Ilani Casino tribe considers dumping Mohegan management

The troubled Cowlitz Indian Tribe, which is embroiled in a criminal antitrust probe, is thinking about terminating its long-standing business partnership with the Connecticut gaming organization that runs the tribe's Ilani Casino Resort in southwest Washington State.

When the Cowlitz Tribal Council said that it is reviewing its options, even some of its own members were taken aback. The Mohegan Tribe has been managing the Ilani since it opened six years ago, and their management agreement expires in June 2024.

For the tribe and southwest Washington, it's a risky and high-stakes choice. The Ilani casino, which is next to La Center, has had great success. The casino, which receives more than three million visitors annually and employs more than 1500 people, has swiftly risen to the top of the list of the region’s tourism attractions.

The Ilani has also been a gold mine for the Cowlitz Tribe, which only regained federal recognition as a tribe in 2000, with annual revenue estimated at $400 million to $500 million. The fees the tribe is paying the Mohegan could be retained.

The Cowlitz, however, lack management experience in the casino industry in contrast to the Mohegans, who run casinos all over the world. To card counters at blackjack and other types of advantage players, getting rid of Mohegan management ai Ilani is not viewed as a good thing. Though the blackjack games offered at its Connecticut casino, the Mohegan Sun, are largely worthless, management at Ilani has maintained surprisingly good games, though the table limits are low. Skilled players fear that new management may worsen the games in a misguided effort at “game protection.”

The gaming management agreement will be put to a public vote at a future Tribal Council meeting, according to a statement from the council. Some tribe members opposed the concept of expelling the Mohegans.

The Cowlitz Tribe is dealing with a lot of other problems. The majority of the last six months have been devoted by FBI agents to their investigation into possible violations of federal antitrust law connected to the tribe's initiatives to defend the Ilani against rival casinos.

In terms of total annual sales, the casino has quickly expanded to become one of the biggest in Washington and is far bigger than any casino in the neighboring state of Oregon. A 14-story hotel being built next to the 110,000 square foot casino is almost finished and is anticipated to increase business.

It's a far cry from the original agreement the Mohegans made with the Cowlitz Tribe and David Barnett, a well-known tribal member, to build and run the facility in 2004. Construction of the enormous gambling hall took 13 years to complete after receiving financial and regulatory approval. Barnett became enormously wealthy thanks to the deal. Barnett's share of the development company for the casino was agreed to be purchased for $114 million. When Barnett died in 2022, the Mohegan firm was paying him in $1.9 million monthly installments.

The Connecticut-based Mohegan Tribe has effectively grown from operating a single casino to being in charge of a vast global gambling enterprise. By purchasing the Connecticut Suns of the WNBA,it has expanded into the sports industry.

Despite having no prior gaming expertise, the Cowlitz agreed to give the Mohegan 24% of Ilani's net earnings every year for the duration of the seven-year contract. In the fiscal year 2021, the Ilani generated $61.9 million in management fees and an additional $2.2 million in development fees, according to the Mohegan Gaming Authority, a publicly traded division of the Mohegan enterprise.

Given the scale of that management charge, it's not surprising that Cowlitz tribal authorities could look into alternatives, according to Robert Whelan, a Portland-based economist who monitors the gaming sector. Some Northwest tribes, according to Whelan, have taken management in-house after gaining some expertise.

Source:

“Ilani casino owner, the Cowlitz Tribe, may drop its more experienced partner” , Jeff Manning, oregonlive.com, March 31, 2023.