Casino Tribal Land-BasedInterview Bringing San Manuel into the top five July 5, 2019 By David Cook Loren Gill and Peter Arceo speak to David Cook about their journey with San Manuel Casino and the property's expansion project, after being confirmed as the operator's new CEO and General Manager respectively "I said to the business committee that if they gave me two weeks, we would have all the people ready to go." Building a management team around him was the first, but at the same time, most simple task for new San Manuel Casino CEO Loren Gill. Having been General Manager for the tribal operator since April 2015, he's been on a journey with some trusted allies – and one of them sits alongside him in this interview. Peter Arceo was brought in as CMO in August 2015, before stepping up to become COO in August 2018, and he was announced as San Manuel's new General Manager in March – in the same press release confirming Gill as the new CEO. Sitting down with Gaming America, it is clear the pair have struck up a partnership from working together for four years and are evidently on the same page, appearing comfortable in each other's company in this environment. Their appointments were only six months apart, and they made it clear from the beginning there wasn't a single area of operation that didn't need improvement when they came in. Arceo says: "When we came in, the property was marketed as a come-one, come-all mass market property. It didn't matter if you were worth $1 per day or $1,000 per day. There was no special treatment. There was not a lot of focus on guests. The focus was on how we dealt with a mass amount of people walking through our door. "We realised we needed to focus on a specific segment. This wasn't a quick fix – it took a while. But we needed to have the right leaders in there to do that. Some people opted out and some people accepted the change. The number one thing was they had to trust us. "The brand was unknown and nobody knew anything about the casino; we had to fix that. We needed to not only propagate the brand for our guests, but for our employee recruiting efforts. We worked very hard to do that, and today, it's a little bit different. People now call us and send us LinkedIn messages, and not the other way around!" Gill adds: "We realised if we did every small thing a little bit better, the whole business will be a lot better. We focused a lot of time, energy and resources on the stuff that really matters. We then excelled very quickly. We could have a house full of people spending $10, or a house full of people spending a couple of hundred dollars. What would you rather?" Yaamava' It is perhaps Gill and Arceo's honesty that has helped gain trust with the tribe and put them in the position to oversee a phase of expansion that Gill believes will place it in the top five casinos in the US. An onsite hotel, a 2,200-space parking garage, an entertainment venue with approximately 3,000 seats, new dining experiences, new amenities and new retail and event spaces are all part of a $550m scheme which will be the most significant development in the casino's history since it opened in 1986 – also known as the Yaamava' expansion project. It's a step which must be taken in a competitive market. Neighbouring the San Manuel reservation in San Bernardino, southern California, San Manuel may not be the first tribal casino that comes to mind for many US citizens, with Florida's Seminole Hard Rock Hotel & Casino of course being of prominence. There is also Sycuan Casino Resort a few hours' drive away down the I-15. A total of 62 of the 109 California tribes own casinos, so differentiation is almost going to be as much of a challenge in this market as it would be in Las Vegas. San Manuel's stature should not be underestimated, though. The property hosts more than 12 million visitors per year – just less than one third of the approximate 42 million people who visited Las Vegas in 2018. The casino offers more than 4,700 games in total when adding together all slot machines and gaming tables. Perhaps it is fitting this project is being taken on after a shake-up in senior management, with a new team overseeing the transformation of the casino. Gill has succeeded Jerry Paresa, who had been CEO Emeritus since the previous September. Paresa had been CEO since 2009 and has worked in gaming for the tribe across three decades, leaving sizeable shoes to fill. Rikki Tanenbaum was brought in as CMO in August 2018 – announced in the same press release confirming Arceo's promotion to COO. Tanenbaum was previously Vice President of Marketing for Caesars Entertainment and SVP and CMO for Golden Nugget Casinos. This followed the announcement confirming Laurens Vosloo had been appointed as CFO in June 2018. It's not necessarily been an overhaul, especially with Gill and Arceo being internal appointments, but both stress the importance of the management team working together in unison, and not placing all responsibility on a single executive. Arceo says: "Going back to when we started, we all had each other's backs and we all said if we saw anyone falling out of kilter, we would tap them on the shoulder and not let ego get in the way. We could have very frank conversations. "Some of our hardest conversations were had during those time periods. We didn't allow things to fester and if we felt someone was going off the chains, we didn't allow them to do that for a very long period of time. We were all there to help each other out." The capital required to make the expansion happen has not come from self-funding, meaning a positive end result is a must; not only for the tribe, but also for the investor. So how are plans coming along? Gill says: "We're well underway on the parking garage. We're working across the country with some really great restaurant concepts, as well as our own team. "We'll have some in-house creative concepts and