Tuesday, October 20, 2009

Mohegan's Pennsylvania Slot Revenue Flat

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For much of the past year, slot machine revenue at the Tribe's racetrack-slot parlor in Pennsylvania has shown increases over the same period in the prior year. Those year-over-year increases in monthly slot machine revenue at the Pennsylvania facility are likely to change.

Those monthly increases in slot revenue over the past year have been based on double the amount of slot machines in use at the Pennsylvania facility over the last year compared to half that number in use in the previous year. The doubling of slot machines, to about 2,500 machines, certainly contributed to the increased slot machine revenue at the Pennsylvania facility while that same logic did not apply to Mohegan Sun, where the additional 650 approximate slot machine expansion in the August 2008 Casino of the Wind did not stem the year-over-year losses in its monthly slot reports.

One year has elapsed since the Tribe doubled the number of slot machines at its racetrack-slot parlor in Pennsylvania so now the facility will be comparing slot revenue based on approximately the same number of machines in use for the prior year.

Since the expansion took place just over a year ago in July 2008, this past August was the first full month in which a slot revenue comparison can be done to the same month in the prior year that included approximately the same number of slot machines.

Just over a year ago in August 2008, the first full month after doubling the number of slot machines to about 2,500 machines, was about $20 million. That same month this year, August 2009, slot machine revenue declined to $19 million.

Monthly slot machine revenue is often compared to the same month of the prior year because of the cyclicle nature of the revenues, always higher in the summer months and always lower in the winter months.

These figures are based on the money won from customers during those months less promotional slot play and does not take into account any expenses, including taxes which eat up about half of those slot revenues alone.

While August showed a small decline in revenue over August 2008, this past September saw a modest slot revenue increase over September 2008.

Slot machine revenue for September 2008 was about $17 million and in September 2009 slot revenue was about $18 million.

Slot revenues are the Mohegan Tribal Gaming Authority's largest source of revenue. MTGA reported last week that fiscal year 2009 combined gross slot revenues at both the Pennsylvania facility and Mohegan Sun are "expected to range between $977 million and $1.02 billion, a decrease of between 1% and 5% compared to fiscal 2008." The decline in slot revenue at Mohegan Sun was partially offset by the increase at Pocono Downs.

The Pennsylvania racetrack-slot parlor also substantially increased its slot play promotions since last year. These slot play promotion figures are deducted from slot revenue to arrive at the figures described above as slot revenue. In August 2008, slot play promotions totaled $566,000 while in August 2009 that figure grew to $3.3 million. In September 2008, slot play promotions were $897,000 while September 2009 slot play promotions totaled $3.3 million.

If anything is a sure bet in Pennsylvania its that the state will allow table games at the slot parlors. The addition of table games will attract a broader customer base and could allow some relief to the high tax rates paid by the slot parlors.