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Mohegans to dip toe into Atlantic City gaming

By Brian Hallenbeck

Publication: theday.com

Published August 07. 2012 2:00PM   Updated August 08. 2012 12:14AM

Extending its reach to Atlantic City's Boardwalk, the Mohegan Tribe announced Tuesday that it would invest in and manage Resorts Casino Hotel, New Jersey's oldest casino.

Resorts, a two-tower structure with an art deco look and ties to history, would join a stable of Mohegan properties that includes Mohegan Sun, the tribe's flagship casino in Uncasville, and Mohegan Sun at Pocono Downs, its racetrack casino in Wilkes-Barre, Pa.

The opportunity to cross-market the properties is a key element of the deal, casino executives said during an afternoon news conference, which a New Jersey radio station broadcast from Resorts.

"We've always thought that Atlantic City created a lot of opportunity for us," said Mitchell Etess, chief executive officer of the Mohegan Tribal Gaming Authority.

Under the cross-marketing plan, casino patrons who earn Player's Club points at any of the three properties would be able to redeem them at any of the three for food, lodging and entertainment. That, in particular, should help drive Mohegan Sun customers to Resorts, casino officials believe.

"We went into our database and asked our customers if they ever went to Atlantic City and, if they did, if they went to Resorts," Etess said in a phone interview. "If they said no, we asked them if they'd go to Resorts if they could earn points they could use at Mohegan Sun. We had a very solid response to that."

Etess said the partnership with Resorts would help strengthen the Mohegan gaming authority and its Connecticut operation. The management fees Resorts would pay an authority subsidiary, the Mohegan Gaming Advisors, would be a new revenue stream, he said, and the cross-marketing would benefit all of the tribe's properties.

"It was very important for us to partner with a well-known, high-profile casino like Resorts," he said.

The tribe would become part owner of Resorts by virtue of a "small investment," the amount of which was not disclosed. Both Etess and Resorts owner Morris Bailey said there are no plans to rebrand the casino or for the tribe eventually to acquire a greater ownership stake.

"Resorts is not for sale," Bailey said. "That's not where this is going."

Bailey said he and his late business partner, Dennis Gomes, bought Resorts in December 2010 "with the dream of making an impact on Atlantic City. … The key always was to find a strategic partner to fulfill our image of what we wanted to be."

After discussing deals "with many major players," Bailey decided to go with "what I believe is the premier partner, Mohegan Sun," he said.

Gomes died in February, leaving his son, Aaron, to help run Resorts.

The elder Gomes was considered the creative force behind efforts to rebrand Resorts with a "Roaring '20s" motif that capitalized on the popularity of the HBO series "Boardwalk Empire."

Just last month, Resorts announced a new partnership with Jimmy Buffett, the singer-songwriter, to create a Margaritaville-themed restaurant and bar that will transform Resorts' Boardwalk entrance. Bailey said the project would cost "tens of millions" of dollars and that other capital improvements are planned as well.

Bailey and Dennis Gomes bought Resorts for $31.5 million.

One financial analyst who monitors the gaming industry said the deal announced Tuesday appeared to be a good one for both parties.

"It makes sense that they would get involved in Atlantic City," Greg Roselli of UBS Securities said of the Mohegans. "These guys are well regarded."

As for the cross-marketing angle, Roselli said the benefit of sending existing Mohegan Sun customers to Resorts would outweigh the loss of New Jersey-based Sun patrons who simply would stay "home" to patronize Resorts.

"Mohegan is going to bring a big chunk of customers (to Resorts)," he said.

The partnership, which is subject to approval by New Jersey gaming regulators, is expected to become final this fall.

b.hallenbeck@theday.com

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