek Nation opens River Spirit Casino. The $195 million gaming facility features 2,800 gaming machines, 39 table and poker games and five restaurants and bars.

August 2009: Cherokee Casino and Resort officially becomes the Hard Rock Hotel & Casino Tulsa. It features five restaurants, five nightclubs and entertainment venues, a 125,000-square-foot gambling floor, 350 luxury suites in a 19-story hotel, 35,000 square feet of convention space and the Cherokee Hills golf course. Singer Toby Keith attends the event to celebrate the opening of his restaurant.

September 2010: The Doobie Brothers headline the opening of The Joint, a 2,700-seat concert venue at the Hard Rock Hotel & Casino Tulsa.

June 2012: Osage Nation announces plans to remodel all seven of its casinos, including the one in Tulsa, spending at least $9 million on each.

March 2013: Creek Nation announces partnership with Jimmy Buffett’s Margaritaville to open a 22-story, 500-room hotel adjacent to its River Spirit Casino. The $250 million expansion will include a new casino, restaurant, pool-bar area, theater and event center.

March 2013: Cherokee Nation finishes 10-story tower at its Hard Rock Hotel & Casino Tulsa. The tower adds 100 suites to the resort, along with non-smoking gaming space, 500 additional electronic games, 15 table games, a poker room, a media bar and a food court.

News researcher Hilary Pittman contributed to this report.

Source: Tulsa World archives

Tribal gaming feeds paid to the state

Through the gaming compact between tribal nations and the state, Oklahoma receives a sliding-scale percentage of gaming revenues. Fees collected from all tribes:

2006 total: $14,233,539

2012 total: $123,872,079

(770 percent increase)

Cherokees

2006 $3,910,664

2012 $13,112,793

(235 percent increase)

Osage

2007 $1,420,341.69*

2012 $5,720,058.00

(302.7 percent increase)

Creeks

2006 $702,435

2012 $10,049,727

(1,331 percent increase)

*Fees collected in 2006 were $254,000, but that figure wasn’t for a full year.

Source: Oklahoma Office of Management and Enterprise Services

(c)2013 Tulsa World (Tulsa, Okla.). Distributed by MCT Information Services.