Viewpoint

TOP CHALLENGES FACING HOSPITALS

By Bo Ryall, President/CEO Arkansas Hospital Association

Hospitals in Arkansas, and indeed throughout the U.S., are facing a financial crisis. It can be difficult to grasp why this industry, in particular, needs specific and immediate relief and why that involves legislation, changes in rulemaking, and constant advocacy efforts at the local, regional, state and national levels. What’s much easier to understand is that if any of our hospitals were to collapse under this mounting pressure, it would put the health of our state – its economy and its people – at risk. The following Q&A is meant to offer some context on this complex and increasingly dire situation.

Why are hospitals experiencing financial difficulties?

It is as simple as expenses outpacing revenues. You can say that all businesses are experiencing this right now to some extent, but unlike other businesses, hospitals cannot simply raise prices and pass expense increases along to consumers. Hospitals are paid by Medicare, Medicaid and commercial insurance, and those reimbursements have, for the most part, remained stagnant while labor and supply costs have significantly increased.

Is it a management problem?

No. With expenses increasing and revenue remaining stable, the challenge becomes what expenses to cut. Hospital costs consist largely of salaries; more than half of a hospital’s expenses fall under compensating the health care workers who provide care to patients. If a hospital were to reduce the number of nurses employed, for example, that would mean fewer beds available for patients. With flu, COVID and RSV reaching peak levels this fall, the result of these types of reductions would equate to reduced bed capacity statewide for sicker patients.

Other possible reductions could include cutting unprofitable lines of service, such as labor and delivery or rural health clinics. Cuts like these have an overwhelmingly detrimental impact on health care access. Arkansas currently has fewer than 40 hospitals operating labor and delivery departments, and that number continues to decrease. Driving hundreds of miles to deliver a baby or to access prenatal care will inevitably have a negative impact on the health of mothers and newborns.

Similarly, closing rural health clinics may save money in the short run, but these cuts also limit preventive care which in turn results in sicker patients who develop diabetes, suffer heart attacks and strokes or succumb to other illnesses.

Are hospitals in danger of closing?

The Center for Healthcare Quality and Payment Reform issued a report last November that identified 22 rural Arkansas hospitals (46%) at risk of closing, and six hospitals at risk of immediate closure. It’s clear that Arkansas’s health care industry is not only facing cutting services and bed capacity, but is also in danger of shuttering locations altogether, the victims of sustained financial losses on patient services reimbursement and low financial reserves.

Why have labor costs increased?

Health care was already experiencing a workforce shortage prior to the pandemic, but the last couple of years have greatly

intensified the pressure of this shortage. Nurses, for example, have retired, moved on to non-bedside care or changed professions altogether. Some nurses have embraced the flexibility of the travel nurse industry, which has contributed to increased costs for hospitals to attract and retain qualified help.

With the bar raised on expenses, and no evidence that the workforce shortage will ease on its own, Arkansas must act. Our state must invest in attracting members of the next-generation workforce to choose health care as a profession. That means increasing pay for our nurse educators, providing more opportunities for students to attend nursing schools, offering loan forgiveness and raising awareness of health care careers to middle and high school students.

What are the solutions to the hospital financial crisis?

For hospitals to continue to serve patients and communities, there must be payment reform. Consider the following: • Medicaid and the Arkansas General Assembly must appropriate more funding to hospital rates to correct the inequity of paying hospitals significantly below the cost of providing care.

Hospitals have not received an increase in the rate of reimbursement for providing care to Medicaid patients in decades. In fact, the last time Medicaid outpatient rates were changed was in 1992, and that was a reimbursement decrease. That is 32 years without a favorable rate adjustment, despite the reality that costs – and the shift toward utilizing outpatient care – have increased considerably over this time.

Rates of reimbursement for inpatient care have not seen an increase since 2007, when it was raised to $850 a day. This daily rate includes all care, including costly procedures like heart bypass or hip replacement, yet Medicaid reimburses hospitals $850 a day rather than the full cost of the procedure. • Congress desperately needs to step in and correct the inadequacies of the Area Wage

Index.

