The Mohegans have stated their desire to diversify but, instead of diversifying their business, the Tribe is currently content only with seeking geographic diversification of the same business - gaming. All of the Tribe's non-gaming ventures, run by the tribal government, have failed or continue to lose money.
The only non-gaming related venture (excluding the Connecticut Sun basketball team, which loses money according to MTGA statements made to financial analysts) that is currently operational is the child-care facility, which is losing money and subsidized by the tribal government. In the planning phase of the child-care center, the tribal council stated that it would be profitable. Now that it isn't profitable, the tribal government says it was never meant to make a profit. An interesting note is that Tribal members' children are said rank third in terms of priority in getting into that child care center. The children of casino management personnel rank ahead of tribal children in terms of preference, according to sources, and despite the fact that these tribal members - through their tribal government - are subsidizing the child care operation.
The only gaming diversification project that has been rolled out thus far is the Pocono Downs racetrack-slot parlor venture in Pennsylvania. Pocono Downs is losing money after taking into account the hefty interest expense of borrowing money.
The Tribe will learn the success of various diversification proposals this year. Perhaps the next word will come from the State of New York. The Tribe could find out this month if the group it has partnered with will be chosen to operate 4,500 VLT slot machines at a New York racetrack. New York's legislature, which must approve any VLT deal at the Aqueduct Racetrack in Queens, N.Y., leaves session June 23rd - a short two weeks away.
The tribe should also find out this Fall if it will be selected to build and operate a casino in Kansas.
A brief update on the Tribe's various gaming diversification projects follows:
PENNSYLVANIA: Still losing money. A $208 million expansion is expected to open this summer, which will add slot machines and restaurants among other amenities. About $750 million will have been invested in the project upon completion of the expansion. Pocono Downs still has "negative cash flows," according to the tribal government.
WASHINGTON: The Mohegan Tribe teamed up with the Cowlitz Tribe of Washington State to build and manage a proposed $510 million casino in that state. The recently federally-recognized Cowlitz is seeking an initial reservation 25 miles from its headquarters upon which it seeks to build the casino. Numerous opponents to the Cowlitz casino plan, including card rooms and the local host government, may not thwart its coming to fruition. The first major step in the process was completed in late May when the environmental impact statement was made public. A federal determination will follow a public comment period. As of March 31st, the Mohegans have borrowed about $20 million on this project. According to one Bureau of Indian Affairs official, the project still has a long way to go for federal approval but the Feather News has reported since inception that this Washington project should eventually receive approval.
MASSACHUSETTS: The State of Massachusetts voted to abandon a casino plan proposed by the state's governor, however two Massachusetts Indian tribes remain eligible to build casinos under the same federal Indian gaming law that permitted the Mohegan and Mashantuckets to build casinos. One of those two tribes – the Mashpee Wampanoag – is being backed by the Mohegan’s former casino partners and is expected to eventually divert part of the Mohegan Sun’s customer base once it opens its doors. An opening date for a Mashpee casino in Massachusetts depends on many factors that have still yet to be resolved but the Feather News forecasts a Mashpee Wampanoag casino could open within two years.
WISCONSIN: The Mohegan Tribe teamed up with the Menominee Tribe in Wisconsin to build and manage a proposed casino in that state, over 200 miles away from the Menominee Reservation. The U.S. Department of the Interior has stated that Indian casinos not located on or near reservations will not be allowed and this, along with numerous federal denials of other off-reservation Indian casinos put forward by other tribes, puts the Menominee project in doubt. The estimated cost of the casino would be $1 billion according to a Menominee tribal councilor. The Feds simply are turned off by what is being called "reservation shopping." According to statements made by Mohegan officials in April, the head of the Bureau of Indian Affairs - which is part of the U.S. Department of the Interior - gave the tribe promising signals on the project but that official resigned from the Bureau of Indian Affairs days later. The total cost of this project has not been made public. “The sudden resignation of (the head of the federal Bureau of Indian Affairs) Carl Artman leaves in question the future of the proposed Menominee casino project in Kenosh, Wisconsin,” according to a statement in Wuskuso. (Subsequent to this article, we read a February 2008 article in which MTGA's CFO Leo Chupaska said the Mohegans had invested about $9 million in the Wisconsin project. He also stated that $2.7 million is being written off as unreimbursable development costs.
KANSAS: The state of Kansas last year began a process that would result in four commercial casinos - one casino for four distinct areas of that state. The Mohegan Tribe is a partner in a group seeking a casino in one of those zones: Wyandotte County/Kansas City. Five groups are applying to build a casino in Wyandotte County and all of those applicants met minimum standards and agreed to the state’s contract terms on May 27. The proposals have been forwarded to the Lottery Gaming Facility Review Board, which has scheduled a decision by September 19. The Mashantucket Pequot Tribe – through its Foxwoods Development Company - partnered with MGM in submitting a proposal last year for a casino in a different county of Kansas but they refused to agree to the state’s contract terms and have since pulled out. According to a Mashantucket spokesman, “Despite considerable efforts by the MGM Mirage/Foxwoods group and representatives of the Lottery and the State of Kansas, our negotiations did not result in terms for a Lottery Gaming Facility Management Contract that the MGM Mirage/Foxwoods group is prepared to sign, given the size, scope and projected returns for our proposed investment.” Any casino built in Kansas would be owned by the state of Kansas, according to their laws. The Mohegans and their partners announced that their proposed casino would cost $792 million, an increase from the previously announced figures of $770 million.
NEW YORK: The state of New York has accepted proposals from three groups to build and manage a 4,500 VLT slot parlor at the Aqueduct Racetrack in Queens, N.Y. The resignation of former Governor Eliot Spitzer has resulted in a delay in selecting the group that would be given the 30-year management franchise. Any decision would need approval by both the governor and the legislature. New York State Senate Leader Joseph Bruno has recently said that current governor David Paterson is holding up the process. Although numerous self-imposed timelines have lapsed, the legislature’s current session ends in the third week of June so a decision would be expected by that date. The Mohegan Tribe has partnered with a team of Australian horse racing executives, among other entities. Capital Play televised commercials last Fall critical of former Governor Spitzer after it lost the bid to operate racetracks in that state so Spitzer’s resignation gives the group renewed hopes of being in the running for the franchise.
The three groups competing for the N.Y. VLT slot franchise and proposal details (according to The Thorougbred Times) are: "(1) Capital Play Inc. is partnered with Connecticut’s Mohegan Sun casino, Plainfield Asset Management and Extell Development. They have offered the state $100-million up front, but promise a greater return to the state over the life of the 30-year contract... (2) Delaware North, which owns upstate New York’s Finger Lakes Racetrack, has offered the state a $370-million franchise fee. Delaware North is partnered with Saratoga Harness Racing Inc. and runs VLTs at its Saratoga Springs harness track. (3)SL Green Realty Corp. has offered the state $250-million along with plans for a Hard Rock Aqueduct and a $28-million investment to promote upstate New York equine economic development programs such as a year-round training facility and educational initiatives in partnership with colleges and universities."
Seasonal Closing - Because the Mashantucket Pequot Museum and Research Center is closing seasonally this year, the Research Library, the Children’s Library, and Archives & Sp...
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