The Mississippi Band of Choctaw’s Timeout Lounge is leading the way in Tribal sports betting, and bringing a new demographic to their resort. (iStock)
In May of 2018, the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), declaring the law that has limited sports betting across the vast majority of the country since 1993 as unconstitutional. This returned the right to individual states to determine their own laws with regard to sports betting.
Shortly thereafter, in August 2018, the Mississippi Band of Choctaw Indians opened the first Tribally owned and operated independent sportsbook in the country at their Pearl River Resort. When the sportsbook debuted, resort guests could visit the Sportsbook at Timeout Lounge to watch games and place bets. Since then, the Tribe’s sportsbook operations have expanded to include a mobile app that allows guests to place bets anywhere on resort property, and the Tribe recently introduced kiosks at three different facilities.
“Due to our unique geographic location in the south, we decided that instead of going the management contract route or bringing a four-wall provider in, with our footprint, our clientele, and our customer database, we decided that we should open our own independent sportsbook,” said Neal Atkinson, Director of Table Games (Poker, Bingo, and Sportsbook Operations) at Pearl River Resort.
In setting up their sports betting operations, Atkinson said that time limitations were a major factor in some of the Tribe’s choices. Given that there were only a few months between the PASPA ruling and the start of football season, the Tribe needed to act quickly and overcome a few key logistical challenges. First, they had to find a vendor to provide the actual betting systems.
“We didn’t have a huge range of providers that had experience in the United States regulatory market,” Atkinson said. “That’s part of the reason that the provider we picked was IGT. We already had an existing business relationship with them, they had a proven track record in Nevada, they had a kiosk product on the horizon, and they had a proven mobile product with one of their customers in Nevada.”
With a hardware and software provider in place, the Tribe then selected Betgenius as the data provider for all of the sports data feeds. Finally, they had to find a bookmaker for their staff.
“Part of the regulation is that we still do have what is referred to in the business as a ‘bookie’ on property,” Atkinson said. “He’s our Assistant Director of Sportsbook, and I was very fortunate to recruit him from the Vegas market.
“He had roughly 18 years of experience in the sportsbook market, had worked independent books in Vegas over the course of his career, and was just a perfect fit for us,” he continued. “His knowledge of being able to understand the trading aspect of the business is what we needed being that we were an independent sportsbook.”
Greg Gemignani, a Las Vegas-based attorney at Dickinson Wright whose practice includes gaming and online gaming law, says that even if Tribes are located in states where sports betting is currently illegal, they would be wise to start learning about sports wagering, if they eventually foresee sportsbooks as part of their Tribal gaming operations.
“There’s a lot of hype out there,” Gemignani said. “There’s a lot of bad information out there. There’s a lot of good information as well, but learning about it and understanding it I think is going to go a long way toward helping Tribes decide how much they want to invest.”
Gemignani also said it’s important for Tribes to remember that sports wagering carries substantially higher risk — and lower margins — than other gaming products that they are more familiar with.
“There’s no theoretical win on sports like there is with blackjack or slots, where mathematically you have significant advantage as the house,” Gemignani said. “A lot of your margins depend on who your risk manager is and whether they’re better than your players are. So, if you have a favorable compact, the real challenge once you begin operations is having a risk manager that knows what they’re doing, because unlike other forms of gambling, you really are in the bet.
“You can’t be a good craps player, right?” he continued. “The dice roll the way the dice roll. You can’t really be a good slots player. But you can be a good sports better. There is a certain skill in managing risk for sports, which is totally different than casino gaming, so worrying about that is probably a good idea.”
Atkinson said that was one of the early lessons that he learned at Pearl River.
“A sportsbook is not as profitable as slots, and it’s very volatile,” Atkinson said. “With a slot machine, yes you can have some short-term volatility, but over the year that machine is going to hold what it’s programmed to hold. Sportsbooks are at the mercy of the outcome of sporting events.
“Because we’re an independent book, we have our own established risk profile,” he continued. “We learned that we have to actively manage our risk profile and maybe on some local high-interest things, our betting lines might be slightly higher than what the nationwide average is. We can’t just turn that over to the computer feed to do that and be the same as everybody else is; we have to be able to adjust those lines to our local profile to manage that risk profile properly.”
