Competition heats up in New England

Sep 25, 2007 7:14 AM

For years there has been talk that competition was coming for Foxwoods Resort and Mohegan Sun casinos, which have had a duopoly on Las Vegas-style gambling in the Northeast for more than 11 years. Executives at the two casinos have talked about it, planned for it, and now say they are ready, even welcoming, of new players and jurisdictions.

Why would they want competition?

Because historically gaming markets have grown as capacity has been added.

And competition makes every venue better, the executives say. Look at what has happened in Connecticut.

As each gaming empire has expanded, the other has played catch up. In addition to the slot machines, roulette wheels and blackjack tables, Connecticut’s casinos boast luxury hotels, spas, convention centers, gourmet restaurants, shopping arcades, and multiple options for entertainment.

They are what industry analysts like Cory Morowitz of New Jersey calls "entertainment superstores." And with more than 25 million adults living within a 180-mile radius of the Northeast, guys like Morowitz see the potential for gaming from Delaware to Maine to grow to a $12 billion industry.

Today, Foxwoods and Mohegan Sun are among the largest casinos in the world. On average, 35,000 plus customers visit each of the two resort destinations every day of the year. And combined, they currently gross $2.5 billion annually, just in gaming revenues.

Industry insiders believe the New England market alone could grow to $4 billion to $5 billion as more casino resorts open.

Even with more than a decade each in the business — Foxwoods opened in 1992 and Mohegan Sun in 1996 — they are still relatively babes in the industry. Atlantic City has had legalized gambling since 1976, and it’s market today, with similar demographics, is about $5.2 billion.

In mature gaming markets, participating rates average about 45 percent, according to Morowitz of Morowitz Gaming Advisors. That means with 25 million adults in the greater New England area, statistically 11.3 million of them will eventually wager at casinos. And on average, the analysts estimate they will spend about $800 annually doing so.

That is why casino operators are bullish about competition in New England. They believe there is room for growth for gaming in Connecticut, Massachusetts, Rhode Island, New York, New Jersey, and Pennsylvania.

The Mohegan Tribe is already officially in the running to be an operator of one of the three new casino "superstores" proposed for Massachusetts last week by Gov. Deval Patrick. And in Rhode Island, where the former Lincoln Park has been renovated to Twin River, with Simulcast racing and video lottery terminals, there is renewed talk of legalizing Las Vegas-style gambling.

Gaming venues are already open, or on the boards, in Delaware, Pennsylvania, New Jersey, and New York state.

In the winter of 1992, when the Mashantucket Pequot Tribal Nation opened the doors at Foxwoods, skeptics wondered if they’d get enough customers to survive. The tribe got that, and more.

And then when the Mohegan Tribe opened its Mohegan Sun four years later, doubters wondered if there would be enough business to sustain both venues. Clearly, there was.

And now, gambling is all around. And more is not far away.

Doubters still wonder when the bottom will fall out of this casino craze. But the evidence seems to be indisputable — people like to gamble and they like the excitement of casinos.

In southeastern Connecticut, Foxwoods and Mohegan Sun have created 20,000 jobs and spit out huge government revenues. Since their inception they have made $4.2 billion in payments to state coffers, and currently have a combined annual payroll of about $838 million.

There are some people who will always dislike the casinos and their primary goal of separating visitors from their money. And for a small minority, compulsive gambling is a serious problem. It is essential that as the industry expands, so does its efforts to help those with gambling addictions.

But gambling is here to stay. Connecticut has become dependent on casino and lottery winnings to finance government, and for that reason it is good news that analysts see potential for sizeable growth in the Northeast gaming market.

Cal tribes take
their case to TV

With opponents still gathering signatures for ballot measures to overturn their new gambling compacts, four of California’s most powerful tribes last weekend launched a multimillion-dollar television campaign to sell the multibillion-dollar deals to the public.

The advertisements, which emphasize the benefits of the agreements, began airing with prime-time news programs in all of the state’s major media markets, said Roger Salazar, a consultant for the coalition that includes Sycuan of El Cajon, Pechanga of Temecula and two other Riverside County tribes, Morongo and Agua Caliente.

Salazar said he believed other initiative targets also have gone up on TV before a measure had qualified for a ballot, but he could recall no specific examples.

The four tribes already have amassed $11 million on one campaign account, with another $10 million expected shortly.

"This is our opportunity to educate voters about the benefits of the agreements," Salazar said. "As voters understand what these agreements bring to the table, they like what they see."

The pending compacts offer hundreds of millions of dollars in added revenue to the state.

Opponents, including the Pala band of San Diego County, contend they encourage reckless expansion — up to 7,500 slot machines each at Pechanga and Morongo — that could hurt other tribes.