Only partially open, casinos held their own in June
Considering their arenas, buffets and many of their hotel rooms, amenities and attractions were mothballed, the casinos did pretty well last month.
Foxwoods Resort Casino and Mohegan Sun released their June slot-machine reports Wednesday — their first meaningful reports since the coronavirus outbreak forced their mid-March shutdowns — showing they combined to keep more than $79 million in slots revenue after paying out prizes. They forked over a quarter of it — nearly $19.8 million — to the state.
Both casinos reopened to the public June 1 after being closed for 76 days.
“We had two less weekend days than last June, so from a calendar perspective, we did great,” said Jeff Hamilton, Mohegan Sun’s president and general manager. “If we’d had another weekend, we’d have beaten last June.”
From a cash-flow perspective, last month was the best June in Mohegan Sun’s history, Hamilton said, given the casino was able to generate as much cash as it did while much of the property was shuttered, reducing overhead.
“Doing that much volume with so much closed allows us to be more efficient,” he said.
Mohegan Sun reported it kept, or “won,” $45.5 million in slots revenue in June, a modest 3% decline over June 2019. Foxwoods kept $33.6 million last month, down 4.9% over the same month a year ago.
Mohegan Sun sent $11.4 million to the state while Foxwoods anted up $8.4 million.
“The positive story here is that we were able to bring back 2,000 employees who were furloughed and needed health care in a pandemic,” said Rodney Butler, the Mashantucket Pequot chairman whose tribe owns Foxwoods. “And despite the economic challenges facing the region and the state, the casinos collectively were able to turn over nearly $20 million to the state.”
Mohegan Sun now has reinstated about 3,300 employees, about 60% of its workforce, Hamilton said. Naturally, most of the employees who have yet to be recalled work in areas that remain closed — Mohegan Sun Arena, the Expo Center, valets, the buffet, he said. All of the casino’s table-games dealers are back on the job.
Earlier, Mohegan Sun had reported its revenue from slots and table games during the first two weeks after reopening was up 10% over the same period a year ago. Overall net revenue for the same period, including nongaming revenue, was down 20%.
The casinos generated their healthy June slots revenues despite having deactivated many of their machines to promote social distancing. Mohegan Sun operated about 2,220 machines during the month, far fewer than the more than 4,000 it operated the same month a year ago.
Foxwoods operated 3,441 machines before the coronavirus shutdown and reopened with 952 machines. It has since added more.
Hamilton said Mohegan Sun was able to get by with fewer machines because there was no demand for a greater number at any one time, as is often the case when arena events draw large crowds to the property. He said casino managers are evaluating what the casino's permanent machine count should be, but he doesn’t expect the number will be significantly less than it was before the shutdown.
“Even in a non-COVID world, there will be more space. That’s one of the things that’s going to stay,” Hamilton said.
Butler said the casinos’ June slots performance reflected the lack of competition they faced.
For most of the month, Foxwoods and Mohegan Sun were the only casinos in the Northeast that had reopened following shutdowns. Casinos in New Jersey, Pennsylvania and Rhode Island have now reopened, at least partially, as have those in Massachusetts, where Encore Boston Harbor in Everett reopened Sunday and MGM Springfield reopened Monday.
Already, Butler said, Foxwoods is starting to see a reduction in business as a result of more casinos rejoining the fray. He said Foxwoods has taken steps to bolster its reserves amid what many in the gaming industry see as an uncertain future.
The Mashantuckets, who defaulted on their debt in 2009 and have operated under a forbearance agreement with lenders since soon after emerging from a 2013 debt-restructuring, have pushed out the maturity date on a $257 million loan that was due June 30, 2020, and have proposed a $20 million line of credit to address Foxwoods’ short-term borrowing needs. The line of credit is subject to the approval of Foxwoods’ lenders.
In addition, the tribe has agreed to lend Foxwoods $12.5 million.
Given those arrangements, as well as federal funding secured under the Coronavirus Aid, Relief, and Economic Security, or CARES, Act, current liquidity and cash flow from operations, “Foxwoods believes that it now has sufficient liquidity to adequately address its anticipated capital needs and obligations ...,” Foxwoods told investors in a June presentation posted online.
“It’s what all business operators are doing,” Butler said. “We’re making sure we have liquidity to survive the unknown. With spikes (of COVID-19) all across the country and questions about whether there might be a second wave, we’re making sure we have the flexibility we need.”
He said Foxwoods does not anticipate needing to draw on the proposed line of credit in the near future.
According to the online presentation, Foxwoods management, “spurred by the COVID-19 closures,” believes “right-sizing the property is in order.”
While five new casinos have grown the Northeast gaming market since 2010, Foxwoods’ share of the market has shrunk by a third, its gross gaming revenue falling from $649 million in December 2010 to $435 million in February 2020, the presentation says.
The new casinos are Resorts World New York City in Queens, N.Y. (October 2011), Plainridge Park in Plainville, Mass. (June 2015), Resorts World Catskills in Thompson, N.Y. (February 2018), MGM Springfield (August 2018) and Encore Boston Harbor (June 2019).