Medicare payments in Arkansas are woefully low. The main cause is the Area Wage Index, which rewards states that pay higher wages and penalizes more efficient, smaller states like Arkansas. • Commercial insurers must do their part.

Some commercial insurers have adjusted payments to account for inflation, but others have not stepped up. All commercial insurers must address the increased costs of treating their policy holders, not by raising premiums, but by investing dollars in the health care providers treating patients. • Laws and regulations are needed to protect seniors from gaps and loopholes in Medicare Advantage plans.

Medicare Advantage companies advertise plans to seniors as a cost-saving solution to reduce out-of-pocket expenses, but when it comes down to paying for care, they excel at erecting barriers to payments. Paying hospitals and physicians below Medicare rates is unacceptable, and denying care or payment for service by using a prior authorization system causes even more harm.

We continue to see Medicare Advantage patients “hotel” at hospitals because plans will not authorize transfer of care to a post-acute setting, such as rehabilitation, acute-care hospital or a nursing home. Laws and regulations are needed to ensure these plans allow seniors to receive care without prior authorization barriers and to not financially punish hospitals and physicians for providing that care.

Hospitals have demonstrated their profound commitment to our state throughout the pandemic by expanding bed capacity and staff numbers to treat patients during COVID surges. At the same time, they continued to provide trauma care and service everyday health care needs.

Arkansas’s hospitals also contribute to the economy statewide by directly and indirectly employing more than 90,000 workers and generating $15.2 billion in economic impact. These numbers are not minor contributions to a state that needs a strong health care system and a strong economy. Hospitals are asking for assistance so that we may continue, according to our mission, to protect access to outstanding health care for all Arkansans, now and in the future.

THE ROLLER COASTER ECONOMY:

What is in Store for 2023?

By Michael R. Pakko, Ph.D., Chief Economist and State Economic Forecaster, Arkansas Economic Development Institute (AEDI)

It seems like the economy has been a roller coaster ride recently, and the ride isn’t over yet. Just like on a roller coaster, our current momentum is driven by the hills, valleys, twists and turns that have brought us to this point. To get a sense of what is yet to come, we need to look back at how we got here.

The great COVID Contraction was the precipitating “shock” to the economy — the initial harrowing plunge of the roller coaster. Suddenly, large swaths of the economy simply shut down. Businesses were closed, workers were idled, and consumer spending dropped precipitously. With service-providing sectors particularly hard hit, we saw a significant shift in spending patterns with the demand for goods holding up better than for services. This was one major way in which the COVID Contraction did not fit the mold of a typical recession. The spending categories most affected by an economic downturn are usually goods-producing, particularly durable goods.

One reason Arkansas fared better than other parts of the nation is our state is less dependent on service-providing industries than most. By nearly every measure — including production, employment and consumer spending — Arkansas’s economy is relatively skewed toward goods. As a result, the shutdown of services had a smaller impact here than elsewhere.

But at the same time the economy’s productive capacity was plunging, the response of fiscal and monetary policy added strength to demand. In the second quarter of 2020, U.S. GDP declined at a 30% annual rate. During the same period, the CARES Act, a set of government programs to compensate American consumers and business for their losses, ended up resulting in a 34% rate of increase in personal income. A second round of COVID relief/stimulus in late 2020, and a third round at the beginning of 2021, added even more momentum to short-term income growth.

Here in Arkansas, the U.S. Bureau of Economic Analysis estimates that Federal Pandemic Relief Programs contributed nearly $11 billion to the personal incomes of Arkansans in 2020, and another $9.4 billion in 2021. Those figures represent 7.7% and 6.1% of income from all sources in those two years, respectively. Moreover, in a state that has among the lowest costs of living in the nation, every dollar in stimulus had a relatively larger impact here than in higher-cost regions.