Another legal issue that Tribes interested in opening sportsbooks will have to deal with is the compact process. For Tribes like the Mississippi Choctaws and others who have quickly moved to allow sports wagering, they share a common trait: there are no difficulties with their compacts that require additional negotiations with the state over exclusivity or other things.
“I think we’re seeing the initial group — who don’t have as much in the way of entanglements — starting to operate sports betting,” said Steve Hart, a Partner at Lewis Roca Rothgerber Christie who represents Tribes and Tribal Gaming Commissions throughout the Western United States. “For a number of Tribes, they will have to work through compact provisions and perhaps some legislative action to get to a place where they can operate sports betting.
He says that in the Mississippi Choctaw’s case, their compact, dating back many years, had a provision that made it clear that once sports betting was allowed in the state of Mississippi, that they would be allowed to operate a sportsbook, which is why they were able to ramp up so quickly.
“Tribes may have two or three games that they’re authorized for — slot machines, blackjack, something like that,” Hart continued. “They may not have sports betting listed as a particular game they can offer, so if they have to go through a compact amendment before they can operate sports betting, that could take a year to get through the compacting provision. It can be a pretty long process and it becomes more complicated if the Tribe has some exclusive rights.”
On the heels of PAPSA, the Mississippi Choctaws have moved forward at full speed. Since they went live, Atkinson told us (pre-COVID) that college and professional football not only met, but actually exceeded their expectations. The Tribe does not disclose its revenues, but he says that the sportsbook is currently doing approximately double what their best-case projections would be. There have also been other pleasant surprises along the way.
“We were anticipating once football season was winding down, that we would actually slow down a little bit and be able to catch our breath and analyze things,” Atkinson said. “But we found that college and pro basketball was almost even more popular than football was. So even now with basketball, maybe your average bet has gone down but your number of tickets has almost doubled.”
Today, Pearl River is offering a full slate of sports.
“If it’s a sanctioned college or professional sporting event, we are offering it,” Atkinson said. “That includes MMA and boxing events. We also offer all of the motor sports — just about everything but horse racing.”
They’re also offering, at low limits, college baseball, especially in the SEC region, as well as some of the women’s college tournament games. He says the interest in placing those bets has been surprising.
Another interesting point that Atkinson says the Tribe has discovered is that sports betting has been a really positive way to bring new demographics into the casino.
“One of the biggest demographics that casinos — whether they’re corporate casinos or Tribal casinos — cannot wrap their head around is penetrating the 21 to 35 age demographic,” Atkinson said. “Well, sports betting will do that for you. It’s unbelievable. The amount of new customers that we’re seeing, especially in that demographic, is incredible.”
He also says that in addition to these new customers flocking to Pearl River to place sports wagers, another contributor to the Tribe’s success is that roughly 85 to 90 percent of their bets are parlays, with their number one most popular bet being an 18-team parlay.
“That is absolutely unheard of,” Atkinson said.
Another interesting discovery has been the way that the Tribe’s sportsbooks perform differently at their main resort versus their satellite location at Bok Homa Casino in Laurel, Mississippi, which is roughly an hour and a half away.
“The main resort and the satellite book at Bok Homa are two completely different sportsbooks with different customer bases,” he said. “The customer base at Pearl River is more of a transient population, where it is more weekend transient. Bok Homa, being a smaller casino in a more rural area, has more of a local base.”
We have found that especially in basketball season, the local sportsbook midweek is outperforming the main sportsbook at the main resort, and on the weekend it flip flops,” he continued.
For Tribes looking to explore sports wagering, Atkinson’s biggest piece of advice is to start now.
“Do not wait one minute if you think you want to open a sportsbook,” he said. “Either get a consultant that knows the sports business for you or start hiring talent that has experience in sportsbook platforms.
“Tribes have to make a decision whether or not their risk profile will tolerate the volatility of a sportsbook or if they want it to be an amenity that is managed by a third party,” he continued. “But if there is any possibility that your jurisdiction will legalize, even if it may be two or three years out, you want to start working on it now.”
Based on his experience, he says that Tribes of every size, and particularly those with exclusivity in their geographic area, should elect to be an independent sportsbook and retain as much of the margins as possible. The demand is clearly there.
“I want everybody to remember: sports betting is not new,” Atkinson said. “Legalized sports betting is new.”