Analyzing Casino Management Contracts with Dr. David Schwartz

Lately it has become a lot more common for major commercial casinos to partner with tribes where they don’t actually own the casino. They just make straight management deals. For instance Ceaser’s has recently signed another management deal with a tribal casino in northern California, and it is going to be an opening up of a Harrah’s northern California. Pretty much all of the major companies have been making deals like this.

So what are the benefits of doing this? The tribes benefit from this because they get to bring in a company with a lot of experience to set up and run their operation. They get to make some money from the casino without having to invest in the human capital. The casinos on the other hand benefit from getting to put their name on or at least getting some management experience under a new jurisdiction. Doing this gets them exposed to new players. They also get to make money without having to invest in the capitalist expenditures and the start up costs.

The casino business is also becoming pretty globalized lately. Another Ceaser’s development that has gone down recently is that they signed a contract with a developer in Dubai. The idea behind projects like this is that there’s not going to be any gaming. There’s no casino involved, but they are able to have a hospitality property. The benefit of this is you get your brand out into the world. This way people from Shanghai, Dubai, or wherever it is that you make a deal at will be able to recognize your name, so if they get the chance to come to the US they will want to stay at your establishment. In addition to this, these deals also make a lot of money.