Not surprisingly, consumer spending rebounded across the nation, and particularly so in Arkansas. It took several months for consumer spending to recover nationwide, but the evidence suggests Arkansas consumer spending had returned to pre-pandemic levels well before the end of 2020. In fact, Arkansas is one of only a handful of states that experienced a net increase in personal consumption expenditures in 2020, and we continued to outpace the national growth rate in 2021. As sales tax collections indicate, retail sales rebounded faster in Arkansas and have continued to trend above the national growth rate. In the face of rising prices in 2022, consumer spending growth has slowed, but remains well above pre-pandemic levels.

Meanwhile, monetary policy was greasing the tracks of our accelerating roller coaster ride in 2020-21. Following a zero-interest rate policy and doubling down on quantitative easing, the already-stimulative fiscal policy was accommodated by unprecedented money creation. Economic scales were already out of kilter with the goods/services imbalance, and now, newly lubricated with fiscal and monetary stimulus, we began to feel the ride shuddering with supply chain breakdowns, labor shortages and price spikes. It felt like the wheels were coming off.

In hindsight, the resulting round of accelerating inflation seems inevitable. Across much of the nation, consumer demand was suppressed by harsher lockdowns than here in Arkansas, so it took some time. But eventually, unleashing pent-up consumer demand, combined with ongoing supply disruptions, was a sure-fire recipe for price pressures to emerge. The monetary policy response to the pandemic had paved the way for a potentially chronic acceleration of inflation.

Predictably, the Federal Reserve hit the brakes in 2022. Starting from near zero at the beginning of the year, the Fed has raised its benchmark interest rate to above 4% with further increases likely in 2023. The roller coaster is heading down the final stretch of the ride, and the Fed’s goal is to tap the brakes just enough to coast to a smooth stop at the station without crashing into a recession.

Achieving this so-called “soft landing” is a difficult prospect under any circumstances, but particularly problematic on our present roller coaster ride. The Fed started from zero, a position that was arguably behind the curve by early 2022, and the rapid pace of interest rate hikes over the course of the year reflected an effort to catch up.

Rising interest rates will undoubtedly slow the economy. The question is, will it inevitably result in a recession? There is good reason to believe that if there is a recession, it will be relatively mild. Labor markets have maintained strength with record-low unemployment and healthy job growth. In fact, employers report ongoing difficulty with finding workers to fill available jobs. The most problematic aspect of a recession — widespread unemployment — seems a distant prospect.

My personal forecast is momentum of consumer spending will have carried us through the end of 2022, but the economy is likely to slip into a modest recession in the first half of 2023. While mild, this recession will follow a more normal pattern than the COVID Contraction. Higher interest rates will have their most significant impact on business investment as well as consumer purchases of homes, automobiles and durable goods. In this regard, the skew of the Arkansas economy toward goods, rather than services, might be exacerbating factor.

Of course, with every roller coaster ride, there could be a hidden curve or drop ahead we’re not yet seeing. Shocks to the economy can come from unexpected sources, and any forecast has to recognize that fundamental uncertainty. At this point, however, it looks like it might be a rough ride into the station, but I don’t see our roller coaster careening off the tracks.

FORECASTING THE FUTURE AT METROPLAN

By Jonathan Lupton, Senior Planner for Publications-AICP, Metroplan

Demographic analysis is powerful because it gives a window on the future. Metroplan is a regional planning agency that makes forecasts for central Arkansas. While our main task is transportation planning, our projections are used by private sources and government agencies, including water utilities, city and county governments, and even the Central Arkansas Library System. We have a pretty good track record for accuracy. For example, in the early 1990s, we did a forecast for regional population in 2010 that turned out low by just 2.2 percent. Yet things are always in flux, and projecting the future is never easy.

Metroplan forecasts the four-county Little Rock region will grow from about 720,000 residents in 2020 to about 866,000 by 2050. That’s a population gain of about 146,000 people, or 20 percent growth — about 0.6 percent per year. Saline County will grow fastest within the region, while central Pulaski County will grow more slowly. Population will continue spreading to the suburbs, but migration toward outlying counties is now slower than it was during period 1990 to 2010.

