Mohegan Tribe signs on as partner in Philadephia casino venture
For years, a southeastern Connecticut Indian tribe figured to be a player in the Philadelphia casino market.
Until now, that tribe didn't figure to be the Mohegans.
The owners of Mohegan Sun announced Wednesday that they are partnering with a Philadelphia investment group that applied months ago for the casino license once held by the Mashantucket Pequots, the tribe that owns Foxwoods Resort Casino.
Mohegan Gaming Advisors, the management arm of the Mohegan Tribal Gaming Authority, would operate the gaming/entertainment portion of an "urban entertainment center" to be developed on the block of East Market Street between Eighth and Ninth streets in Philadelphia's Center City district. No financial details were disclosed.
The investment group, Market East Associates, which describes itself as "a unique, cross-cultural group of successful, home-grown professionals, businessmen, real estate developers, casino owners and philanthropists," expects to present its plan, dubbed "MARKET8," to Pennsylvania gaming regulators next week.
"This is a great opportunity for us," Mitchell Etess, the Mohegan authority's chief executive officer, said of the project. "It's in our market, our geographic wheelhouse. We believe it's very synergistic as far as our other properties, awareness of our brand and our reputation in the region. We've been preparing for this type of expansion for years."
The Mohegans would be an equity partner in the project, Etess said.
Mohegan Sun also is partnering on the proposed development of a $600 million resort casino in Palmer, Mass., where it is among three gaming operators seeking the one license to be awarded for western Massachusetts.
"We believe we're capable of getting both licenses," Etess said.
At least one gaming analyst agrees.
"I think they can," Greg Roselli of UBS Securities said. "The Mohegans are very well regarded. They've been expanding off their reservation for years. They've got a very strong footprint and they're a proven operator in the Northeast. This should give them a very good return on their investment."
Roselli was unfamiliar with the Mohegan's would-be partner, Market East Associates, whose members include Ken Goldenberg of The Goldenberg Group; David Adelman, president and CEO of Campus Apartments; Ira Lubert, chairman and co-founder of Lubert-Adler Real Estate; Willie Johnson, founder and chairman of PRWT Services; and others.
The Mohegans also own and operate Mohegan Sun at Pocono Downs, a racetrack casino in Wilkes-Barre, Pa. Last year, Mohegan Gaming Advisors acquired part ownership of Resorts Casino Hotel in Atlantic City, N.J., and signed a deal to manage the property. Its involvement in the Philadelphia project would mirror its role with Resorts, Etess said. "We will be an equity partner and the operator of the facility," he said.
The Philadelphia license that Market East Associates and the Mohegans are pursuing once belonged to a group that included the Foxwoods Development Co., the Mashantucket Pequots' development arm. The group, known as Philadelphia Entertainment and Development Partners, won the license — one of two awarded for Philadelphia — in 2006.
Foxwoods Casino Philadelphia, as the project was known, soon ran aground amid controversy surrounding its South Philadelphia site and later over the Mashantuckets' financial problems. The tribe, which defaulted on its long-term debt in 2009, sought to withdraw from its 30 percent investment in the project, and other investors, notably Steve Wynn, the Las Vegas casino mogul, came forward in early 2010, offering to rescue it.
Wynn abandoned the deal, however, and the project eventually collapsed. The gaming control board, which had granted an extension of the Foxwoods license in 2009, withdrew the license in December 2010 after Philadelphia Entertainment and Development Partners failed to meet deadlines for the submission of plans and financial information. A state appellate court upheld the permit revocation in a decision the Pennsylvania Supreme Court refused to review last spring.
SugarHouse Casino, another Philadelphia project initially beset by delays, opened in September 2010. Three other casinos operate near the city — Harrah's in Chester, Parx Casino in Bensalem and Valley Forge Casino Resort in King of Prussia.
Roselli, the gaming analyst, said the market can support another casino. He said SugarHouse has "outperformed" projections since it opened and that the Philadelphia casino is planning an expansion to add more slot machines, table games and parking. The expansion could be completed this year or next, he said.
The MARKET8 project is one of six vying for the second Philadelphia license. Among them is Penn National Gaming of Wyomissing, Pa., which reportedly would partner with the City of Philadelphia. Penn National also has proposed a resort casino in Springfield, Mass., where it has applied for the same western Massachusetts license sought by the Mohegans.
Pennsylvania gaming regulators are expected to decide among the Philadelphia applicants by the end of the year. The approval process in Massachusetts is on a similar track.
The MARKET8 project is being designed by JCJ Architecture, which also designed Foxwoods and Mohegan Sun at Pocono Downs.
MOST VIEWED MEDIA