Monday, March 10, 2008

Pocono Downs Master Plan Flawed From The Start

Feather News

The attention to the Mohegan's Pocono Downs' slot machine win per day of $412 needs to be taken in context. That average win per slot machine of the 1,200 slot machines in the Pocono facility is said to be the highest daily win per machine in the Northeast United States.

What is rarely said is that this statistic is not a proud achievement because it shows that too few slot machines were installed in the Poconos facility. The tribe is believed to be losing as much money in Pennsylvania as it did before the slot parlor was opened in November 2006. Prior to the opening, the Tribe was paying a tremendous amount of interest expense on the amount borrowed to purchase the property without any slot machine revenues to cover that amount.

Every other slot parlor opened in Pennsylvania has opened their doors with at least 2,000 slot machines with the exception of one slot parlor that has just over 1,800 machines. The Pocono Downs facility is permitted to have up to 5,000 slot machines. Instead of two construction phases to reach that target, if desired someday, the Mohegan Tribe would need four construction phases to reach that level.

It is also distressing to note that the Tribe projected a much lower win-per-machine prior to the opening which, of course, would have resulted in much larger losses at the facility. It may be possible that, with the addition of many more machines, the property may one day become profitable.

Note: The $412 win per slot machine figure is for the period of November 14, 2006 (the date of the Pocono Downs slot parlor opening) through December 31, 2007, according to MTGA statistics. After the publication of this article, the tribal government's chief operating officer Phil Cahill stated that after the current expansion is completed, the tribe has no intention of building new space for additional slot machines.