January 21, 2019

Foxwoods, Mohegan Sun say MGM Springfield taking less gaming revenue than expected

Photo | HBJ File
Photo | HBJ File
Mohegan Sun (shown above) and Foxwoods have seen lower gaming revenues since MGM Springfield opened in August.
Photo | HBJ File
Foxwoods Interim CEO Rodney Butler said his casino’s entertainment business has not been negatively impacted so far by the opening of MGM Springfield.
Ray Pineault, President and General Manager, Mohegan Sun

Five-month-old MGM Springfield has poached revenues from Connecticut's two tribally owned casinos, but the impact hasn't been as bad as originally projected, local casino executives say.

Since MGM opened in September, slot-machine revenues at Foxwoods Resort Casino and Mohegan Sun have fallen about 7.1 percent and 6.7 percent, respectively, following years-long declines that have been fueled by changing consumer habits and the opening of competing East Coast gambling venues in Rhode Island, eastern Massachusetts and New York.

However, Foxwoods and Mohegan say their entertainment and hotel businesses thus far remain unscathed by MGM entering the New England market.

That's led to a boastful attitude by local casino executives who have clashed with MGM in recent years on several fronts, including the state's efforts to open a third gaming facility in Connecticut. Mohegan and Foxwoods have received state approval to open a joint casino in East Windsor, which MGM has lobbied strongly against.

"Based on their own comments, they were bringing entertainment to New England like nobody has ever seen, and that's just not happening," said Foxwoods Interim CEO Rodney Butler of MGM's highly publicized grand opening. "They had some great shows to kick off the season, but I haven't seen much going on up there since."

Michael Mathis, MGM Springfield's president and chief operating officer, pushed back against Butler's characterizations.

In a statement, Mathis said the new casino has received an "extraordinary response" since its debut, offering New England's first integrated luxury resort and entertainment complex. As evidence, Mathis cited MGM's successful opening weekend, when it welcomed 150,000-plus guests to downtown Springfield.

"We continue to grow the market with solid visitor volumes throughout our resort," Mathis said. "Our casino, hotel and restaurants continue to reflect impressive numbers of guests eager to experience what our new resort has to offer. Visitors from across the region are responding well to the breadth of our overall entertainment strategy and dynamic programming."

MGM Springfield was feared to take a big bite out of Connecticut casino operations, which is significant because the state receives a 25 percent cut of their slot revenues.

In fact, a 2016 report by the state Office of Fiscal Analysis projected the arrival of MGM would cost the state $68 million in annual revenue. That's on top of steep gaming revenue declines Mohegan and Foxwoods have already experienced in recent years.

Butler and Ray Pineault, Mohegan's president and general manager, said area casino-goers will likely tryout MGM's new $960 million complex over the next year, but they expect to win back many of those guests.

Butler said Foxwoods anticipated its monthly gaming revenues would fall up to 10 percent once MGM opened. From September through December, its seen monthly slot revenues decline 7.1 percent; it doesn't publicly report the performance of its overall gaming business.

Still, that has cost Foxwoods almost $11 million in revenue compared to the same four-month period in 2017.

Mohegan's slot revenues have fallen $13 million from Sept. 2018 to Dec. 2018, compared to the year-ago period.

Meantime, MGM in September, its first full month in operation, reported gaming revenues (including both slots and table games) of nearly $27 million, but it's seen a decline since then, posting $22.2 million in October, $21.2 million in November and $21.5 million in December.

Entertainment unchanged

Despite MGM's assumed impact on gaming, the luxury resort's use of nearby MassMutual Center in downtown Springfield for concerts has not hurt entertainment venues at Mohegan or Foxwoods, local casino executives say.

Ticket sales at the 10,000-seat Mohegan Sun Arena have remained steady since September, helped in part by a notable lineup of shows including Kesha, Blake Shelton, Justin Timberlake and Kelly Clarkson, Pineault said. Attendance there is also expected to be consistent for the pro lacrosse club New England Black Wolves, whose 2018-19 season runs through April.

Mohegan hotels are also maintaining a 95-plus percent occupancy rate, and the casino's new $80 million Earth Expo & Convention Center has been a "tremendous success" during its first eight months in operation, Pineault says.

The 250,000-square-foot complex has lured several well-established exhibitions, including the Hartford Boat Show and Connecticut International Auto Show, previous mainstays at the Connecticut Convention Center in Hartford.

"Knowing what your competitors are doing is important as an organization, but from a strategic perspective, we continue to focus on providing great products and good people, and that doesn't change regardless of who the competitor is that comes online in our industry," Pineault said. "Both the hotel as well as the Expo Center are performing better than we had modeled post MGM impact."

Foxwoods does not release hotel occupancy data, but Butler said on-site hotels are still recording strong occupancy rates upwards of 90 percent.

Sales have also been stable at Foxwoods' 4,000-seat Grand Theater, according to Butler, who said the casino is still booking quality shows and scoring consistent ticket sales.

"Other than their splash at opening, they haven't done a lot of entertainment," Butler said of MGM, suggesting their entertainment drought has helped Foxwoods. "That might be contributing to their lack of performance on the gaming revenue side."

Capitol watch

In addition to tracking MGM's impact, Foxwoods and Mohegan Sun are focused on this year's legislative session, featuring a Democrat-controlled legislature poised to vote on several bills that would benefit Connecticut casinos.

One bill co-sponsored by Senate Democrats would allow Connecticut to bypass the federal government's role in approving changes to tribal compacts required to open a casino in East Windsor.

The Mohegan and Mashantucket Pequot tribes teamed up several years ago to open a joint gaming venue near the northern border as part of an effort to ward off competition by MGM Springfield.

State lawmakers greenlit the East Windsor casino in 2017, but the U.S. Interior Department has refused to sign off on changes to the state's gaming compact with the Mashantucket Pequot tribe, delaying the $300 million project.

State lawmakers are hoping to sidestep the federal government and get construction started.

Also slated for consideration is a bill that would legalize online and brick-and-mortar sports betting at the state's tribal casinos, legislation that is likely to get pushback from anti-gambling advocates and off-track betting parlors and others who may want to host sports-wagering sites.

Mohegan Sun and Foxwoods executives say they are ready to launch on-site sports betting if legislation passes. Their plans, developed by working groups over recent months, include adding kiosks and transitioning race books and electronic gaming areas to accommodate sports wagerers.

"We need to add that amenity, our competitors are already adding it," Pineault said. "To remain competitive in the market, our guests want to have that amenity offering."

Butler, who last year hoped sports betting would be legalized before Sunday's Super Bowl, called the bill a "top priority."

"We are optimistic, because everyone around the table is saying the same thing, and shame on us if we can't figure it out for the state in very short order," Butler said.

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