SOUTH BEND — Four Winds South Bend, the state’s first tribal casino, brings a new level of competition to the state’s gaming market.
As a sovereign tribe, the Pokagon Band of Potawatomi Indians newest venture is not subject to Indiana wagering taxes or state corporate income taxes. For the state’s 13 existing commercial casinos, graduated tax rates between 15 percent and 40 percent of annual revenues are collected by the Indiana Gaming Commission in taxes. Four Winds South Bend will pay only 2 percent of its annual revenue to the city of South Bend, via a sharing agreement, and additional agreements to fund local organizations and projects.
That advantage could see the tribal casino outpace its commercial competitors in annual profit.
For Blue Chip Casino in Michigan City, a 33-mile drive from Four Winds South Bend, the new competition could draw some of its customers away, as was the case when Four Winds opened its New Buffalo, Mich., casino in 2007. Blue Chip took an initial $50 million revenue hit that first year and has since dropped from $267 million in 2007 to $159 million in 2017.
But with features and amenities that distinguish it from Four Winds South Bend, including a hotel, spa and table games, Blue Chip claims the added competition is welcome.
“Competition is nothing new to us,” said David Strow, a spokeperson for Boyd Gaming, the parent company of Blue Chip. “We have seen several new casino properties open in this region over the last 10 years, and Blue Chip has continued to compete successfully each time over that timeframe.”
The opening of Four Winds South Bend also means the tribe will essentially draw customers away from two of its three Michigan casinos in New Buffalo, and Dowagiac. Four Winds also operates a casino farther north in Hartford, Mich.
Four Winds chief operating officer Frank Freedman said that migration of customers from its other facilities will occur, but he expects it will result in a net gain.
“You basically do feasibility studies, and understand what that migration might be," Freedman said. "The net effect is plus, plus, plus. So some of our guests that currently frequent New Buffalo that live here, it will be natural to start coming here.”
That migration will mean changes in staffing needs at the different facilities. But with staff that can work at any of the Four Winds locations, and an already fluctuating seasonal market, Freedman expects the shifts won’t cause any issues for the company.
Four Winds also expects its new location to fit a different clientele. With no hotel or table games, Freedman said he thinks the casino will serve more players who stop in for just a few hours or even a day. And Four Winds New Buffalo will serve those looking for an experience that includes a night at a hotel, table games and occasional concerts.
“New Buffalo was built with table games and was built with an expectation, with a hotel, of a longer visit," Freedman said. "(In South Bend) we’re going to market to an urban environment, more day trippers. So if a group’s coming in to see a Notre Dame game and want a party of 25 at the steakhouse, we can do it. Up there (in New Buffalo), it’s prohibitive, just the distance.”
The Indiana Casino Association represents 11 of the 13 commercial casinos in the state. A study done on behalf of the association by Spectrum Gaming Group identified a number of impacts that Four Winds South Bend could have on the state’s gaming market.
The study claims that the tax differences between the new tribal casino and existing commercial ventures represents an “enormous marketing and pricing advantage, particularly in slot payout rates.”
The Casino Association’s study also claims that the state’s casino tax revenue will drop by as much as $64 million over the next five years and cause the loss of 732 commercial gaming jobs. In fiscal year 2017, Indiana brought in $596 million in gaming taxes. The report did not estimate the number of jobs created by the new tribal casino, which has already hired 1,200 employees.
Though the band’s sovereignty means it is not subject to gaming taxes, the Pokagon Band has agreed to spend more than just the original 2 percent of revenue sharing agreed to with South Bend. The band also committed to paying $5 million over three years to community programs.
And the band operates the Pokagon Fund, which has distributed $22 million since 2007 to fund scholarships, education grants, poverty reduction programs and community improvements in the area.
The remainder of the band’s revenues, after deduction of a number of business and tribal government operating expenses, is distributed monthly to each tribal citizen. The per capita revenue sharing agreement is released to children once they graduate high school.
The distribution is part of the tribe’s unique outlook, one that plans to make an impact seven generations down the line from the present day.
“We in the Potawatomi tribe, we want to make sure that we leave a legacy for our children,” vice chairman Bob Moody said. “Not to be rich, but to take care of our future.”
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