The Native American tribe running the Mohegan Sun resort casino in Uncasville has expanded into New Jersey while its Massachusetts expansion plans are slowed by bureaucracy and competition.
The gaming arm of the Mohegan tribe — the Mohegan Tribal Gaming Authority — announced on Aug. 7 it is taking over operation of the Resorts Casino Hotel in Atlantic City, the oldest established casino in New Jersey, in an agreement with the Resorts owner.
The move gives MTGA three active casino properties with the Uncasville resort and Mohegan Sun at Pocono Downs in Pennsylvania. MTGA also has two other operation agreements with tribes in Washington state and Wisconsin, although those properties aren’t built yet.
“From their perspective, it certainly makes sense to diversify across the Northeast,” said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts Dartmouth. “Mohegan is certainly recognized as a quality manager of casinos.”
MTGA choose to diversify as competition in New York and New England is eroding the revenues and customer base at the premier property in Uncasville. Its subsidiary — Mohegan Gaming Advisors — is trying to land contracts such as the one with the Resorts Casino Hotel.
“We are excited to have this commercial contract,” said Mitchell Grossinger Etess, MTGA chief executive officer.
Part of that diversification plan includes MGTA owning and operating another casino in Palmer, Mass., but the chances of the tribe obtaining that license any time soon — if at all — are decreasing. Making matters worse, if the tribe loses the competition for the license to a casino in Springfield, Mass., that locations proximity to Hartford would further eat into the Uncasville resort’s revenues.
Massachusetts passed legislation authorizing casino gaming in November, but the state has been slow to award the licenses. The Massachusetts Gaming Commission now plans to award gaming licenses in October 2014 at the earliest.
The national average from legislation passage to casino openings is 18-24 months in other states, but Massachusetts could be looking at five years or more in its timeline, Barrow said.
“That would be close to the all-time record, although I think Pennsylvania was slower,” Barrow said. “You could be talking about no casinos in Massachusetts until 2016.”
Massachusetts will award three operating licenses for resort casinos based on geography. Immediately after the legislation passed in November, MTGA was considered the frontrunner for the western Massachusetts license.
Since then, serious contenders for the western license have emerged, including four in Springfield, which have natural advantages over the Palmer proposal, Barrow said. Springfield is further from Boston where a casino license is expected, plus Springfield is closer to the population centers in Hartford and Albany, N.Y.
One of the five commissioners on the Massachusetts Gaming Commission awarding the licenses is a former business development director for the Springfield city government.
“I don’t know if (the Mohegans) are necessarily the frontrunners anymore,” Barrow said.
If a Springfield casino wins the western license, that could further erode the premier Mohegan Sun resort since Springfield is closer than Uncasville for many Connecticut residents, including those in Hartford, Barrow said.
“Depending on where you put a casino in western Massachusetts, there is a large portion of the population of Northwest Connecticut that are a lot closer to a Springfield casino than Mohegan Sun,” Barrow said.
Mohegan Sun and Foxwoods Resort Casino in Mashantucket are estimated to lose about 15 percent of their gaming revenues to Massachusetts casinos, but Etess said he couldn’t speculate on how much extra Mohegan might lose if one of the Massachusetts casinos is located in Springfield.
“There’s no way to have any specifics on that,” Etess said.
MTGA has worked to put forth its best proposal to obtain the western Massachusetts license, Etess said, and the tribe considers itself a contender still.
“We are not surprised by the competition,” Etess said. “We never thought that this would be a solo effort.”
The tribe is working on how to take advantage of its new presence in Atlantic City. The Mohegans are the first Native American casino operators in Pennsylvania and New Jersey.
The situation creates efficiencies where MTGA can get discounts from performers by booking shows at all three locations, Etess said.
The Mohegans don’t plan to renovate the Resorts Casino Hotel along the lines of the themes in Connecticut and Pennsylvania, Etess said, as the property already has a strong history and has been made up in a 1920s theme. The main MTGA influence will be training and employee attitude.
The marketing opportunities among the three properties are one of the best reasons for taking over operations in New Jersey, Etess said. The Player’s Club cards can be used interchangeably at all three locations, giving regular Connecticut and Pennsylvania customers a reason to head to Atlantic City.
“If you are a Pocono visitor and want to go visit the beach, you can do that,” Etess said.
