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Berman, Lyle - Overview, Personal Life, Career Details, Chronology: Lyle Berman, Social and Economic Impact

casinos grand casino minnesota

(1942-)
Grand Casinos, Inc.

Overview

Lyle Berman is the chairman of the board of Grand Casinos Inc., which develops, builds, and manages casinos. He is also the chairman and CEO of Rainforest Cafe, an innovative concept combining restaurant and retail shopping with an environmental flair, including live birds and lush plants.

Personal Life

Lyle Berman was born around 1942 and raised in Minneapolis, Minnesota. The son of Theresa and Nathan Berman, he graduated from the University of Minnesota in 1964 with a degree in business administration. Berman and his wife, Janis, live in Wayzata, Minnesota, and have four children. In October of 1995, the B’nai B’rith, a Jewish organization, honored him with the Great American Traditions award, and in April of 1996 he was named the recipient of the Gaming Executive of the Year award. In 1996 Berman donated $2 million to his alma mater, the University of Minnesota, to create the Berman Family Chair in Jewish Studies and Hebrew Bible in the school’s College of Liberal Arts.

Career Details

Berman started his career working in his family’s leather business, Berman Buckskin. The company flourished with his ideas, eventually opening 27 stores. The family sold the operation in 1979 to W. R. Grace, but Berman continued as president and chief executive officer. Under his direction, the business grew to include over 200 branches across the country. In 1987 Berman bought out the company and the next year, sold it to Melville Corporation for millions, which made it part of Wilson’s: The Leather Experts chain. In 1996 Berman and Wilson’s management bought back the entity from Melville Corporation.

With plenty of business experience behind him, Berman was semi-retired when he went in another direction in 1991, helping to found Grand Casinos, Inc., for which he began serving as CEO. Investing $3 million, he pledged to develop and manage casinos for a Minnesota Native American tribe, the Mille Lacs Band of Ojibwe. In a little over five years, Grand Casinos had grown to include 13,000 employees and owned or operated seven casino resorts in the United States.

Berman’s first casino was built on Lake Mille Lacs, about 90 miles northwest of Minneapolis/St.Paul, but it immediately proved to be too small to handle the number of customers it attracted. He put Grand Casinos stock on the public stock market and raised funds for a building five times the size of the original. “A lot of my friends thought putting a casino up in rural Minnesota was crazy,” he remarked to Richard S. Teitelbaum in Fortune. “But I knew the power of a slot machine.” The company is now listed on the New York Stock Exchange

Berman then opened two casinos in Mississippi: Grand Casino Gulfport, opened in May of 1993, the largest casino to operate between Las Vegas and Atlantic City; and Grand Casino Biloxi, the largest floating casino in the world. In 1996 it opened the third of Mississippi’s three largest casinos, the Grand Casino Tunica. As of 1997 Grand owned and operated these three casinos, plus two casinos on Indian lands in Louisiana, and the Mille Lacs and Hinckley casinos on reservations in Minnesota. To set Grand Casinos apart from other casinos, Berman’s theory was to offer more extras, like golf, restaurants, and hotels. “We want to become known as the biggest casinos with the best amenities,” he noted, according to Wall Street Transcript Digest.

Meanwhile, in 1995 Berman was named chairman of the Innovative Gaming Corporation of America, a video game developer and distributor. Grand Casinos was the firm’s largest shareholder, owning about 17 percent. Berman had also been chief executive officer of the Stratosphere Corporation since July of 1994 and in 1996 he took over as its chairman as well.

Stratosphere, a giant entertainment/casino complex in Las Vegas, was another way in which Grand Casinos was continuing to build its dynasty. This project included a 100-story, 1,149-foot free-standing observation tower, the tallest such structure in the country. David Spanier in the Independent claimed that “it pierced the skyline like a white rocket.” The tower offered a 360-degree revolving restaurant and a roller coaster which zoomed over 900 ft in the air around the outside of the tower.

However, Berman suffered a blow in 1996 when Stratosphere stock plunged, affecting Grand Casinos, which owned about 42 percent of the project. He was caught in a controversy when shareholders learned that while he was selling them on the idea, he was secretly selling his own shares, perhaps indicating that he knew the casino was doomed, he vehemently denied all of the allegations. Berman continued to be optimistic about the project, but nevertheless, it declared bankruptcy and Berman resigned from the board of directors in July of 1997.

Chronology: Lyle Berman

1942: Born.

1979: Berman family sold chain of leather stores.

1987: Bought back leather retailers.

1988: Sold leather stores for a tidy profit.

1991: Cofounded Grand Casinos Inc.

1994: Appointed CEO of Stratosphere Corp.

1995: Named chairman of the board of Innovative Gaming Corporation of America.

1995: Received B’nai B’rith Great American Traditions Award.

1996: Named Gaming Executive of the Year.

1996: Donated $2 million to University of Minnesota.

Rebounding from the failure of Stratosphere, Berman soon became involved with a new entertainment venture as chairman and CEO of the Rainforest Cafe. This intriguing concept blended entertainment, retail, and a “rainforest” theme, complete with waterfalls, lush plant life, colorful live tropical birds, and bird keepers to give talks about the various species for the benefit of patrons and passers-by. It operates under the registered trademark motto, “A Wild Place to Shop and Eat.” As of May of 1998, there were 15 such ventures in the United States and three in Mexico and England, with a number of new stores planned, including expansion into Canada, Hong Kong, and Singapore. Unlike Stratosphere, stocks were healthy in the first year of operation. Also in early 1998, Hilton Hotels was conducting talks with Berman to possibly purchase Grand Casinos, which had seen a sales growth of 24 percent from 1996 to 1997.

Social and Economic Impact

Not long ago, gambling was the almost exclusive domain of Las Vegas, Nevada; Atlantic City, New Jersey; and Reno, Nevada; unless illegal back-room operations, private poker games, and church bingo were counted. Casinos started cropping up on Indian reservations in numerous states after a law passed in 1988 making them legal. As the popularity of casinos increased, more and more people saw that there were substantial profits to be made. Soon, various state and local governments around the nation gave the green light to put up casinos, seeing them as a sure bet for raising much-needed cash.

These added and updated venues have transformed the reputation of gambling. From the glitzy Vegas establishments to the heart of the Midwest, gambling has a new image. Retiree bus trips make frequent stops to these more down-to-earth establishments, but the range of demographics that can be found gambling is not limited to seniors. Moreover, there is an escalating number of gamblers: casinos brought in twice as many visitors in 1993 compared to 1990, according to Corporate Report-Minnesota, and more and more cities saw these numbers as a good reason to add casinos to their business communities. With this rise has come a bevy of social problems, including gambling addicts who rack up thousands in debt. However, a great majority enjoy casinos as just another diversion.

Berman was at the forefront of this new gambling frenzy with the Grand Casinos chain, which brought slot machines and games to rural reservations and added family fun to Las Vegas, which was previously marketed as adults-only. In 1993, Grand Casinos’ 40 percent share of the profits from the Mille Lacs and Hinckley casinos was $10.7 million, an increase of 16 percent from the $9.2 million it took in 1992. By 1997, Grand Casinos sales revenue was over $607 million, with a net income of over $66 million. With Berman’s leadership of the fast-growing Rain-forest Cafe, valued at around $500 million, it looks like he has yet another winner in the entertainment business.

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