December revenues reflect big hits at Foxwoods, Mohegan Sun as patrons change spending habits
December’s slot-machine numbers at the region’s tribal casinos were anything but pretty Thursday, especially those posted by the Mashantucket Pequot Gaming Enterprise, whose monthly win slipped below the USD 50 million mark for the first time since December 1998.
The enterprise, which since May has included both Foxwoods Resort Casino and MGM Grand at Foxwoods, reported a December slots “win” – the amount kept by the casinos, usually 8 to 9 percent of the total wagered – of USD 44.9 million, down 19.3 percent over December 2007.
The Mohegan Tribal Gaming Authority, the entity that manages Mohegan Sun, reported a December slots win of USD 63.1 million, a 4.3 percent decline over the previous December. It was the lowest one-month total for the Sun since January 2005. Typically, November, December and January are the lowest-yielding months of the year when it comes to slots revenues.
Mohegan Sun and the Foxwoods casinos forwarded 25 percent of their month’s win to the state, nearly USD 15.8 million and more than USD 11.2 million, respectively.
”The decrease is less than we’ve seen lately,” Mitchell Etess, Mohegan Sun’s president and chief executive officer, said of the Sun’s year-over-year decline. “But it does come after December 2007, which was the worst month (year-over-year) we’ve ever had.”
Indeed, Mohegan Sun’s USD 65.9 million slots win in December 2007 was 18.8 percent less than it reported for December 2006. For the 12 months of 2008, Mohegan Sun’s slots win totaled nearly USD 843 million, down 6.5 percent over 2007.
Foxwoods‘ December 2007 win was off 17.1 percent from December 2006. For the 12 months of 2008, its win was USD 728.1 million, 7 percent less than in 2007.
The recession began in December 2007, as determined by the National Bureau of Economic Research.
Etess said he was “somewhat gratified” that Mohegan Sun’s slots decline was far less steep than those of its competitors at Foxwoods and in Atlantic City, where casinos last week reported an 18.7 percent decline in December slot winnings.
”I think we’re still providing a very quality product,” he said. “We’ve got options for people to entertain themselves at various budget levels. We had a lot of entertainment programming in December that brought a lot of people to the building. But there’s no doubt we’re seeing people alter their spending habits.”
Etess said Mohegan Sun also had success marketing its retail shops in December by direct-mailing promotions to those in its database. He said poor weather the weekend of Dec. 19-21 and on New Year’s Eve might have kept Mohegan Sun from posting a year-over-year gain in slot winnings for the month. Christmas falling on a Thursday helped business because many people took that Friday off as well, he said.
”Our gaming enterprises continue to contribute significantly to the stability of the regional economy, and I am confident that we will successfully meet the challenges that lie in the months ahead,” Michael Speller, president of the Foxwoods casinos, said in a statement. “… While our foot traffic was somewhat impacted by weather in December, I want to thank our guests for their continued patronage and extend a message of appreciation to all of our employees for their continued commitment and hard work.”
Experts who analyze the gaming industry generally agree that it’s not likely to pull out of its tailspin before 2010.
”It’s a tough economy. There’s no rocket science behind these numbers,” said Joe Weinert, senior vice president of the Linwood, N.J.-based Spectrum Gaming Group. “In Las Vegas, Atlantic City and in southeastern Connecticut it’s the same: Consumers don’t have the money to spend or they don’t want to spend the discretionary dollars they might have.
”So long as the economy is the way it is, this industry is going to continue to suffer. You’re seeing projects shelved, employees laid off, benefits cut, salaries slashed …”
Just this week, Mohegan Sun announced that all of its 9,800 employees would have to take pay cuts in order to avoid layoffs. Foxwoods let go hundreds of employees in 2008.
”If you look industry-wide, you’ll see a shakeout (in 2009),” Weinert said. “Some of the weaker properties will close. What then ultimately happens is that the stronger properties get stronger. It’s natural selection.”
Twin River, the Lincoln, R.I., racino, reported this month that its slots win was USD 28.7 million for December, down 2.4 percent over December 2007. Newport Grand, the only other Rhode Island facility with slot machines, reported a 13.7 percent decline in December slot winnings.