This is a forecast, not a promise. We built it based on trends in the recent past and extrapolated into the near future. Population change is based on three essential factors: births, deaths and migration. The first two are termed “natural increase,” and they tend to follow predictable trends. Migration, however, is more of a variable. Jobs, income and quality of life are all factors that influence migration.

Demographic forecasting makes predictions based on people alive today. We have a pretty good idea how many females will be in childbearing ages, for example, and we know the rate at which they have babies, so we can predict how many children will be born with a reasonable degree of accuracy. Our region has a higher fertility rate than the U.S. average, but we have nonetheless dropped below the replacement rate of 2.1 births per woman. To grow as a region, we must have in-migrants. That’s where jobs and quality of life come into play. Fortunately, our region continues to attract migrants.

Metroplan also forecasts employment. COVID caused a major loss of jobs but now, in the post-COVID era, we’re seeing a return of employment growth. But there’s a difference: A lot of people dropped out of the labor force during the COVID crisis, and now, even with workers returning, it’s hard to get enough of them. This is a national problem affecting Arkansas, and it’s a factor throwing off Metroplan’s employment forecasts.

COVID caused a lot of older workers to retire early, and they aren’t coming back. Government stimulus programs got some people into the habit of living without jobs, and they are gradually coming back. Then there are demographic factors. Although local fertility is a bit above average, we are having fewer babies, and it’s beginning to catch up with us in not enough young people to hold jobs. This trend was already happening, but the sudden loss of workers during the COVID crunch made it stand out. Get used to waiting a while at checkout counters, in drive-thrus and at your favorite restaurant, all of which have to do with underlying demographics and a shortage of low-wage, mostly young service workers.

How do trends in the Little Rock metro area stack up, compared with other U.S. south central metro areas? From 2010 to 2020 we grew slightly faster than Memphis, and our growth rate was roughly comparable to Baton Rouge, Tulsa, and Jackson, Mississippi. Aside from Memphis, the regional metros with more than 1 million population —places like Dallas, Austin, Nashville and Oklahoma City — grew quite a bit faster, especially Austin. And, of course, the cluster of cities in Northwest Arkansas, though still a smaller region, grew faster than those in the central part of the state.

Looking toward the future, it is important to remember these rates constantly change. A lot of the Little Rock region’s slowdown after 2010 stemmed from the demise of the Alltel corporation, previously a powerhouse of job growth. We’ve seen a slight acceleration in job growth post-COVID, in spite of labor shortage, so the future is very open.

We are becoming a center for warehousing and logistics. We have a niche in fintech and cybersecurity. There’s evidence the larger south-central metros are getting maxed out with traffic and congestion, plus we have unusually low housing costs, so don’t be surprised if you see this region ticking back up in comparison with other southcentral metros.

The future will see less population growth for just about everybody. We all grew up in a world of rapid growth, yet United Nations forecasts suggest global population growth is slowing, and total world population will probably begin dropping late this century. Here in the United States, birth rates continue their slow decline, while mortality took a jump with COVID-19. Slowing immigration in recent years also helps explain the worker shortage. Central Arkansas is now competing with Northwest Arkansas to attract youthful talent from rural parts of our state, so population growth will be a challenge.

In the meantime, we can plan. Central Arkansas has achieved some outstanding urban revitalization in the past two decades. Areas like River Market and downtown in Little Rock, Argenta and Rockwater in North Little Rock, and Conway’s Hendrix Village, are all prime examples of redeveloping real estate with a great life-work balance. Similar redevelopment has also begun in downtown Benton and Lonoke.

Our natural landscape is varied and attractive with areas of steep topography via the Ouachita Mountains juxtaposed against Delta flatlands with abundant lakes and rivers. We have some of the cleanest and cheapest water in the entire country. Our trail system is world-class with about 88 miles worth already in play. And, thanks to Metroplan’s Regional Greenways Plan, that amenity will eventually include 191 miles of high-quality trails weaving through our region, linking our cities. In short, the future is hazy but Central Arkansas has a lot going for it.

