After more than a decade chasing tribal gaming deals, Lyle Berman, the founder and CEO of Lakes Entertainment, says the stakes are too high and he’s moving on to new challenges, whatever they may be.
In a recent interview, Berman said he’s decided to reinvent his nine-year-old company, which develops and manages Indian-owned casinos. But just what the Minnesota-based company will become, he’s holding close to the vest.
"Indian gaming is a very good business for us, but it’s not where we intend to invest the revenue in the future," Berman, 66, said. "Indian gaming is not a growth business."
Indeed, Lakes Entertainment hasn’t signed a new casino management contract in nearly three years, as the pipeline of large new projects has nearly run its course and fewer Indian tribes seek outside help running their casinos.
As many people know Lyle Berman is an avid high-stakes poker player, the the World Poker Tour is a wholly owned subsidiary of Lakes Entertainment.
Now, as the company casts about for a new strategy, Berman’s poker-playing style as a chief executive may be coming back to haunt him.
In its nine years as a public company, Lakes has bounced from $2 a share to as high as $18 a share, before retreating again. Twice in three years, the company revised its financial statements because of accounting mistakes. And last week, the company announced it had fired its senior vice president of operations, Robert Wyre, the company’s third-highest-paid executive, but declined to give a reason.
Even so, optimism is one of Berman’s strongest traits, say analysts. It’s helped him rebound from past mistakes and consistently find new opportunities to make money.
In 1997, for instance, Berman resigned as chairman of Stratosphere Corp., the owner of an ill-conceived casino in Las Vegas that went bankrupt quickly after it opened, but only after investors poured $550 million into the project.
Berman was also criticized for conflict of interest when, in 1999, he tried to arrange the merger of Rainforest Cafe to Lakes Gaming Inc., now Lakes Entertainment. Berman was chairman of both companies. Rainforest Cafe ultimately was sold to another company, Landry’s Seafood Restaurants Inc., for $125 million.
Yet Berman proved adept at gaining management contracts with Indian tribes. In 1999, within a year after Lakes was spun off from Grand Casinos, the company obtained contracts to manage large Indian casinos in California, Michigan and Massachusetts.
Then, in 2003, Berman launched the World Poker Tour on the Travel Channel. The tournaments revolutionized televised poker by allowing viewers to see the players’ "hole cards," or down cards.
At the peak of the poker craze shares in WPT Enterprises hit $25. They now trade at about $2.50.
Nonetheless, Lakes Entertainment is highly profitable — it made $20.2 million last year on revenues of $29.9 million — yet the bulk of its revenue comes from WPT Enterprises instead of its core, casino development business.
On the professional poker circuit, Berman is known as someone who excels at virtually any game, from no-limit Texas Hold ”˜Em to pot-limit Seven Card Stud.
He is a regular at a high-stakes poker event known as "The Big Game" that draws some of the world’s most elite players. Games switch every eight or 10 hands, "so you really have to be versatile at all aspects of poker," said Berman, who in 2002 was inducted into the Poker Hall of Fame.
That versatility may be needed as Lakes seeks to invest newly flowing cash from casino operations. Berman said if he sticks to gaming, he’d prefer to use the money to start his own casino, but he’s not ruling out the possibility of acquiring a business in a different industry.
"Give me a company with a lot of money and we’ll find something to do," he said.
Poker was always an important part of Lyle’s life, as he learned the game early and moved up to hosting poker games in college, even coming under scrutiny from the university for such participation. Amidst his many business endeavors as an adult, he decided to read Doyle Brunson’s Super System in the 1980’s, and he took what he learned to the World Series of Poker in Las Vegas. He cashed in a number of events dating back to 1984, and he won his first WSOP bracelet in 1989 in the $1500 Omaha limit event.