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Mohegans’ gaming earnings plummet

By Brian Hallenbeck

Publication: theday.com

Published January 30. 2014 10:00AM   Updated January 31. 2014 3:21PM
Players at table games won more than usual

Mohegan — Mohegan Sun took a bath at the gaming tables in the three months that ended Dec. 31, a big reason why the casino and its parent corporation had a particularly poor quarter, executives told investors Thursday.

The Mohegan Tribal Gaming Authority, which operates Mohegan Sun and Mohegan Sun at Pocono Downs in Wilkes-Barre, Pa., reported that its adjusted EBITDA — earnings before interest, income taxes, depreciation and amortization — was down 26.7 percent over the same quarter the previous year.

Operating income was down 33.6 percent.

The declines were largely attributable to lower table-games revenues at Mohegan Sun, a result of the “house” losing more than usual, executives said.

Mitchell Etess, the authority’s chief executive officer, noted that “drop” — the amount wagered at Mohegan Sun’s table games — was up nearly 7 percent for the quarter but that revenues were down 13 percent, an indication that gamblers enjoyed exceptionally good luck.

“It wasn’t just one player,” Etess said. “We promoted high-end play and we got it — and they all seemed to win. It happens.”

The casino held, or kept, $65.7 million of the $495.7 million dropped at its tables, a hold percentage of 13.3 percent. It was the second-lowest hold percentage of any quarter in Mohegan Sun’s 17 years of operation, according to Mario Kontomerkos, the authority’s chief financial officer.

Had table-games revenues remained at the level they were at in the same quarter the previous year, the authority’s earnings would have declined by about 6 percent, Kontomerkos said.

Overall, authority gaming revenues for the quarter totaled $274.8 million, down 5.1 percent, while nongaming revenues fell 8.5 percent to $62.9 million. Table-games revenues were down 11.2 percent; slot-machine revenues fell 2.5 percent.

Etess noted that the authority had taken a number of steps in the quarter — the first quarter of its 2014 fiscal year — to bolster its position over the long term. The authority’s goals, he said, are to “diversify and deleverage.”

During the quarter, the authority completed a series of key refinancing transactions and announced it would partner with Suffolk Downs on a plan to develop a $1.3 billion resort casino in Revere, Mass. In Pennsylvania, it opened a new hotel and convention center at the Pocono Downs facility.

The authority is also partnering on a casino project in Philadelphia, where it is a 17 percent equity partner in a $500 million project, one of five being considered by Pennsylvania authorities.

b.hallenbeck@theday.com

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