Royal Flush

By Dwain Hebda

ARKANSAS GAMBLING INDUSTRY BOOMING

hen the doors opened on Oaklawn’s 2022-2023 rac-

Wing season Dec. 9, the stream of patrons flowed in familiar channels throughout the historic racetrack. Carried by the tides of tradition, fans picked up racing forms, viewed the mounts at the indoor paddock and scooped up thousands of signature corned beef sandwiches, engaging in annual rites more than 100 years in the making.

But as the gates flew wide on the first race, it was clear that for all the history and tradition draping the edges, an incomparable new vista had come into focus. At the first turn, a seven-story, 200-room hotel, opened in April 2021, loomed trackside. Just beyond that lies the yawning casino floor, expanded as part of the $100 million addition, where dealers, dice and slots now operate 24/7.

Oaklawn, like its competitors, has wasted no time leveraging the new freedoms brought in 2018 when voters finally removed the last remaining barriers between the public and live casino gaming. But this year, ensconced in shiny new amenities, armed with brand-new mobile sports wagering and with the pandemic behind them, Arkansas casinos are about to see just what the industry can really do.

The thought that gaming is only starting to find its gear is a startling one, given the revenue (and various taxes) generated thus far by the state’s three casinos, not to mention thousands of jobs and the substantial trickle-down spending by tens of thousands of guests. From the Delta to the Spa City and from the shadow of Memphis to the shores of the River Valley, the future has never looked brighter for the industry in Arkansas

The Upstart

When Saracen Casino planted its stake in Jefferson County, it did so without the name recognition Oaklawn and Southland had forged over generations. It also lacked the advantages of a major population center on its back doorstep or of being located in the state’s tourism epicenter. Quite the contrary, the casino opened in a community tourists rarely visited, let alone built a weekend or vacation around.

And yet, none of those factors seems to have stunted the company’s performance much. If anything, it has emboldened Saracen with an underdog spirit, the plucky contender ready to stand toe-to-toe with all entertainment comers, building the community right along with it.

“When you come to Saracen, you are going to experience a business that’s identity is casino gaming, period. That’s who we are,” said Carlton Saffa, chief market officer. “We believe in producing a quality casino product. That’s our core. We’ve tried, and I think successfully, to introduce ourselves as a Vegas-style experience.

“There’s no greater compliment than the fact someone’s driving an hour and a half or two hours, literally passing casinos, to

come play at your facility. And when you look at the macro data, you see the gaming revenue in central Arkansas has basically doubled since we opened. That says to me we’ve found something that was missing in this market. There was an unmet need and we are meeting it.”

Saracen has scored notable first-to-markets, particularly on the amenities side. The on-site Red Oak Steakhouse has been a star attraction since it opened, challenging other properties to compete with its high-end fare. This has helped compensate for Saracen lagging behind the competition in brick-and-mortar, something Saffa blames on pandemic-related issues. While for some, this only pads the casino’s diamond-in-the-rough appeal, management is eager to make up ground on facilities and curb appeal.

“I will make no secret of the fact that gaming is not immune to COVID,” Saffa said. “Every other month has had some form of COVID limitation, COVID spike. Between that and $4 gasoline, we’ve seen weird times. We’ve seen all kinds of weird times. In fact, 80% of our time open has been under a weird time.

“In the 26 months we’ve been open, we believe — and we’re not even sure because we don’t have enough data — but we’ve seen what we believe are probably four to five months at most of normal operating conditions.”

As of November, Saracen had the second-highest number of slots, but was virtually tied with Oaklawn in total cash spun both in November and year to date. The property was also well behind the field in on-premises retail sport betting. The casino saw $750,000 in November retail sports handle, a total three and four times lower than at Oaklawn and Southland, respectively.

A closer look, however, shows Saracen’s emerging pockets of strength such as table play, where it ranked second, and particularly in mobile sports betting. Per the state’s monthly Casino Gaming Section/Expanded Games of Skill report, the casino grew its monthly mobile sports handle over six months to a peak of $15.5 million in November, a number almost twice that of the other two casinos combined. Given that, it doesn’t take much to see the potential once the hotel and conference space are completed.

