For months, the Sault Ste. Marie Tribe of Chippewa Indians has been analyzing what went wrong that caused it to lose Detroit’s Greektown Casino, which it built a decade ago.
When the Greektown emerged from bankruptcy earlier this year, the tribe had lost all shares in the operation, which they built to help individual tribal members. The new owners of the casino include hedge funds and mutual funds, such as MFC Global Investment Management and Oppenheimer Funds Inc. The operation shed itself of $500 million in debt in return for giving ownership to these groups.
Experts say the tribe was in over its head from the start, competing as the smallest casino in a city with two other casinos run by experienced gaming companies, MGM Resorts International and Mandalay Resort Group. The casino produced profits for its 30,000 members for just a few years before things took a turn for the worse. The tribe ultimately lost as much as $200 million.
The tribe had 15 years experience operating five other casinos, which it still has, but they are all in rural areas, not in a major metropolitan area 350 miles from the reservation. It had no experience dealing with a heavily regulated city, or the with city officials who frequently change the rules of engagement, or with the 24 percent taxation rate.
According to Bill Eadington, a gaming professor and the University of Nevada Reno, the tribe was simply too inexperienced. “Indian tribes, in general, don’t have a long history of business experience,” he told the Detroit News. He pointed out that most tribal casinos are operated on the reservation.
Besides inexperience, luck also played a part in the downfall, says Eadington. “One might suggest that it was very bad luck that when they opened their permanent casino, the economy went south.”
Meanwhile, just four months after leaving bankruptcy, the casino’s new management team is doing its best to create a new image. Everything is on the table to be changed to repurpose the casino’s public face as the casino prepares for its 10th anniversary.