Some career moves are worth the gamble. Just ask James LaPorte, who recently left his job as the CFO of a public oil company to become the director of finance for the Little River Casino Resort.
In LaPorte’s new role at the Manistee, Michigan, tribal gaming facility, he’s discovered to his surprise and delight that business decisions must maintain a “delicate balance” between profitability and social responsibility. A good word for these efforts, LaPorte says with pride, is “honorable.”
LaPorte’s career move also happens to be a homecoming. Unlike his predecessor, who was recruited from inside the gaming industry, LaPorte is a Native American and a member of the Little River Band of Ottawa Indians — a family connection that still appears to be the exception in the booming multibillion-dollar industry.
Lately, tribal gaming has been one of the most wide-open career opportunities for senior finance executives. Drake Harris, director of the newly established Indian Gaming CFO Association and the former CFO of a tribal casino, expects to have 40 members signed up by April. (LaPorte, for the record, prefers the term “Native American gaming.”)
Many tribes across the nation are expanding into resort businesses; other tribes are adding new gaming facilities, especially in California. So regardless of tribal ties, there’s strong demand for finance talent. Ty Huff, CFO at the Jackson Rancheria Casino in California, had several recruiters trying to steal him away from the same position at another casino. The industry is growing so quickly, says Huff, that “the talent pool has really been stretched.”
The casinos certainly have plenty of money to spread around. A total of 330 tribal gaming operators generated $14.5 billion in revenue for fiscal years ending in 2002, according to the most recent data provided by the National Indian Gaming Commission, an independent federal regulatory agency of the United States. That’s a significant increase from the $8.5 billion in revenue generated by 297 operators in 1998. Today, 48 of the 50 states have Indian gaming in some form.
On the face of it, tribal gaming seems like a terrific career opportunity for finance executives, and tribal sovereign immunity also appears to lift many regulatory burdens. But what should finance executives of public companies really expect — from the regulators, the banks, the capital markets, and the tribal councils — when they take charge of the casino business of a sovereign nation? Says LaPorte, “This isn’t Corporate America.”
In one sense it’s not America at all. The industry owes its very existence to the sovereign status of the tribes, which also precludes the payment of federal or state income or sales taxes. Sovereign immunity also prevents a bank from taking legal recourse — let alone taking possession of Indian land — should a tribe default on a loan or go bankrupt.
Yet over the past five years, financial institutions have been increasingly happy to partner with tribal casinos. One reason would be that tribes are willing to incorporate limited waivers of sovereign immunity into lending agreements; another would be the growing track record of tribes repaying their lenders. What really puts a smile on a banker’s face, however, is the success of big-name resorts like Foxwoods and Mohegan Sun — and the fact that tribal casinos are cash-rich enterprises. “We can usually get quite a few banks competing for our business,” says Huff.