“Our plans at this point are to go vertical with the hotel tower in the first quarter [of 2023],” Saffa said. “That hotel expects to be 320-plus rooms, and we’re looking at an event space that can hold up to 1,600 people. That space will feature a permanent stage, so we can do large, big-name acts all the way to converting the space to conventions or meetings.”

In many ways, the grit and optimism of Saracen leadership reflects the resilient spirit of Pine Bluff itself. Saffa said the property is proud to play a role in the community reclaiming some of its lost luster.

“In Pine Buff, the cards that have been coming out of the shoe have been kind of rough for about a generation,” he said. “But we’ve got incredible leaders here who I think are making the most of situations that are occurring in areas all over the South, probably nowhere more vividly than in Pine Bluff.

“We’re bringing 150,000 people a month through our doors. Many of those people had written off Pine Bluff, and I’m proud to say we gave them a reason to come back. There are towns all over the state that are drying up that would jump at the chance for people to come visit their town once again, and I’m glad that it’s working here with Saracen.”

The Powerhouse

Southland Casino Hotel has quickly sprinted to the forefront of Arkansas casinos. On nearly every measurement, the West Memphis property is well ahead of the competition, spinning $274 million in slots in November alone, about double that of either Oaklawn or Saracen. What’s more, its November retail sportsbook handle of $3.1 million and $2.9 million in live tables net win about equaled the other two properties combined, aided greatly by Memphis tourists who find their way across the river.

But with a new hotel and expanded casino just opened, Southland is hoping to become a destination all its own. The company recently celebrated completion of its $320 million expansion, including a new 300-room, 20-story hotel and boosting the gaming floor to 113,000 square feet, 50 live tables and 2,400 slot machines.

“We are not where we want to be at this time; I think the future of Southland is still a lot brighter,” said Osi Imomoh, general manager. “Currently, our clientele is very local. We’ve been here a long time, so it’s generated by name recognition. This area knows who we are.

“The addition of this new facility will be how we bring more people to the community of West Memphis, and I think that’s the most exciting part about it. We’re uniquely prepared with this facility, the world-class restaurants we’ve put into this building and the team we’ve assembled.”

Imomoh said digital technology also figures to play a major role in bringing visitors to Southland’s newly constructed property.

“We launched our Southland Lucky North mobile app, which is an all-encompassing app for patrons to see all their gaming offerings, dining and hotel,” he said. “We also have a mobile sports betting app statewide called Betly. In addition, we are seeing more adaptation of cashless technology, such as in our steakhouse. We have seen some barriers to that in other outlets, but I think it’s coming along.

“Technology is ever-changing, right? And right now, the mobile app and cashless technology are the two biggest things going forward.”

This isn’t Imomoh’s first spin in Crittenden County; he served here a decade ago as Southland’s food and beverage director. He returns to usher the nearly 70-year-old venue into becoming a regional destination without alienating longtime regulars.

“I still see people here from 10 years ago,” he said. “When we talk about our changing clientele, I preface that by saying we’re not looking to change guests, we’re looking to add guests. There’s something here for everyone.

“When you look at this part of the state, it doesn’t always get the best rap. The more people we can get to see West Memphis differently, not only do we do better, but the gas stations and other businesses in town also do better.”

Imomoh’s “We’re all in this together,” spiel might be written off as tired public relations pap except for the company’s impressive record of putting money where its mission is in the community. While most casinos kick in to local causes at some level, Southland’s record of philanthropy has been consistent and extensive.

In addition to direct contributions to nonprofits and supporting the city and state through tax receipts, the property’s parent company, Delaware North, launched ALL IN for Stronger Communities to take a more coordinated and proactive approach to addressing needs within the area itself.

“We do a needs assessment of the community and also the region,” said Neki Catron, community engagement manager, who was hired specifically to manage the program. “We look at what’s needed and how we can provide accessibility of resources from Memphis, Little Rock, Jonesboro, all over this region.

“Most people would be really surprised at what issues we’re looking at, like food deserts. We look at areas like health resources, we look at the homeless environment. We put a lot of backing behind initiatives most people don’t realize we support.”