partnerships with others. I think the most exciting thing is the entertainment venue. It's going to be a venue that has the quality and capability to host any artist in the world. It will be relatively small, but we're building something that's certainly going to differentiate us from the rest of the market and that people are going to talk about." Perhaps San Manuel could use the entertainment venue to run events like esports tournaments – the buzz term that is often talked about as a potential driver to bring millennial customers to a casino. "Concerts will make up the core of events there, but esports tournaments would be the perfect example of the other entertainment ideas we can explore," Gill says. Chance for sports betting? Despite all the talk of expansion, there is of course one avenue San Manuel is still unable to explore – sports betting. While six states have launched fully-regulated sports betting since PASPA was repealed in May 2018, California is unlikely to follow suit for some time to come. We could devote a four-page feature alone to the intricacies of what's involved and needed for California to make it happen, with the tribes, commercial casinos and lawmakers needed to come together, but the upshot of it all is the forecast is certainly a murky one. The Californians for Sports Betting group filed a petitionto legalize sports betting in the state in June 2018, which did not qualify for the 2020 ballot. California Assemblyman Adam Gray and Senator Bill Dodd presented a sports betting bill in June, which would need to pass through the state legislature with a two-thirds majority vote to qualify for the 2020 ballot. The only other indication of a step forward here has been Roar Digital's partnership with the United Auburn Indian Community for a sports betting venture, announced in October. Roar Digital is a joint venture between operators MGM Resorts and GVC Holdings (owner of the PartyPoker brands). Arceo says: "Right now, it's difficult to form a plan, until the state determines which way it wants to go. We would go crazy if we were to try and figure out all the different situations. In our opinion, it's a little premature to start looking down that path, and once the state's determined where it's going to go with it, we'll plan a strategy based on that." The concern in this regard is that sports betting's fate in the state could be similar to that of online poker. Even if there is an interest in getting it over the line, getting all the concerned parties to agree on how best to do it is a different matter entirely, especially when tribal gaming compacts need to be respected. This is a state where 74 tribal governments have signed compacts with the state of California. Gill says: "With sports betting, we don't even know who is going to be involved in it. It's probably the biggest playground with unidentified players I've ever seen. I think the issue is whereas some states moved quicker, I think California is really going to try and understand it first. "I do see the similarities with online poker. The San Manuel tribe was very active in that. Our tribe and many other tribes spent a lot of resources on trying to get it approved over many years, and simply couldn't get there. I think the focus is going to be far more on sports betting now." Speaking from experience Reflecting on their paths to more senior positions with San Manuel, the pair will naturally press the case for appointing internal talent to management roles. When asked if internal appointments have been a common theme in Arceo's time there, he says: "We always look internally first, and if we can't find an internal candidate, then we'll look elsewhere. Over the last few years, we have had to bring in a lot of people from the outside, but now there's an equal amount of promotion from within. "We're trying to train folks about what it means to be a director and what it means to think strategically. The problem is we've been growing so fast in the last four years that we haven't had the time to really bring along some folks. That's what we're going to focus on for the next two years." Speaking to this pair does not necessarily feel like a regular interview with senior management executives of gaming operators. While Gill and Arceo themselves may not have been born into a tribe, it is clear to see that sense of community has rubbed off on them in the last four years, and creative freedom is naturally encouraged by a tribal operator. "One of their key initiatives and high priorities is educating people about their culture and where they came from," Arceo says. "We try to do that in everything we do. I worked for a PLC [Boyd Gaming, where he was Marketing Manager from 1995 to 2004], and I've worked for private equity and publicly-traded companies. This is my second tribe [after working for Talking Stick Resort & Casino Arizona from 2011 to 2015 as Vice President/CMO]. I think the integration of the culture into the business is super important, because it brings the ownership into the culture of the casino, and it really is an extended family of the tribe." It is the final comment from Arceo that makes it clear there is one thing he has learned from his time with the operator which he feels will be of value to him in his new position. He says: "Work/life balance is important here; not just for myself, but for everyone. With 12 million visitors, it puts us at number two in California, behind Disneyland California. We don't know of any other venue outside that which hosts more people than us. With that comes fatigue. We have people that come in and every day is busy. We average 30,000 people per day walking into our building. I don't want to say it's unique to San Manuel, but it's certainly highlighted." Gill and Arceo are now tasked with making sure everyone keeps it together at a time which could make or break the casino's position in US gaming.