- By Chez Oxendine
TUNICA, Miss. — A subsidiary of Cherokee Nation Businesses will pay $450 million to purchase the Tunica, Miss.-based Gold Strike Casino Resort from operator MGM Resorts International, the company announced Thursday.
Under the agreement, Cherokee Nation Entertainment Gaming Holdings LLC will enter into a long-term lease agreement with VICI Properties Inc., a real estate investment trust that owns the real estate.
The deal, which is subject to regulatory approval, is expected to close in the first half of 2023.
“Cherokee Nation Entertainment has a rich history of operating award-winning hospitality destinations in Oklahoma, and we are proud to continue our growth in gaming and bring the level of excellence we are known for to the Tunica area,” Mark Fulton, president of Cherokee Nation Entertainment, said in a statement. “We are excited for the team at Gold Strike Tunica to join the CNE family.”
Gold Strike Tunica features a 32-story hotel tower with roughly 1,100 rooms, a conference and convention center, dining area, and 50,000-square-foot casino.
In the 2021 calendar year, Gold Strike reported $81.1 million in net income with adjusted earnings of $115 million, a reflection of specific market factors last year. Prior to the onset of the pandemic in 2019, Gold Strike reported adjusted earnings of $67 million.
Under the deal, VICI Properties and Cherokee Nation Entertainment agreed to an initial annual base rent of $40 million for at least 25 years, with the tribal enterprise having three, 10-year lease renewal options.
Cherokee Nation Businesses is guaranteeing the lease for the property.
“This transaction continues to demonstrate VICI’s ability to build strong relationships with new partners while working collaboratively with existing tenants to support their strategic objectives,” VICI President and COO John Payne said in a statement. “We are pleased to welcome Cherokee Nation Businesses as our ninth gaming tenant and we look forward to a long-term partnership as they pursue additional growth initiatives in the future.”
After master lease adjustments with VICI Properties, MGM expects to net $350 million in cash from the sale.
MGM International said divesting the property will allow the company to narrow its offerings in Mississippi to a single resort, the Beau Rivage Resort and Casino in Biloxi.
“This is a great outcome for the Company as we are able to reprioritize future capital expenditures toward opportunities that will enhance the customer experience at our other locations," MGM Resorts CFO Jonathan Halkyard said in the statement.
The Cherokee Nation deal also marks the second proposed casino transaction in six months involving MGM Resorts. As Tribal Business News previously reported, the company inked a deal valued at nearly $1.08 billion to sell The Mirage Hotel and Casino on the Las Vegas strip to Hard Rock International, which is owned by the Seminole Tribe of Florida.
VICI Properties also is a party to the Las Vegas deal. The REIT bought The Mirage real estate as part of a $17.2 billion deal with MGM Growth Properties LLC that closed in April. The Gold Strike Tunica property also was included in the deal.
Barring regulatory challenges, the Gold Strike Tunica will become Cherokee Nation Businesses’ first commercial casino operation and its first gaming venture outside of Oklahoma.
The tribe’s 10 active entertainment operations, including the Hard Rock Hotel and Casino in Tulsa, sit on tribal land primarily in northeast Oklahoma.
Previously, the tribe’s proposed the Legends Resort and Casino in Russellville, Ark. as its first foray into commercial gaming. The project has faced stiff resistance from Fair Play for Arkansas, which is backed primarily by the Choctaw Nation, the operators of a casino just across the state line in Pocola, Okla.
The opposition group has petitioned the state of Arkansas to revoke a 2018 commercial gaming license issued to the Cherokee Nation, according to a May report by the Arkansas Democrat Gazette.
While Fair Play for Arkansas remains “confident” they’ll earn a referendum on the November 2022 ballot, the group has yet to gather the necessary 89,000 signatures on a petition, according to a June report.
As the Legends Resort and Casino continues to play out, Cherokee Nation Businesses considers the Gold Strike Tunica purchase and the expansion of casino operations beyond tribal borders as a key tenet in the tribe’s economic development strategy.
“We look forward to expanding our gaming and hospitality businesses as we execute on our strategic plan to grow our footprint outside of the Cherokee Nation Reservation,” Cherokee Nation Businesses CEO Chuck Garrett said in a statement. “This acquisition will enable us to better serve our mission of growing the Cherokee Nation’s economy while also having a significant positive impact on the local economies we serve.”
The Gold Strike Tunica acquisition follows a series of commercial gaming ventures by tribes across the country, as Tribal Business News has reported. In addition to the Seminole/Hard Rock’s proposed acquisition of The Mirage, other deals include:
- the San Manuel Band of Mission Indians in California acquiring the Palms Casino Resort in Las Vegas in early May for $650 million;
- the Alabama-based Poarch Band of Creek Indians, through tribal enterprise Wind Creek Hospitality, securing a license to build a $440 million casino south of Chicago in December 2021; and
- the North Carolina-based Eastern Band of Cherokee Indians, purchasing the Caesars Southern Indiana casino in Elizabeth, Ind. for $250 million in late 2020, in a deal that also involved VICI Properties.
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