Over the past two years, Southland’s partnership with the Midsouth Food Bank resulted in collecting more than 600,000 pounds of food for the local area, Catron said. The company also worked with East Arkansas Health Center to develop an OB-GYN clinic staffed daily, the only one in the county. Not exactly standard casino billboard material, but an essential part of Southland’s culture, she said.

“The thing is, we are in this community, and even though every single person we invest in may not come inside our facility, we want to make sure we are still a part of that community,” Catron said. “We do things just because they’re the right things to do. That’s what corporate social responsibility is about.”

The Stalwart

For nearly 120 years, Oaklawn Racing Casino Resort has welcomed guests from all corners of the country. Most of that time, the attraction was horse racing, but as each new chapter of Arkansas wagering unfolded – from simulcast racing to games of skill to present day – Oaklawn has kept up with the times.

So, it should come as no surprise that even with its new hotel and expanded casino barely broken in, property leadership is already looking for what’s next.

“At Oaklawn, we always want to embrace change,” said Wayne Smith, general manager. “We just opened up a brand-new stateof-the-art sports bar with Top Golf, ax throwing, shuffleboard and nearly 100 TVs. We’ve added that amenity as all-ages as well, so you don’t have to go to the casino. We have a luxury spa. We have an event center that does banquets and group events and also will do concerts.

“And we have restaurants that, in my opinion, are second to none in Arkansas. Oaklawn has not always been known as a culinary destination. We’ve got phenomenal chefs now and a new executive chef. So, our culinary aspect is going to be a focus for us in the coming 12 to 24 months.” Smith said such additions are not just for the sake of filling up square footage, but calculated business decisions to allow Oaklawn to remain competitive. In November, Oaklawn ranked second or third among Arkansas properties across various gaming categories. The company’s big winner of late is its mobile sports wagering. While rolled out much later than its competitors, action quickly reached par with other casinos. Per the CGS/EGS report, sports handle jumped from about $800,000 in September 2022, its first month, to $2.7 million in November. Such numbers illustrate that while Oaklawn is certainly holding its own, the competitive landscape is a far cry from the decades when the property had a built-in exclusivity – live thoroughbred racing – now just one attraction among many.

“There’s competition there,” Smith said. “We’re very fortunate to have horse racing in Arkansas, but regionally, you’ve got Louisiana, Texas, Oklahoma and Kentucky all running horse racing at the same time we are. Then, when you look at casinos, we have one an hour or so away from us, and there’s probably 20-plus casinos within a four-hour drive of this property. So, we compete very heavily in the casino space too.”

For everything that Oaklawn has done to keep up with the Joneses, it still holds some inherent advantages the competition can’t match. Oaklawn enjoys the kind of instant name recognition only a century-plus in business can create and anchors the many other attractions within arm’s reach in Hot Springs, epicenter of the state’s tourism.

“What we’ve been able to do is position ourselves as a prop-

erty that can garner a regional destination for people who like to travel, who like to drive,” Smith said. “When you look at the drive time from Hot Springs to Dallas, to Memphis, to Nashville, to Tulsa, Oklahoma City or Shreveport, we’re four to five hours max from anybody. We’re finding that our travel patterns now are leaning more and more towards the driving position, particularly regionally.

“Then, when you have a state like Arkansas, which has such natural beauty, and you have a town like Hot Springs that is the number one tourist attraction in the state of Arkansas, the opportunity is there for us to garner a different clientele than we’ve had in the past. We have already seen some nice growth regionally over the last 12 months since we’ve had our resort fully open.”

Despite everything that’s new, Oaklawn still retains a feeling of familiarity, something Smith chalks up to its lineage of family ownership dating back to 1916. With more places than ever to place a bet – all of them offering essentially the same odds and options – it’s another way the Arkansas landmark is setting itself apart.

