Catskills gaming could prove Dicey for Connecticut casinos

The state”™s two casinos say they will continue to have the upper hand should the St. Regis Mohawk Tribe win in its bid to open a gambling operation in the southern Catskills of New York state.
However, there is a potential to lose hundreds of millions of dollars according to a university study.
Mitchell Etess, Mohegan Sun president and chief executive officer, said a casino in the Catskills would certainly provide competition but how much is difficult to say at this stage.
“It depends on what their product is and how they market it,” he said. “We”™ve been refining our product for years. We”™re going to make it as difficult as possible for people to decide not to come here.”
The Catskills casino still needs to be approved by U.S. Department of the Interior.
“I think the standard rule of thumb in this business is if you want to compete with an established gaming resort, you need to build it on comparable scale. That”™s one of the reasons we are not worried,” said Bruce MacDonald, spokesman for the Mashantucket Pequot Tribal Nation, which operates Foxwoods.
According to study by the Center for Policy Analysis at the University of Massachusetts-Dartmouth, about 11 percent of Foxwoods”™ customers and 20 percent of Mohegan Sun”™s come from New York state, mostly from the New York metropolitan area and the Hudson Valley.
The Center for Policy Analysis estimated that if the Catskills casino were built, Foxwoods would lose some $189 million a year from New York patrons and Mohegan Sun, $221 million.
Considering the Connecticut state treasury received $427.5 million last year in Indian Gaming Payments and Gov. M. Jodi Rell”™s proposed 2007-08 budget projected revenue from the casinos to be $446.3 million, the state could lose a chunk of change if the federal government approves New York”™s fifth Indian gaming facility.
“The basic rule (of casino competition) is that people will visit the nearest comparable facility,” said Clyde Barrow, director of the Center for Policy Analysis.

For example, he said, “Pennsylvania opened up its first couple of slot parlors, and those have had a significant impact on Atlantic City. And that”™s only within four months of opening.”
But both Foxwoods and Mohegan Sun are banking on the allure of world-class concerts, dining and sporting events to lure New York gamers back to Connecticut even if a casino is built in the Catskills.
Additionally, both casinos are trying to reposition themselves as national conference and meetings destinations to attract the same corporate clientele that might now hold conferences in Atlantic City.
According to the Mohegan Tribal Gaming Authority”™s 10k report, filed in December 2006, the plan is to “diversify the tribe”™s business interests in the gaming industry outside of Mohegan Sun.”
The tribe believes it can “further strengthen our position in the Northeastern gaming market by capitalizing on the increasing demand for gaming and nongaming amenities and providing a premier destination resort that will mitigate impacts from future competition,” according to the filing.
Mohegan Sun has several projects under way, including a new casino area featuring a House of Blues restaurant and a poker room, scheduled to open in spring 2008.
The tribe is also looking to become a national gaming brand, by building and operating casinos for other tribes that sign gaming compacts with their state governments, Etess said.
The Mohegan tribe also operates a slot parlor in the Poconos, which it bought in 2005 from Penn National Gaming Inc.
Foxwoods is also aiming for loftier heights. The world”™s largest casino, in terms of floor space dedicated to gaming, is in the midst of a project that would add another casino/resort on the premises. The expansion will hold the MGM brand name, and Foxwoods will partner with parent company MGM Mirage on the project.
The MGM expansion is also an attempt to lure conventions and trade shows, said Bruce MacDonald, a spokesman for the Mashantucket Pequot Tribal Nation, which operates Foxwoods.
Foxwoods, too, is looking to branch out its gaming operations in other parts of the nation.
In the last year, Foxwoods Development Co. announced deals to build casinos in Philadelphia and San Diego. The San Diego casino will be built on land owned by the Pauma Band of Mission Indians, through an agreement between the two tribes.

But for all Foxwoods and Mohegan Sun offer outside of gambling to draw customers, those who are simply looking for gaming opportunities will generally travel to the closest option, said Dr. Richard Toltheimer, an economist who runs Toltheimer Research Associates in Lexington, Ky.
He said about 80 percent of a casino”™s revenues come from slot machines, and if the Catskills casino offers New York slot players a closer option, they would likely go there.
“It”™s obviously going to have a negative impact, but it”™s hard to tell at this point how much impact,” he said.