Casino Enterprise Management

Lyle Berman has always defied convention and caution. According to his book, I’m All In, he has gravitated toward risk and the road less traveled since he was old enough to walk. Berman epitomizes the entrepreneurial spirit.

His attraction to new business experiences stems from a childhood sense of family security and a need for new discovery down an uncertain path. According to Berman, “The next best thing to gambling and winning is not gambling and losing; it is learning to avoid propositions that don’t offer a positive expectation of long-term financial gain.”

Berman has always moved at high speed, simultaneously changing careers, launching new businesses and building a solid reputation as an astute entrepreneur. His professional life has transformed him from the only son in a family-owned Minneapolis leather company to an internationally renowned business mogul and Poker player.

Currently, Berman serves as CEO and chair of the board of Lakes Entertainment Inc. in Minnetonka, Minn. Lakes Entertainment manages and develops Indian Gaming properties in Michigan, California and Oklahoma. The company also owns approximately 60 percent of the World Poker Tour (WPT) Enterprises Inc., and Berman serves as its chair. He is also the chair of PokerTek.

Business is in His Blood
Berman’s Minnesota beginnings were far removed from the world of gaming and Poker. His grandfather David Berman began trading hides and fur in the early 20th century and founded the family’s business, Berman Brothers. David’s sons Nate (Lyle’s father) and Morris entered the business in the 1930s.

The brothers opened Berman Buckskin Company in 1946. Lyle joined the company when he came of age in the early 1960s. By then, Nate and Morris had split the business assets between them. Lyle’s family chose to concentrate on the organization’s buckskin division while Morris focused on other products.

Berman recognized the benefits of working hard and taking business risks. He and his father later negotiated a partnership agreement. Berman never believed anyone should “rest on his laurels” and immediately envisioned an expansion of the business.

During the 1970s, Berman’s Buckskin evolved into a more sophisticated leather merchandiser, selling outerwear and leather accessories. Their new “March to the Malls” philosophy resulted in annual sales of $25 million at 27 mall stores throughout the Midwest by 1978.

New York chemical conglomerate W.R. Grace noticed their successes and purchased Berman Buckskin for $10 million in 1979. Berman remained president and CEO of the division until 1987.

By then, the business had grown to 200 outlets and was renamed The Leather Experts. Berman believes those years helped him hone his negotiating and management skills.

In 1987 Berman repurchased the business from W.R. Grace for 10 times its earlier selling price. However, plans changed unexpectedly when a sudden brain aneurysm and a brush with death refocused his priorities in 1988.

With a new life philosophy, Berman soon sold the company, renamed Wilsons: The Leather Experts, to his biggest competitor. His share was $18 million in cash. (Ironically, he and Joel Waller, his friend and former employee, decided to buy back Wilsons, which was by then a 575-store operation, in 1996 for less than half the selling price of a decade earlier.)

One was Never Enough
But a sedentary life was not for this dynamo. While recovering, Berman explored other opportunities. Fortuitously, the 1988 Indian Gaming Regulatory Act (IGRA) had just passed, introducing Tribal Gaming to many Americans.

Minnesota was among the first jurisdictions to create Tribal Gaming opportunities. Berman seized the chance to invest in a Minnesota casino in 1990. He invested the initial $3 million in exchange for 100 percent of the limited partnership, a third of the general partnership and the position of both chair and CEO of the new Grand Casinos Inc.

Why that name? Berman claims it captured their vision. “We were building the biggest casino in the Midwest. Unlike Las Vegas, which can segment the types of casinos around town, we had to be all things to all people. I felt we were going to be grand, so why not call it ‘Grand,’” he explained.

During the 1990s, Grand Casinos grew to own and manage four commercial casinos and four Indian Gaming sites in four states. The original three-man operation grew to 20,000 employees. Just as everything seemed to be going his way, Berman acknowledges a giant miscalculation when he invested in the Stratosphere, or as he calls it, the “Catastrophicsphere.”

Grand Casinos Inc. was a major investor — more than $100 million for a 43 percent stake — in the Stratosphere. Berman also personally funded a piece of the enterprise. He expected a winner, but it failed quickly and filed for bankruptcy.

What’s He Doing Now?
Opportunity again knocked in 1998 when the Hilton Hotels Casino Division joined forces with Grand Casinos. It was a win-win scenario, giving Hilton a foothold in Mississippi, where Grand had two casinos, and offering Grand the security of becoming part of a larger gaming company. The new casino group was named Park Place Entertainment.

However, Hilton did not want Grand Casinos’ Indian Gaming properties, some leftover cash and a parcel of land in Las Vegas. Those assets spun off to become Lakes Entertainment, with Berman at the helm. He says, “My primary job responsibilities are to manage the day-by-day operations through Lakes’ president and a group of high energy vice presidents.” 

Since then, Berman has enjoyed challenges and successes at Lakes. He sees himself as a champion of Indian tribes, helping them to realize their economic potential through quality gaming operations.

The process can sometimes be demanding. Berman says: “Our primary challenge is to work in conjunction with our tribal partners, assisting them to obtain the legal rights to build a casino. Once they obtain those rights, they must withstand the lawsuits that inevitably come from anti-gaming interests. The second challenge is running a business that is open 24 hours a day, seven days a week, 365 days a year.”