“Our ownership is highly unusual in today’s world; from Oklahoma to Mississippi to Louisiana, there might be a single tribe that owns a property, but I don’t know of a single owner in our region,” Smith said. “It takes a lot of guts for somebody to want to do that and support it the way that our ownership does with racing number one. The racetrack is the reason why Oaklawn is here; it’s the reason why the casino and the resort are here.

“Quite honestly, we are very unique. It’s a model that isn’t copied much around the country, if at all, particularly with just one site. But without invested ownership it just would never work. We’re very, very fortunate to have that type of ownership here.” The Contender

The forthcoming $225 million Legends Resort and Casino in Pope County will change the literal and figurative landscape of the River Valley. Boasting 200 hotel rooms, 50,000 square feet of gaming, a 15,000-square-foot event center and an outdoor music venue to hold 5,000, the project will create 1,000 jobs and generate untold millions in tax revenue and direct contributions to local nonprofits. The company forecasts an overall economic impact for the state of more than $5 billion during the property’s first 10 years.

But in the burgeoning arms race found throughout the state’s casinos, those facts alone are not that unique. What is noteworthy is the Legends project is finally being built at all following years of legal wrangling in a dizzying saga where millions were spent and billions hung in the balance.

Chuck Garrett, CEO of Cherokee Nation Businesses, is happy to be at the end of such an ordeal but he still can’t quite wring the weariness out of his voice discussing the three years it took to get here without a single shovelful of dirt yet turned.

“If you’re asking if I see a silver lining to all that, the short answer is no,” he said. “If I could choose to have not had a delay and had a straight line to develop and open the resort, I would have preferred that.”

As grueling as the litany of (mostly resolved) legal challenges has been, it has done nothing to temper CNB’s optimism about Legends. Garrett said from the beginning, the company was only interested in Pope County, noting its location would dovetail with existing CNB properties in Oklahoma.

“We were exclusively focused on Russellville for several reasons,” he said. “One was the proximity to Interstate 40, along which we have two other properties. That, we felt like, was a good corridor for us strategically to grow.

“Secondly, Cherokee Nation has a historic connection to Pope County dating back to the mid-1800s. There are some cultural connections that were of interest to us to pursue as part of our overall tourism effort.”

The Russellville property anchors an exciting new chapter in the history of CNB, one where the company is actively growing from a clutch of 10 casinos in one state to a regional operator. In addition to building Legends, CNB has also purchased the Gold Strike property in Tunica, Mississippi.

Garrett said this growth reflects trends in the gaming industry as a whole, moving from one or two national hotspots dominated by national brands to a network of regional players providing more hands-on management and localized oversight.

“What you’re seeing are states that haven’t historically had legal gaming recognizing the tremendous economic impact that gaming can have from employment and other economic factors,” he said. “You’re seeing more and more states embrace that. That has resulted in a fractured market and created some opportunities for operators like us.

“We’re closer to the consumer in ways that national and international gaming companies aren’t. I think it’s created some really interesting opportunities for us and others that have history in those types of markets.”

Garrett said patrons of the Russellville property will notice right away how this localized strategy is expressed in the architecture and décor of the place.

“What we have tried to do is focus our branding on the consumer who is local, who is present there in that geographic area,” he said. “For example, Cherokee Casino within the Cherokee Nation, which is logical. Hard Rock, which is in Tulsa, is our flagship property and is a more urban destination.

“Legends, we felt like, was an interesting opportunity to focus on the unique aspects of Arkansas and the history of Arkansas. You’ll see references to famous athletes, famous musicians and other individuals who have made an impact, who originated from Arkansas. Some of the architectural features will be a nod to the beautiful Arkansas landscape. You’ll see water, you’ll see some very unique stone features and some other aspects that look and feel like Arkansas.”

With the one final legal action dragging at the project’s hem winding down, Legends Resort and Casino is primed to begin construction soon. The entire project will be built in one phase by Arkansas-based CDI Contractors and take 18 to 24 months to complete. Talking about it, Garrett’s tone perks up.

“You’re going to see a beautiful, cutting-edge facility that’s going to have a heck of an economic impact in the community,” he said. “Some guests will come just for entertainment and some will come to game. We welcome them all.”