Mario Kontomerkos is chief executive officer, Mohegan Gaming & Entertainment (MGE), operators of five casinos in the U.S., and, as of last month, two casinos in Canada—Niagara Falls, Ontario-based Casino Niagara and Fallsview. MGE was selected last year by the Ontario Lottery and Gaming Corporation as official service provider for the two casinos plus a future Niagara Falls Entertainment Centre. MGE is also in partnership with Paramount Pictures Corporation to open Inspire, a massive integrated entertainment resort near the Inchon Airport in Seoul South Korea, scheduled to open in 2022.
Casino Journal Executive Editor Charles Anderer recently spoke with Kontomerkos about MGE’s new Niagara Falls properties and how they fit with the company’s overall strategy. Excerpts from this conversation follow:
When the Niagara Falls opportunity came up, how did you see it fitting with MGE’s overall strategy?
KONTOMERKOS: We see MGE as an unappreciated gem. The Mohegan Tribe, starting with the flagship facility in Uncasville, Conn., has been great at creating extraordinary experiences for people. I remember the first time I came down the escalators there and saw the Chihuly [glass sculpture] and the waterfall; I had been following gaming in various capacities for 20 years when I came there for the first time and thought I had seen everything but I had never seen a place like this.
Our strategy is to take our ability to create unique experiences and combine it with our culture; our heritage and our spirit of community-based cooperation and collaboration and take that recipe overseas and internationally where there is a lot of growth. What we’re seeing in the gaming industry right now, and in a lot of consumer businesses in the discretionary space, is significant growth overseas. Generational sustainability is what is important for us. We’re a little different from typical shareholder-based companies; what would satisfy our shareholders, as opposed to getting through the next quarter, is being sustainable for another 13 generations or another 400 years, which is how long this tribe goes back in recorded history, if not longer. When we look at opportunities, we ask ourselves if we can take our model to other markets and other countries and the answer is yes, and I think Niagara is a great example of that.
How would you describe the path that MGE has taken to date and how it has prepared it for this new chapter in Niagara?
KONTOMERKOS: We run Mohegan Sun Pocono in Pennsylvania, Resorts in Atlantic City, Paragon in Louisiana and the ilani property just north of Portland, Ore. Inspire is a $5 billion project at the Inchon International Airport just outside of Seoul in South Korea scheduled to open in 2021. These are all either under ownership, operation or development.
In terms of what we’ve learned along the way… our Connecticut property is one of the highest growing facilities in the Western Hemisphere. That alone suggests we have a certain combination of product that is clearly desirable. From a marketing expertise perspective, we are able to create an experience there through our guest service, marketing offers and our advertising that people really like; I think we do it as well as anybody else.
From a product perspective, we’re probably one of the only integrated resorts outside of Las Vegas that operates a full-scale 10,000-seat concert arena, which is one of the busiest venues of its size in the world. We book about 170 shows per year at this one facility and 600 headliner shows a year across our portfolio. We also own two professional sports teams; the WNBA Connecticut Sun and the New England Black Wolves, a men’s indoor lacrosse team.
Elsewhere, Atlantic City was a huge turnaround opportunity for us. When we took over Resorts in 2012, it was on the brink of closure with negative cash flow and now it’s one of the more successful properties on the Boardwalk—because of our strengths in marketing, entertainment and people expertise. The facility at ilani, which we developed and manage, has become one of the dominant facilities on the West Coast. Inspire in South Korea really has a chance to be a huge game changer for us. It’s located 1,000 feet from the fifth busiest airport in the world and will represent a new integrated resort paradigm. It will be the first purpose-built integrated resort built into a fully-branded theme park.
What does the MGE/property management structure look like?
KONTOMERKOS: We have very strong property management teams that we’ve built up over the years. In the last six or seven years, the company has gone from operating two facilities, in Connecticut and Pennsylvania, to now eight facilities. Our management is scaled to be able to take on more. The property GMs report up to the COO and to a number of folks who support the properties at the corporate level.
How do you view the Niagara assets in terms of their individual strengths and how they work together?
KONTOMERKOS: We’re very excited about these assets. They’re sort of set up for different demographics which is nice. Casino Niagara, which sits right across the bridge from the New York border, is more of a locals property. It opened in 1996; it was the first casino and it became an immediate favorite of local residents. I think there’s a lot we can do there to spruce it up and revitalize it as a comfortable place for locals.
Fallsview is just spectacular; the kind of place that really appeals to a destination traveler. It gets a lot of its business from Toronto, which is a very diverse and fast-growing city. Folks looking for a casino entertainment experience will love Fallsview and its restaurants. The other thing they will love is we’re overseeing the development of a $130 million, 5,000-seat theater there. We’re going to bring some experiences there that they have not had before. All the headline entertainment that we bring to Connecticut and all of our other properties we’ll now be able to rotate into Fallsview.
What’s the overall employee head count and how have they reacted to the change in ownership?
KONTOMERKOS: There are 4,000 employees and we are totally enthralled by the employee base there. I had the chance to go up there and meet about 1,500 of them personally. They have a set of core values and beliefs that’s very similar to ours; we couldn’t have better aligned culturally. We haven’t made any changes in management and we don’t plan to make any to any part of the employee base at this time.
Whenever there’s a big change like this, the default setting tends to be uncertainty. Stability is important in these situations, isn’t it?
KONTOMERKOS: Very much so. After the announcement was made and before we had a chance to visit the property, there were naturally some questions. But when they heard from us on the visit—who we are and the way we operate on a generational, long-term basis and that we’re not some sort of slash-and-burn type of company—that was very reassuring. I think it was also reassuring for them to hear that they’ll have more career opportunities with us than just Niagara, that they could perhaps transfer one day and get some experience in other jurisdictions. I think the change has become a very positive thing for them.
The cultural alignment makes sense in that they’ve been working for a government-run organization, same as MGE.
KONTOMERKOS: It’s a great point. Like many governments, we’re very community-oriented, supporting charitable giving, sustainability initiatives and funding infrastructure for the towns we’re in. It’s very much like a government. Also, when we had a chance to explain the specific heritage of the Mohegans—the importance they place on building relationships, mutual respect and being a welcoming people—all of these things helped them understand that MGE is not your typical publicly-traded organization, which is not to say something negative, just that we’re different and the Niagara employees find that appealing.
Were there any changes made to the properties prior to your opening on June 11?
KONTOMERKOS: There weren’t many changes to what customers had already seen. A lot of what they already had at those properties was exactly what we would offer; they’ve done a great job. What will happen over time is you’ll start to see an increase in buzz related to all the entertainment. You’ll see an integrated loyalty program, the integration of not only our new theater, but other enhancements. There is a long-term opportunity for upside at these properties.
Mohegan Sun has a very significant table game business with Asian players. Seoul and Toronto are both growing, prosperous global capitals. It seems you have the makings of some very interesting cross marketing opportunities with these latest international additions to your portfolio...
KONTOMERKOS: It was not lost on us that the fifth or sixth largest group of visitors last year to Niagara Falls, which generated 12.7 million visits, were Koreans. One of the big points for us in terms of our ability to be successful in the bidding process for Niagara was the fact that we thought we could cross-market very effectively from a very large and deep database here in the northeastern U.S. back and-forth from Toronto. As you note, we have one of the largest Asian table game operations in the world here at Mohegan Sun. Toronto has one of the fastest growing populations of any large city and the Asian population is playing a big part in that. There is a very significant opportunity for Niagara Falls to grow from the cross-marketing that we can bring to that area.