September 3, 2018
FOCUS: Tourism

For Foxwoods Resort Casino, size matters as MGM Springfield adds new competition

HBJ Photo | Joe Cooper
HBJ Photo | Joe Cooper
Foxwoods Interim CEO Rodney Butler and his predecessors have been gearing up for the launch of MGM Springfield for several years, adding exclusive resort and recreation amenities.
PHOTO | CONTRIBUTED
Foxwoods added a 3,750-foot zipline atop the 32-story Fox Tower in March.

Staring down the 3,750-foot zipline atop Foxwoods Resort Casino's Fox Tower, Interim CEO Rodney Butler rides the new cable down from 32 stories high with a clear view of his destination and the competition lying ahead.

And it's not just Mohegan Sun peaking over the foothills of southeastern Connecticut. Just 73 miles away, MGM Springfield has opened a $960 million casino and entertainment complex that stands to make Connecticut's north central residents think twice about their gaming options.

But this is nothing new for the Mashantucket Pequot Tribal Nation-operated casino, which more than five years ago began knocking down walls and adding exclusive gaming and adventure entertainment to combat expected losses from its new competitors over the border and across the Northeast.

With much planned development ahead, Foxwoods for now boasts New England's first on-site casino brewery and zipline; exclusive regional food and retail options; the nation's largest indoor karting track; and could be nearing groundbreaking of a proposed $300 million satellite casino with Mohegan Sun in East Windsor — the first tribal gaming partnership in the U.S.

Exclusive offerings are key to Foxwoods' business strategy, which will come under threat with MGM Springfield's recent opening. Foxwoods' bottom line has already been under pressure in recent years amid heightened competition. In 2017-18, Foxwoods recorded 6 percent less gaming revenue ($477.2 million) vs. 2013-14 ($507.8 million) and 41 percent less than it reported at its peak in 2004-05.

Next on its wish list is securing the exclusive rights to offer sports betting in Connecticut alongside Mohegan Sun, but it appears that won't happen until 2019, at the earliest.

Gov. Dannel P. Malloy has been pushing unsuccessfully for lawmakers to meet in special session to legalize sports betting in the wake of the Supreme Court's decision earlier this year to allow states to authorize it.

For the tribes and Malloy, sports betting means more than the projected $10 million to $20 million in annual state tax revenues.

Legalization, they say, raises Foxwoods' and Mohegan's competitiveness with casinos in Massachusetts, Rhode Island and New York, which are also vying to become the Northeast's gambling and entertainment meccas.

"This really is about competitiveness," Malloy said at a press conference last month regarding sports-betting legislation. "This is more about maintaining market share and perhaps capturing a portion of the illegal gaming revenue that currently is generated from people who aren't paying taxes on it."

If the tribes are eventually granted sports-betting privileges, Foxwoods plans to add kiosks throughout its six casinos spanning 9 million square feet. Current race books and gaming areas would also be transitioned into spaces to accommodate sports wagers, said Butler in a wide-ranging interview with Hartford Business Journal that included a tour of the mile-long casino.

Sports betting is an attractive business because there is "no risk" for the house, which typically takes a 17 percent cut on pari-mutuel betting, meaning all of Foxwoods' total wagering pool, according to casino consultant Clyde Barrow, who also chairs the political science department at the University of Texas Rio Grande Valley.

Responding to competition

Each corner of Foxwoods has either been replaced, reconfigured or renovated since MGM unveiled plans for its Springfield casino in 2012. Additions have included a zipline, go-karts, bowling, shopping outlets and new eateries.

Butler says the focus is clear: Bigger, brighter and more open space for new adventure, entertainment and gaming options.

Foxwoods is adamant, he says, about developing beyond the scope of its competitors, especially when it comes to building their resort entertainment.

And it won't be hard to find the room at Mashantucket Pequot Tribal Nation's 100-plus acre site, although its outstanding debt of more than $1.8 billion — according to the tribe's most recent quarterly filing — could be an obstacle to future development.

"We are continually looking at resort amenities that add to the destination environment," said Butler, who chairs the Tribal Nation and took the interim CEO title following the sudden and unexpected death of Felix Rappaport in July. "The more of those we can create, the more we can differentiate ourselves."

Foxwoods officials began plotting an indoor water park several years ago, identifying possible areas on-site for a narrowing pool of developers.

This fall it will launch new golf simulators, each estimated at $30,000. The Topgolf Swing Suite will include retro arcade games, a DJ booth, and lounge and bar-restaurant space. MGM Springfield recently opened the region's first Topgolf Swing Suite.

Pop-up bars surfacing throughout the facility are also meant to further the resort experience as guests enjoy a cocktail during their walk through the casino.

Foxwoods is developing new bar concepts and often renovates its 30 restaurants, Butler said. The Festival Buffet, serving more than 750,000 people annually, will undergo major renovations this month that will be completed by early 2019.

"It is going to reshape this side of the building," Butler said of the restaurant, which was founded just after the casino's inception in the early 1990s. "That is what we have been doing for the last few years — systematically going through the building and freshening up key locations."

Many of its 4,000 slot machines get replaced every three years. It's a costly endeavor with each unit having a $15,000 to $20,000 price tag.

Final obstacle for E. Windsor casino

Meantime, regulatory approval is the last hurdle standing between Foxwoods, Mohegan and history.

Connecticut's two tribes are waiting for the final greenlight from regulators before breaking ground this fall on a $300 million satellite casino in East Windsor.

In June, the town's Planning and Zoning Commission approved development plans submitted by MMCT Venture LLC, a joint project of the Mashantucket Pequot and Mohegan tribes. This would mark the nation's first joint tribal gaming project.

The tribes in 2015 signed a landmark agreement to launch Connecticut's first off-reservation casino as part of a plan to retain a portion of lost revenue from MGM Springfield.

With local zoning approval in hand, the tribes still need a nod from the U.S. Department of Interior before construction begins. Federal officials are still ironing out whether the project would harm the state's longtime revenue-sharing agreements with the tribal nations. Butler said he expects final project approval soon.

He said he's eager to begin the 20-month construction effort, which will replace the demolished former Showcase Cinemas along Route 5.

For every month the satellite casino is delayed, Butler said it adds $10 million to MGM's bottom line.

If all goes according to plan, the one-story casino will open in spring 2020, he said. Plans show the venue will include about 1,800 slot machines, 50 table games, 10 poker tables and a five-story parking garage.

Sizing the competition

Although Butler will be replaced by a permanent CEO this fall, you wouldn't know it. The affable casino executive often stops along his treks throughout the facility to chat with any of the casino's 6,000 employees.

The 41-year-old Montville native moved his way up the Foxwoods ladder by first cutting his teeth as a financial analyst, fresh off his playing days as a defensive back for UConn football.

Butler says he has been there long enough to realize that bringing Las Vegas to New England doesn't work. He was there when the Foxwoods-MGM partnership dissolved after just five years in 2013. Foxwoods had leased the MGM Grand brand for its new 32-story, $700 million building, but the partners mutually parted ways. The building was renamed The Fox Tower in a rebranding effort to challenge new competition across the region.

The brief partnership, he says, made it clear Connecticut residents prefer traditional, large-scale casino offerings vs. the flare of Las Vegas.

"Once you see another facility that is a third of the size, or a quarter of the size, you realize it's just a local gaming facility and not a destination like Foxwoods," Butler said.

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