Gamblers' success blamed for Mohegan's earnings dip
Mohegan — Mohegan Sun’s parent company reported declines in quarterly earnings and profit Thursday though nongaming revenues were up at its casinos here and in Wilkes-Barre, Pa.
Lower-than-average table games “hold” — the percentage of wagers a casino keeps — was the culprit, Mohegan Tribal Gaming Authority executives told gaming analysts who participated in a conference call.
Hold percentages can fluctuate significantly over short periods.
In the three months that ended June 30, the third quarter of the authority’s 2016 fiscal year, net revenues of $323.4 million were “relatively flat” compared to the same quarter the previous year, the authority reported.
Gaming revenues of $276.8 million were down by 2.8 percent while nongaming revenues of $72.1 million were up by 10 percent.
Adjusted EBITDA, defined as earnings before interest, income taxes, depreciation and amortization, decreased 5.4 percent to $76.7 million. Net income, or profit, was $26 million, down 7.5 percent.
Following the call, Bobby Soper, the authority’s president and chief executive officer, said the decline in table games hold meant gamblers had better luck than usual during the quarter. He noted that over the same period, the casinos’ table games “drop” — the total amount of wagers — increased.
“Gaming volumes were up,” Soper said. ”We’re more focused on volumes than on hold percentage because hold evens up over time. … We were pleased with all our metrics.”
At Mohegan Sun in Uncasville, the table-games decline was partially offset by increases in hotel and entertainment revenue associated with events at Mohegan Sun Arena. The casino’s hotel occupancy rates approached record levels during the quarter, boosted by such blockbusters as the Barrett-Jackson collector car auction that took place over several days in late June.
The strong demand for hotel rooms bodes well for the fall opening of Mohegan Sun’s new 400-room Earth Hotel, a $125 million project financed by the Mohegan Tribe, which will lease the hotel to the authority.
During the quarter, the authority earned $2.6 million in management and development fees in connection with its expanding portfolio of properties. It manages the Resort Casino Hotel in Atlantic City and the Tunica-Biloxi Tribe of Louisiana’s Paragon Casino Resort in Marksville, La., and is partnering with the Cowlitz Indian Tribe on the development of a La Center, Wash., casino.
Soper said the Cowlitz-Mohegan project, named ilani Casino Resort, is more than 50 percent complete and is scheduled to open next spring.
In addition, the authority is a majority partner in a $1.6 billion resort casino project to be developed at the Incheon International Airport near Seoul, South Korea.
Revenue from management and development fees could reach $20 million a year by next year, Mario Kontomerkos, the authority's chief operating officer, said, with the Earth Hotel expected to eventually generate another $10 million in annual income.
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