In his opinion, there have been two really exciting events this year: the opening of the Four Winds Casino on behalf of the Pokagon Band of Potawatomi Indians in New Buffalo, Mich.; and securing the financing and starting construction of the Foothill Oaks Casino in Sacramento, Calif., on behalf of the Shingle Springs Band of Miwok Indians.

Looking ahead into 2008, Lakes will confront management and legal issues. “For the next 12 months our major challenges will be managing the casino in New Buffalo, building the casino in Sacramento, and securing legal rights for both the Jamul Indian Village San Diego and the Iowa Tribe of Oklahoma in Oklahoma,” Berman says.

One business is never enough for entrepreneurs like Berman. Today, as during most times of his life, he currently has his hands in “multiple business pies.”

In addition to Lakes Entertainment, Berman is also the chair of PokerTek, a company that produces a revolutionary Poker table. “This table has no chips, no dealer and features simulated cards on a computer screen. It eliminates mistakes, and we are very excited about it,” he says.

Poker is His Passion
Berman’s love for Poker dates back to his youth. He was nicknamed “The Caveman” because of the time he spent playing cards in dark rooms. Berman furthered this fascination during his first two years at the Wharton School of the University of Pennsylvania in the early 1960s.

Along with his roommates, Berman organized an off-campus Poker group, which developed into a full-fledged gambling program. Once college authorities learned of the Poker ring, they shut it down and had Berman and his cohorts arrested.

The Great Wharton Gambling Scandal went to trial, but all charges were dismissed. However, Berman was expelled, left Pennsylvania and returned to Minnesota. In his book, Berman states: “Looking back at things now … getting kicked out of Wharton might very well have been the single best thing that ever happened to me. I doubt I would have ever achieved the degree of success — and happiness — I now enjoy had I stayed on to complete my degree in Pennsylvania.”

During the 1960s and 1970s, Berman’s many business ventures left him little time to play Poker. However, his interest was rekindled following a one-day tournament at the Stardust in 1983.
Berman wrote a two-page business synopsis in 1985, describing a plan for a televised series of Poker tournaments with one grand finale. He unsuccessfully attempted to sell the program and now believes society was just not ready for it.

However, 15 years later, in 2000, attorney and filmmaker Steve Lipscomb propositioned Berman about that very same idea of televising a Poker tournament to mainstream America. The timing and planning seemed perfect to position the World Poker Tournament as the NFL or NBA of this spectator sport.

Filming began on the first tournament in 2002. Coincidentally, both gambling and reality shows were really taking hold of the public’s interest.

Berman believes he has helped create a new respectability for Poker in the public’s eye. The game is now the darling of popular movie and television celebrities. “I tease my Poker friends that before me, they were bums. I made them legit,” says Berman.

The WPT only films those tournaments conducted and managed by individual casinos that buy into the name. Some WPT tournaments take place at high-profile locations such as designated MGM properties in Las Vegas. The Travel Channel has run the program for the past five years, but the sixth series will be shown in 2008 on the Game Show Network.

The competitions are run every three weeks. They are typically three to four days, but only the last day and the final table is filmed. The final eight to 10 hours of film are edited down to two hours. Anyone is eligible to enter by paying a fee of $5,000, $10,000 or $25,000.

Berman describes the typical player as a younger male, aged 21 to 35, but says Poker is a “sport that transcends gender and age.” A tournament begins with 400 to 800 players and ends with six at the final table. Berman plays in six competitions each year.

Thanks to the power of syndicated television, the WPT is now its own brand that is seen on playing cards, jewelry and other items. Foreigners are now also able to play on a WPT Internet site that was launched this past June. However, Berman warns that players must be foreign citizens to have an account.

The Poker craze has motivated many casinos to reconfigure their gaming floors to include larger dedicated Poker rooms. Will its popularity continue? Berman is convinced it will for a long time. He says: “I believe the future is bright. Although there has been an explosion in the last five years and Poker will certainly peak some day, I believe there will be a lot of growth before that happens.”

After decades of exciting days at numerous jobs, Berman still eagerly anticipates going to the office. It has been a life filled with excitement, exhilarating successes and highs matched with fewer terrible lows and failures. He believes his legacy is the creation of the WPT with Steve Lipscomb and creating a worldwide trend that has grown far beyond the U.S. borders.

Berman’s biggest disappointment is the Stratosphere project in Las Vegas. He says, “In hindsight, I can see where we went wrong. We made several mistakes that, taken together, doomed the project almost from the beginning. To this day, the Stratosphere deal remains my biggest business disappointment. However, it did change the Las Vegas skyline and is a major icon. I’m not sure I get bragging rights for that.”

But the good days have far outweighed the bad ones. He tries to live by the motto “Vivir es Bueno,” or “Life is Good.” Berman urges people to enjoy life, find joy in everyday living, pursue favorite activities and to not retire before the time is right. He states, “I like to brag that if people define work as something they don’t want to do, then I have never gone to work a day in my life.”

Sharon Harris has reported on the North American and Caribbean casino gaming industry since 1993, and the American coin-operated amusement industry since the 1980s. Based near Atlantic City, she can be reached at (609) 601-7890 or sharonhar[at]aol.com.