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REITs In Indian Country
GLPI ’ s deal with a California tribe could be just the beginning
For years , commercial gaming operators have been selling their land and assets to REITs ( real estate investment trusts ) and cashing in on millions — and often billions — of dollars while still being able to operate their casino operations . But since tribal casinos are largely on sovereign reservation land and they are the only entities approved to operate those casinos , the fit with REITs didn ’ t seem to work .
In November , however , Gaming and Leisure Properties Inc . ( GLPI ) reached a deal with California ’ s Ione Band of Miwok which became the first agreement in which a tribal casino partners with a REIT . The technical term is a $ 110 million “ delayed draw term loan facility .” In the deal , GLPI essentially leases the land and finances the construction of the casino . At the end of 25 years , or at a maximum of 45 years , the tribe can pay back the loan and GLPI walks away .
Most importantly , according to GLPI , the National Indian Gaming Commission has approved the deal , potentially opening up these kinds of arrangements with other , more successful tribes . The Ione Band has been trying to arrange financing for its casino near Sacramento for years , and this deal allows the tribe to get started .
While Heidi Stoudemire , an Indian gaming law expert with Snell & Wilmer , hasn ’ t read the detailed agreement , she says this could be a game changer .
“ As a sale-leaseback transaction , the tribe will continue to own its tribal lands and not the REIT . It is likely the REIT has a lease to conduct gaming on the tribal lands that has been approved by the NIGC ( and possibly the BIA as well ). The tribal casino must continue to be 100 percent owned by the tribe , although the REIT can manage the gaming operations — again with that contract being approved by the NIGC . It is important that the parties can show that the tribe still maintains 100 percent control and management over the tribal gaming operations , because the financial compensation is likely through a fixed rent structure as opposed to revenue sharing of the casino proceeds to the REIT .”
As for GLPI , Chairman Peter Carlino admitted there ’ s an element of risk in the company ’ s third-quarter earnings call .
“ It ’ s still an unknown ,” Carlino said . “ The value has yet to be proven .” The tribe is also excited about the deal . “ This transaction represents the first time that a REIT has provided both project financing and / or a long-term lease option to a tribe for purposes of direct investment in a gaming asset on tribal trust lands ,” said Ione Tribal Chairwoman Sara Dutschke . “ The tribe is pleased to have found a partner in GLPI who placed their trust in the tribe , supporting our efforts toward self-determination and self-sufficiency through the financing of the construction of Acorn Ridge Casino , a tribal enterprise two decades in the making .”
The law firm of Drummond Woodsum , which advised GLPI on the deal , said in a press release :
“ The loan with the long-term lease option is the first-ever real estate investment trust financing in Indian Country , marking a significant innovation in tribal finance that promises to expand financing opportunities for tribes .
“ In particular , the … duration of the loan with the exercise of the long-term lease option opens up the possibility of long-term financing alternatives in Indian Country that can be deployed where standard bank financings or other types of shorter-term financings are less attractive .”
Stoudemire says that foreclosure on a tribal property would be difficult , but protections for the REIT are likely built into the deal .
“ It is likely that the REIT has the typical protections a commercial lender would have , including the option to foreclose on the property and operate everything except the aboriginal casino itself ,” she explains . “ After 45 years , the Ione tribe keeps the land ‘ and we all go our separate ways ,’ to quote the GLPI CFO in media reports . In effect , the REIT can foreclose on the property but cannot continue operating the casino ; instead , the REIT could operate a non-gaming business out of the facility .”
Although the deal isn ’ t a blockbuster at $ 110 million , it is important because it ’ s the first . Barry Jonas , of Truist Securities , agrees .
“ We see gaming REIT expansion into tribal gaming as significant ,” he says .
Carlino says his company has been working on this kind of tribal gaming agreement for years , and it fits into the company ’ s process .
“ If we can ’ t find opportunity , we ’ ll make it , with caution and care always ,” he said . — Roger Gros
2025 is the Year of AI
How AI impacts the gaming industry
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Artificial Intelligence ( AI ) has evolved steadily since the first algorithms introduced in 1957 . The speed of evolution was limited due to the slow evolution of computing power and the lack of connected databases to offer the trillions of pieces of information needed to train the data .
Training refers to the algorithms that associate all the information to be able to read and correlate the information to provide simple answers from questions ( or queries ). In 2025 , AI ’ s emergence in the gaming industry will begin to impact competitive dynamics , and more importantly , accelerate security threats and human competency levels .
Generative AI is the first wide-scale , practical application of artificial intelligence . While it is still in its early stages , it is offering tremendous promise in reading , understanding and making sense of mountains of information .
With advancements like ChatGPT achieving an IQ nearing 160 at the time of writing this article , AI can now function as a highly skilled , non-judgmental assistant . This transformation allows professionals to offload routine tasks , freeing time for strategic priorities .
KEY AI-DRIVEN TRENDS FOR 2025
1 . Data-Driven Competition Data will emerge and be recognized as a core asset for organizations in 2025 . Companies that establish clear programs for data ownership , access and use will be at a competitive advantage . Data is the fuel for AI , and data management will serve as a foundational measure of an organization ’ s value and its ability to innovate .
2 . AI-Enhanced Cybersecurity Threats 2025 is projected to be a challenging year for cybersecurity , as AI-empowered hacking becomes more sophisticated . AI tools allow hackers to identify vulnerabilities , patterns and personal information at unprecedented rates . Organizations need to anticipate and prepare for human-directed ( employee ) cyber-
26 Global Gaming Business DECEMBER 2024