Competition from a rising list of casinos in New England, but particularly in Massachusetts is forcing tribal casinos such as Foxwoods to change their business plans and switch over to a larger emphasis on entertainment and good food.
That’s the conclusion of Foxwoods CEO Felix Rappaport, who commented to the Metro Hartford Alliance, “This business has always been about entertainment.” Both Foxwoods and the Mohegan Sun are scrambling to make adjustments to a new competitive landscape—so much so that the former archrivals are now partners in a plan to jointly operate three satellite casinos along Connecticut’s border with Massachusetts. The plan still needs to be sold to the legislature, but many lawmakers are on board.
Besides a casino resort that MGM is getting ready to build in nearby Springfield, and the $1.7 billion resort Wynn plans in Everett, next to Boston, competition beckons from Rhode Island where Penn National will open a racino next month.
For two decades the tribes had the playing field pretty much to themselves, and as result built two of the largest casino resorts in North America. However, now they face losing as much as $700 million a year to competition in New York and the Bay State.
Recently the tribes forwarded a study to lawmakers that claims that if the three satellite casinos are built they could stop the great majority of revenue from leaving the state.
The Mashantucket Pequot Gaming Enterprise and the Mohegan Tribal Gaming Authority jointly funded the report. It estimates it would cost $300 million to build the casinos and equip them with 2,000 slots apiece, 50 table games, and 15 poker tables, but would save 88 percent of the revenues expected to be lost to the new competition.
One such casino in the northern part of the state would generate over $300 million in gross revenues and create over 2,000 jobs, says the report, prepared by Clyde Barrow, a longtime gaming expert in the region. Barrow’s report did not focus on any one town, although several have been mentioned as possible casino hosts.
Instead it focused on three generic locations near three interstate highways. “There are going to be some marginal differences, but they’re not going to change the numbers I presented in this report,” Barrow told a conference call of reporters. “Whether it’s Enfield or Windsor Locks is not going to make a big difference.”
Several communities have shown interest, despite the lack of a concrete bill yet in the legislature. One of them is a $138 million casino in East Hartford, 25 miles from Springfield proposed by Anthony W. Ravosa Jr.
Barrow’s report emphasizes the vital importance of convenience to attracting players to the satellite casinos, rather than their rivals.
Mohegan Tribal Chairman Kevin Brown cited the “compelling numbers,” of the report and how it maps out of what needs to be done to save thousands of jobs.
While not as large as either Foxwoods or the Sun, these casinos would also not be the “box of slots” that some critics have charged. According to Barrow, “While not of the scope and scale of Mohegan Sun and Foxwoods, these would be considered significant-size casinos, about the size of an average Atlantic City casino.”
Building such casinos will strain the resources of both tribes, he said, especially to get them online by 2017 when the MGM Springfield is due to begin operations. However, once the legislature authorizes the casinos, financing will likely become available.
Other reports have estimated that the tribal casinos could lose 9,300 jobs to the new competition. One such report said that about 7,000 of those jobs could be saved if the satellite casinos are built.
The Connecticut Mirror has quoted Senate President Pro Tem Martin Looney as saying that the Senate is unlikely to vote for more than one casino this year.
Barrow actually considered such a contingency in his report, a hypothetical casino north of Hartford. It would “recapture” slightly more than half of the revenues that are expected to be lost—about $301 million, he wrote. Such a casino would probably attract about a third of those who might instead cross the border to visit the MGM Springfield, Barrow told the Hartford Courant.
On the other hand, the state would actually profit by having three casinos being taxed at 25 percent. Without any, the state would lose about $100 million annually. With all three, it would actually come out $25 million ahead. One reason for that is that these casinos would pay normal taxes because they wouldn’t be operating on sovereign tribal land.
As Barrow put it, “From the state’s perspective, the more gaming they move out of Foxwoods and Mohegan Sun, the better they are from a tax collection perspective.”
Only three weeks are left for the legislature to act this year. It adjourns on June 3. Senate Majority Leader Bob Duff last week commented, “I think that we’re very close to bringing something to the floor. The legislation will “probably be more of a two-step process.”
