Report: Foxwoods & Mohegan Sun Hard Hit by Regional Gaming Expansion

Report: Foxwoods & Mohegan Sun Hard Hit by Regional Gaming Expansion

Foxwoods Resort Casino and Mohegan Sun Casino, once the two largest and most successful casinos in the world, are bearing the brunt of the northeast’s expanding gaming market with combined drops in revenues and the workforce of almost 40 percent in the last eight years – and conditions aren’t likely to improve any time soon, according to a new report.

Increasing regional competition and the recession have caused the decline at Connecticut’s two Indian-owned gaming facilities, according to the 11th annual edition of the Northeastern Casino Gaming Update, which was released last week. The report is published by the Northeastern Gaming Research Project.

Dr. Clyde W. Barrow, an owner and general manager of Pyramid Associates, LLC, wrote the report. Barrow, who specializes in gaming industry analysis, established the Northeastern Gaming Research Project while previously serving as director of the Center for Policy Analysis at the University of Massachusetts, Dartmouth. The Project has continued as an independent research project sponsored by Pyramid Associates.

“The Project continues to note that the New England casino gaming market is developing and changing as a result of two recent developments: (1) the lingering impact of the Great Recession (December 2007-June 2009), which continues to depress discretionary spending on casino gaming and (2) the emergence of an increasingly competitive Northeastern gaming market that encompasses both the New England and the Mid-Atlantic states,” Barrow said. “As the national and regional economy continues its slow recovery, state casino gaming policy and individual gaming operators are shifting their attention to questions of regional competition, market saturation, and inter-state cannibalization.”

Foxwoods and Mohegan Sun’s combined revenues fell from an estimated $3.2 billion in 2006 to $1.9 billion in 2014. During that time new and expanded gaming facilities developed in surrounding states. Two massive slot parlors opened in metro NYC – Empire City Casino at Yonkers Raceway and Resorts World Casino New York on Long Island. Rhode Island’s Twin River Casino became the third largest slot parlor in the United States and then added table games to complement its expanding array of video lottery terminals. In Maine, small commercial (non-Indian) casinos opened in Bangor in the north and Oxford in the southwestern part of the state, pulling in a lot of the casino spending by their own state residents, who used to travel to Connecticut in larger numbers. Massachusetts and New Hampshire residents, meanwhile, spent their gaming money at the more convenient destinations in Rhode Island and Maine, the report says.

Barrows points to the rise and fall of casino gaming in New Jersey as the “catalyst” for Connecticut. Gaming in Atlantic City expanded from 1978 to its peak in 2006, when it hosted 12 casinos that generated $5.2 billion in gross gaming revenue to $2.7 billion (-48.1 percent) in FY 2014. By last September, however, four of the city’s 12 casinos had closed, including the $2.4 billion Revel, which was hailed by many gaming experts and public officials as the key to Atlantic City’s renaissance. The city lost 9,000 jobs because of gaming revenue losses and casino closures.

At Foxwoods, total revenues dropped by 43 percent, or $685 million, in the last eight years, from an estimated $1.6 billion in CY (Calendar Year) 2006 to $892 million in CY 2014. Total revenues at Mohegan Sun Casino declined by 35 percent, or $545 million, during that time from an estimated $1.6 billion in CY 2006 to $1.0 billion in CY 2014.

The plunge in revenue at Connecticut’s two casinos resulted in a huge reduction in the workforce. Foxwoods employed 12,800 people at its 2006 peak, but currently employs 7,558 peoples – a -40.9 percent decrease in the number of jobs. Mohegan Sun employed 10,500 persons at its 2006 peak, but now has 7,205 employees – a -31.4 percent decrease. This total of 8,537 jobs lost since 2006 “is effectively a transfer of jobs from Connecticut to the new gambling venues in New York, Pennsylvania, Rhode Island, and Maine,” Barrows said.

And the decline is likely to continue, the report said. A new $800 million MGM casino will open in 2017 in Springfield, Massachusetts, less than half an hour from Hartford, Connecticut’s capitol city. A proposed hotel at Rhode Island’s Twin River. Casino, more casinos in New York City and Albany, and a proposed casino in southeastern Massachusetts owned by the Mashpee Wampanoag Tribe all pose additional challenges to Foxwoods and Mohegan Sun so that “it is possible that up to one-third of the Connecticut casino’s remaining customer base, including residents living in the Greater Hartford area could be lost to new competition — all things remaining the same,” the report said.

Currently, four in 10 of Foxwoods’ visitors and three in 10 of Mohegans’ are from Massachusetts or New York.

“The gambling arms race in the Northeast has essentially been a war waged against Connecticut and New Jersey – and, for Connecticut, that arms race will continue,” the report said.

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