EDITOR'S LETTER: Right direction
February 21, 2012
I don’t think I’m giving away any trade secrets when I write that the Connecticut casinos are at something of a crossroads.
Like Las Vegas and Atlantic City before it, the tribal casinos that reside in Connecticut are having their feeder markets potentially hijacked by emerging gaming in neighboring jurisdictions-in this instance, by Massachusetts, which recently approved legislation establishing destination-style casino resorts, and by New York, where Gov. Cuomo is pushing to create a commercial casino industry. By some counts, the Connecticut casinos (Mohegan Sun and Foxwoods) derived $613 million in gaming spend from Massachusetts alone in 2010. Losing a large chunk of this trade would likely be catastrophic for the Connecticut properties, which are just now emerging from financial difficulties brought on by the recession and the tightening of the lending marketplace.
In many ways, what Connecticut is about to go though is analogous to the situations faced by Las Vegas in the 1990s with the emergence of tribal gaming in California and by Atlantic City in the 2000s when gaming came to Pennsylvania. Las Vegas came out of this challenge stronger than ever, thanks to a firm casino industry/government connection, some inspired marketing and, ultimately, the creation of the megaresort model to keep people interested and coming back. New Jersey, however, did not fare as well for a whole host of reasons-a less than cordial relationship between the various casino operators and state and local officials, the inability to create any kind of cohesive marketing campaign, the lack of desire to re-invest into existing properties, a general lack of urgency… the list goes on and on. Atlantic City is still paying for the inaction and these missteps-PricewaterhouseCoopers recently released a report predicting Atlantic City gaming revenues were likely to decline through 2015, and would bottom out at $2.8 billion annually, an astounding 46 percent decline from market’s high point, which was the $5.2 billion it earned in 2006. The good news is that it appears the gaming industry and local/state governments are starting to work in tandem to revive the market through a combination of liberalized regulation and new construction.
If these are the two paths Connecticut tribal casinos can go down, I’m assuming they would rather head in the direction of Las Vegas than Atlantic City. On a positive note, as tribal enterprises, both Foxwoods and Mohegan Sun have the advantage of being nimble, meaning they can react quickly to market changes without having to wait for group consensus or state/local government buy-in. On the other hand, being tribal enterprises, it will be interesting to see how much economic and legislative relief/support the state of Connecticut will supply (one would think quite a bit if for no other reason than to protect its tax revenue from tribal slots) and whether Foxwoods and Mohegan Sun can make decisions in tandem that benefit the market as a whole, which may not be as easy as it appears since they have been primary competitors for such a long period of time.
So far, recent news out of Connecticut appears positive, at least when it comes to the tribes and the government working together for the common gaming good. Gov. Dannel P. Malloy recently told The Day newspaper he wants to “play offensively” in regards to gaming expansion in neighboring jurisdictions, and has made Lt. Gov. Nancy Wyman the point person to work with the Mashantucket Pequot and Mohegan tribes to create a unified approach going forward.
“How do we protect that investment - that’s what I’m working on,” Gov. Malloy told The Day. “We have an industry to protect now.”
Here’s hoping that all stakeholders in Connecticut gaming stick to this proactive approach in the days and weeks to come. Years from now when I look at Connecticut casinos, I hope to see a strong and vibrant industry.