SIGA Feels the Weight of Responsibility During COVID-19
December 17, 2020
By Tom Nightingale
Saskatchewan Indian Gaming Authority CEO Zane Hansen talks COVID-19, closures, and the struggles of operating as a First Nations-aligned non-profit during a pandemic.
For the Saskatchewan Indian Gaming Authority (SIGA), the challenges posed by the COVID-19 pandemic have hit a little differently than for most operators and regulators.
That’s because SIGA is not like most of its industry peers. The authority operates numerous gaming entertainment destinations in Saskatchewan, with the latest, Gold Horse casino, having opened in Lloydminster in 2018. Rooted in First Nations history since its founding in the early 1990s, SIGA has grown to seven casinos and 2,000 employees over a quarter of a century. Today, those casinos generate more than $250 million in revenue and $80 million in net income annually.
But for SIGA, “sharing the wealth” is more than just an idiom. To say they pay it forward would be an understatement.
SIGA operates as a non-profit corporation under Saskatchewan law, meaning that 100 per cent of its profits go to the province’s First Nations and community development. 50 per cent goes to the First Nations Trust, which aims to support economic and social development, justice, health, education, recreation, culture, and other First Nations initiatives in the province. The Trust is administered by an independent board and monitored by the provincial Ministry of Government Relations. The other half is split evenly between the provincial government’s General Revenue Fund, which helps to finance initiatives supporting social and economic objectives such as health, education, and infrastructure, and Community Development Corporations (CDCs). Those CDCs fund charitable initiatives in communities where SIGA casinos are located and are run by independent boards in each community comprised of Tribal Council and local community representatives.
That profit-sharing model goes a long way, too; by October 2017, estimates were that SIGA has contributed in excess of $1 billion to the provincial economy. SIGA CEO Zane Hansen described the corporation’s operations as being built upon solid business principles but come year-end, "a non-profit in the truest sense of the word."
Navigating spring closures
Saskatchewan has been an interesting case study when it comes to how provincial gaming industries have responded to the progression of the COVID-19 pandemic. Along with SaskGaming’s Casino Regina and Casino Moose Jaw, SIGA’s seven properties were forced to close down back in March as the full extent of the pandemic became apparent. It was truly unknown territory.
“From a company perspective, we were thankful that we had solidified our business/emergency continuity planning and we were able to quickly respond and evolve our business for the unprecedented situation,” Hansen recently told CGB. “During reopening, we took a very fluid and dynamic approach to the controls, processes, and offerings that SIGA can present, both on the floor and with back-of-house and central office processes.”
When the casinos opened again in July, the state of play at SIGA reflected that at other casinos around the province and the country. Limited slots and live games were on offer, capacity limits were in place, masks were mandated, and shows and events could no longer be offered. Hansen notes SIGA has adapted well, averaging around 80% of its normal slot machine volumes in November, but that it anticipates things "tightening up" heading into the winter months. Up to this point, the corporation has withstood the effects well.
Hansen acknowledges a strong base of loyal customers and the reduced alternative options for entertainment as factors in maintaining that level. “Players also seem to be staying playing longer average times with a game, perhaps because there are fewer playing spots available with our reduced capacity regulations.”
The pandemic has accelerated certain trends across Canada’s gaming industry and one of those has been an uptick in Electronic Table Games play. That has been seen at SIGA’s properties, too, and Hansen calls the transition to increased ETG play “a positive move.” There are lessons to be learned not just now but moving forward beyond COVID-19. “Certainly, a situation like this makes one revisit how one can leverage technology to support business continuity,” notes the CEO.
The pandemic has also exposed the importance of not having a presence in online gaming, which has yet to be approved in Saskatchewan. SIGA has repeatedly stated the need for the province to modernize its gaming delivery channels. Saskatchewan is one of the last provinces to not have a regional iGaming site. With tangible progress to being made in Ontario and other provincial operators enjoying a spike in online casino traffic during land-based closures, Hansen highlights movement in the iGaming field as an aim moving forward.
Already, though, other steps forward are being taken. Hansen explains how the pandemic has helped SIGA to learn how to optimize capital and better manage overall expenses. “By throwing out the established book and re-inventing processes and controls, we managed to create a much leaner and efficient operational model,” he says. “As a collective, we’ve learned that even stronger teamwork across the organization was essential to navigate through COVID-19.”
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The impacts of a second shutdown
The primary concern of the spring shutdown, Hansen stresses, was the human dilemma of having to reduce the size of SIGA’s workforce due to the initial lockdown and then having to respond with diminished resources upon reopening. That had a profound effect on SIGA’s charitable operations. Casinos were ordered to close on March 16 and remained out of action until July 9; that was a long four months and hit SIGA and its First Nations affiliates hard, says Hansen.
“As a result of the shutdown, First Nations communities already had experienced a significant financial loss,” Hansen explains. It’s worth mentioning here that 65 per cent of SIGA’s employees are of a First Nations descent. That only intensifies the pain felt by tough decisions that have needed to be made, such as the one at the end of August which saw 550 positions permanently eliminated at SIGA as the company underwent restructuring to better survive the pandemic. Hansen notes the company is thankful it was able to take advantage of the federal wage subsidy program to help offset some payroll costs and support employees who were placed on leave during times of disruption.
SIGA had braced well for the continued impact of the pandemic. However, as has been the way in areas of Canada throughout the pandemic, things have changed drastically again in recent days. On Monday, December 14, Saskatchewan announced all casinos and gaming centres must close from December 19 until January 15 at the earliest.
Hansen emphasizes that policy makers do not understand how safe and clean casino properties actually are, and he laments that these new closures will result not only in further financial loss for the company but “a disproportionately negative impact” on provincial First Nations communities. A previous public health order which required SIGA to limit casino capacity to 30 patrons per site meant placing 500 employees on leave; the latest will extend that to another 400-plus employees. “This public health order coming one week before Christmas will only make putting these employees on leave that much more difficult,” Hansen says.
Moving forward through troubled waters
In all, while SIGA is immensely proud of its First Nations and charitable links, Hansen notes that the pandemic has certainly exposed the flaws in the system. “Our current gaming framework agreement is a positive relationship, but it does reflect a vulnerability to the organization in that 100% of the net income is distributed,” he continues. “This leaves little opportunity for reinvestment without borrowing, and certainly creates a cashflow crisis without cooperation to adjust distribution terms in times like these.”
Hansen estimates it will take two years to get back to anything resembling normal pre-pandemic levels of business. He expects to see necessitated restricted operations until a vaccine is widely implemented. Thankfully, progress is finally being made on that front. As for how to progress, the CEO suggests that there are pockets of opportunity for development and First Nation gaming has clearly demonstrated it is in the best position to deliver on these opportunities.
As for many operators in the industry, it’s an almost impossibly difficult time. Hansen concludes by reiterating that SIGA and its casinos are active participants in the Saskatchewan economy and continue to respect provincial guidelines and health and safety requirements. and have gone above and beyond to keep our properties safe. Having said that, he voices optimism that the closures will indeed end as hoped on January 15. “The casino industry has been hit hard by the virus and we have had to make some painful adjustments,” he says. “This closure cannot be sustained over a long period of time with out irreparable damage occurring to the business and its communities.”