Two and a half months after Mohegan Sun opened a temporary FanDuel Sportsbook in Connecticut, followed by an online and mobile statewide launch of sports betting and iGaming, Yogonet spoke with the CEO of Mohegan Gaming & Entertainment (MGE), Ray Pineault, to have first assessments of that expanded market; Las Vegas; plans in Ontario, Washington, Korea; synergies and competitiveness regarding neighboring states; and new challenges for 2022.
Though he notes it is still too early in the process in Connecticut, he says “we are very pleased with the performance that we’ve seen so far”, “very happy with the receptivity we’re seeing from our guests. And I would say that what we’re seeing preliminarily is actually somewhat exceeding our expectations for this early stage of the offering.”
In November, the casino reported a rise in slot-machine revenue of 42.9% in a year-over-year comparison, though 11% down from pre-pandemic numbers. When asked if the availability of sports betting had driven traffic to the casino, Pineault says they are actually seeing a crossover, and that they had always intended to enter into this new markets with synergistic opportunities between land-based and mobile applications. “We’re seeing that our guests are taking to the mobile app as well as continuing to visit our brick-and-mortar property. And we’ve set it up in a manner to work cooperatively together to reach our guests in an omnichannel fashion. The FanDuel partnership and the applications that we’ve launched in combination with them have worked in a manner that we intend to cross-sell our bricks and mortar property on the app and on the application.”
MGE CEO anticipates that the permanent sportsbook is on track to open this winter, targeting a date before the Super Bowl, and it will be the largest FanDuel retail sportsbook in the United States with 11,000 thousand square feet of space, making it one of the largest in the United States. “However, I want to provide a bit of a cautionary tale. You’ve probably read or heard a lot about the supply chain issues and it’s not anything that we’re not experiencing. We’ve been affirmed by all of our suppliers that they will have the materials we need to complete the room at the time that they’ve promised us. But we always remain cautious that something could come up as a fly in the ointment,” he explains.
Moreover, consolidated Adjusted EBITDA for the fourth fiscal quarter of 2021, ended on September 30th, was the highest in Mohegan Sun’s 25-year history. Since this only included one day of sports wagering from the Connecticut property, Pineault attributes most of this record to the reopening performance of its brick-and-mortar properties in Canada, after the jurisdiction was closed for over 16 months.
When asked about the upcoming mobile sports betting market in neighboring New York state, expected to go live before the Super Bowl, Pineault says: “We’ll see if they hit that date. I would say that between our gaming, our sports wagering and our ability to get into the market first, our ability to connect with our existing guests, along with our ability to demonstrate and showcase our brick-and-mortar facility to New York, Massachusetts, Rhode Island residents is certainly a tremendous benefit for us and something that we see. The synergies will continue to attract guests from all of those states in the neighboring states, including New Jersey, New Hampshire. And we’ve always had a good visitation from all of those states, and we expect that to continue and continue to increase as we expand our offerings and provide the best gaming destination resort in the Northeast.” The CEO also sees Massachusetts, where legal sports betting is currently under discussion and Mohegan “already serviced many guests,” as an opportunity, depending on the tax rates and the availability of skins.
When Mohegan Digital was created in July, President Rich Roberts told Yogonet that their goal was for Mohegan Digital to introduce online gamers to its brick-and-mortar property, providing a full 365-degree retail and digital experience. Yogonet now asked if MGE is looking to gradually diminish its core reliance on Mohegan Sun land-based property, which has generated $25.4B in net revenue throughout its 25 years and attracts about 9 million guests per year, towards an omnichannel presence. “When you think about the total revenue input from Mohegan Sun, Connecticut will probably become a smaller portion of the total revenue. But we actually expect that the overall revenue to the Connecticut property will increase with digital gaming because we’ll be able to have that omnichannel approach to our guests, we’ll be able to engage our guests through multiple mediums now and we’ll be able to gain a greater share of their entertainment wallet and we’ll also increase their visitation,” Pineault replies.
The CEO further explains the synergies started from day one between land-based and digital gaming, including sign-up areas at the brick-and-mortar property so that visitors could download the app and “become a part of our omnichannel approach.” On the digital app, Mohegan offers benefits at the property, such as the opportunity to get tickets or a box to a show; reward dollars and earnings from digital gaming for hotel rooms or food offerings. And the company is in the process of integrating its rewards program between digital gaming and its property into one, which is expected to launch soon.
Furthermore, Mohegan Sun Casino at Virgin Hotels Las Vegas has been open for less than nine months, and Pineault fully expects that it is going to continue to grow as we come out of the pandemic, Las Vegas’ conventions come back and guests become more comfortable with traveling. “We’re very pleased with how Las Vegas has been going. It’s been a great experience being in Las Vegas. We’ve always wanted to be in Las Vegas, which is such an iconic gaming destination.”
Recently, the California-based San Manuel tribe received approval from the Nevada Gaming Commission to buy the Palms, thus becoming the first tribal operator to own a Las Vegas casino. “I would never say that we won’t own another property in Las Vegas or look at other opportunities because we’re constantly looking at opportunities. I have nothing to announce today, but we’re constantly looking for opportunities, whether it be in Las Vegas or any other jurisdiction throughout the world to bring our brand and bring our guest service.”
MGE has recently announced the closing of financing to develop the INSPIRE Entertainment Resort on Yeongjong Island in Incheon, South Korea, expected to open in 2023 as the largest IR in Northeast Asia once completed, and the first American IR launched in Korea. “If you think about Asia in general, it’s an underserved market when you think about the number of gaming operations per resident. Asia is the most underserved market in the world, and Korea was a perfect opportunity for us to enter into the Asian market. It is a foreigners-only market now. It’s a law in Korea, but that law is subject to change. If that were to ever change, this would be a grand slam, not a home run. Being attached to the airport right at Incheon, which is one of the busiest airports in the world, and being right there at that property, we’re confident that this is going to be a destination for travelers throughout the world, and we’re building a fully integrated resort and entering that Asian market.”
In North America, MGE is currently preparing to go live in Ontario. “Our digital team has been working tirelessly to be prepared to launch when it’s permitted under the new regulatory regime. The province has announced that they hope to be ready by the next quarter, so by the end of March 2022. When that should occur, we’ll be prepared to enter that market and we look forward to entering it. Having two properties in Niagara, which is a large city on the Canadian American border, and with the largest database in that region, we think that we’ll be highly competitive in that market, which will be an open market for anybody to enter.”
As for the Washington market, Mohegan has been working with ilani and the Cowlitz tribe on opening an on-premise sportsbook. “We have a partner selected, we are finalizing the agreements. The sportsbook is being finished to be built out to be offering that, and we hope in the next quarter to also be able to open an on-premise sportsbook with Ilani in combination with Ilani and the Cowlitz tribe in Washington state.”
Looking ahead, when it comes to challenges coming up for 2022, Pineault cites Covid-19 in another resurgence and the fears over a new variant, Omicron. “We’ll see how that plays out in the coming months, but it’s something we’re going to have to continually deal with and make sure that we’re addressing. There have been concerns over supply chain issues and making sure that we can get products in a timely manner and at a reasonable cost and in the United States. And I’m sure throughout the world there continue to be tight labor markets with the great resignation, with people moving, and we continue to make sure that we’re able to staff our properties appropriately and make sure that we can deliver the world-class guest service that we’ve always been known for,” the CEO concludes.
Watch the full video interview with MGE CEO Ray Pineault on our YouTube channel.