Articles & E-Books

 

How to become a high performance casino

Jun 16, 2022
By: Grant Eve

For the past 23 years, Wipfli has surveyed Indian gaming operators for the Cost of Doing Business Report. It’s the only report of its kind, built from financial performance data from 117 Native American organizations from all over the United States. Casino leaders use the annual report to compare their operations against peers and update their strategic plans.

Wipfli gaming experts analyze the information — 23 years of performance data — to advise operators on best practices, optimal performance and what’s possible.

Each year, a portion of casinos are classified as “high profit.” In the report, the term denotes      the top half of tribal casinos according to operating profit margin. The report uses operating margin rather than net profit margin because some non-operating expenses, such as interest and transfers to the tribe, are not within management’s control.

Throughout the report, comparisons are drawn between high profit casinos and less-profitable organizations to glean any performance differences. For example, in 2020:

  • Average total revenue dropped about 20% for high profit casinos, compared to an average decrease around 37% for non-high profit casinos.
  • High profit casinos outperformed other casinos on return on equity (ROE) and return on assets (ROA); high profit organizations’ returns were nearly double for ROE and more for ROA.
  • While net profit margins were down across the board in 2020, high profit casinos experienced less than a half of a percentage point dip. Other casinos saw new profit margins decrease more than 6 percentage points.

Understand the numbers

These are more than just interesting facts. With this information, and years of experience, Wipfli’s gaming experts help casino leaders become high performance organizations.

The highest performing casinos do four things differently:

  • Set incremental goals. Big goals are fine. But they’re likely to be achieved through smaller, incremental wins. Casinos that set out to increase profit margin by just 2% or 5% a year — over a span of years — are more likely to reach the high profit category. Why? Because they’re always moving forward. They don’t have one big, unattainable goal to achieve — and then be finished. Progress and improvement are constant parts of the culture.
  • Revisit goals and strategies frequently. The COVID-19 pandemic wiped out the notion that strategic planning is just an annual thing. Sure, casinos can have five-year visions or annual goals — but strategies and tactics need to be revisited far more frequently. As conditions change, leaders must ask and evaluate tough questions, and redirect the ship, when needed. To be successful, casinos need to pursue the right goals, at the right times, in line with market and regional conditions.
  • Watch for opportunities. High performance organizations are curious. They’re looking for opportunities to present themselves (e.g., sports betting), studying the possibilities and proactively setting plans in motion. They explore what’s happening outside their organizations, what’s working, how and why.
  • Leverage accountability tools. There’s no “set it and forget it.” High performance casinos have accountability tools in place to make sure everyone is moving in the right direction, and to evaluate progress periodically. In many high profit tribes, accountability comes from frequent and open communication between the tribe and gaming operations. With accountability tools, everything comes into alignment: engagement and hiring plans, compensation and bonus awards, policies and goals, all driving toward the same outcome.

Beyond calculation

Becoming a high profit or high performance casino isn’t just a numbers game. Quantitative data plays a part but so do measures of other, more qualitative experiences and practices, too.

Wipfli understands how culture and tribal sovereignty are intertwined in casino performance. That’s why Wipfli offers strategic planning and change management support, alongside profitability assessments and accounting services.

To see how your gaming operations measured up to industry standards, download the 2021 Indian Gaming Cost of Doing Business Report. To add your data to next year’s report, reach out to  is coming soon. Nikki Pfrimmer.

How Wipfli can help

Our team of tribal gaming specialists sees opportunities instead of obstacles. We can help you improve your revenue and fuel your growth while meeting all regulations. From financial solutions and digital transformation to strategy and cybersecurity, we can help. Learn more on our tribal gaming services web page.

Author(s)

Grant Eve, CPA, CFE
Partner
View Profile