Facing competition, Connecticut casinos look to expand

By John Christoffersen
New Haven, Connecticut (AP) 9-07

The nation’s largest casinos are hedging their bets.

Foxwoods Resort Casino and Mohegan Sun have grown rapidly over the past decade, enjoying a monopoly in most of New England. But growing competition is prompting the tribes that run the casinos to expand around the country and at home, trying to become national entertainment destinations like Las Vegas that offer much more than gambling.

“It’s just a matter of time before most of the other New England states are going to allow gambling,” said the Rev. Richard McGowan, a gambling expert at Boston College. “The days of them having a monopoly are over.”

Revenue growth from slot machines has slowed recently due to competition from racetracks who have expanded their slot machines in New York and Rhode Island. Atlantic City is pouring billions into its casinos in a bid to draw top entertainers and restaurants, while Massachusetts is considering casinos. Foxwoods and Mohegan Sun, which each have more than 300,000 square feet of gaming space, are trying to stay ahead of the competition by spending more than $700 million each to expand in Connecticut by adding hundreds of hotel rooms, convention space, restaurants, stores and night clubs. While new competitors may lure away some day trippers, the Connecticut casinos hope to draw visitors from around the country and even abroad who stay for longer visits at the hotels, spas, golf courses, concert venues, stores and restaurants.

The Connecticut casinos are drawing on the experience of Las Vegas, where about half the revenue comes from non gambling activities such as entertainment.

“I think the market is becoming more sophisticated and more demanding,” said Foxwoods President John O’Brien. “They want something else other than to come and play a machine.”

Foxwoods, run by the Mashantucket Pequots, has teamed up with Las Vegas-based MGM Mirage Inc. to build another hotel and casino that will be called MGM Grand. The expansion, expected to be completed next year, also includes a 4,000-seat performing arts theater, the largest ballroom in the Northeast and new convention space to accommodate thousands.

Foxwoods, which will have access to MGM’s database of more than 22 million customers, expects to attract high-profile chefs, Las Vegas-type shows and top entertainers. The project amounts to a distinct third casino in Connecticut, Foxwoods officials say.

Foxwoods, which now draws about 40,000 visitors daily, expects to attract 50,000 as a result of the new casino.

Mohegan Sun is in the midst of a $740 million expansion that will include a 38-story, 1,000-room hotel with a spa that will open in 2010, the return of poker, a new House of Blues music hall and more slot machines, stores and restaurants.

Both tribes also are forming partnerships with other tribes around the country interested in opening casinos.

Foxwoods is working on casino projects in California, Kansas and Philadelphia, St. Croix and the Bahamas.

“We always knew that over time the competitive landscape would do nothing but change,” O’Brien said. “The extent of the changes we don’t know but it’s important that we as a nation prepare for that.”

Mohegan Sun last year opened slot machines at Pocono Downs in Pennsylvania and is working on projects in New York, Massachusetts, Washington and Wisconsin.

“Both tribes have strong brands. What we do in Connecticut is portable,” said Jeffrey Hartmann, Mohegan Sun’s chief operating officer.

Mohegan Sun has grown about 7 percent annually since it opened more than a decade ago. But after a weaker third quarter, the growth streak may end with the current fiscal year on Sept. 30.

“It’s going to be close,” Hartmann said.

While growth has slowed for the Connecticut casinos, the industry is still $1.5 billion to $2 billion away from market saturation, said Clyde Barrow, who directs the University of Massachusetts New England Gaming Research Project.

“It’s definitely the right strategy,” Barrow said.

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