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Foxwoods, Mohegan Sun redouble efforts in Massachusetts

HARTFORD — Once the uncontested heavyweights of the Northeast gambling industry, Connecticut’s two tribal-owned casinos are redoubling efforts to establish a presence in Massachusetts as they contend with growing competition.

Mohegan Sun and Foxwoods have been losing ground for years, with revenue falling in each of the last six years for Mohegan Sun and the last eight years at the Foxwoods Resort Casino.

So the two casinos see little choice but to compete for a share of the millions of dollars at stake across the state line in Massachusetts, the region’s newest market where a new law allows for three resort casinos and a slot parlor. Each is pursuing its second bid for a Massachusetts project after voters rejected their proposals to build $1 billion resort casinos.

The casinos’ chief executives say it is important to have a presence in Massachusetts, but the proposals will not make or break their business.

“The market in Connecticut is kind of being hemmed in and we needed to expand and look for other ways to drive revenue,” said Mitchell Etess, CEO of the Mohegan Tribal Gaming Authority, the parent company of the Mohegan Sun in Uncasville and Wilkes-Barre, Pa.

“I wouldn’t say we have to be in Massachusetts,” said Scott Butera, chief executive of Foxwoods. “We want to be in Massachusetts.”

The future of the two companies will be very different if they fail to win approval for casinos in Massachusetts, whose residents spent about $554 million in 2012 at Connecticut’s two casinos, said Clyde Barrow, director of the Center for Policy Analysis at UMass Dartmouth.

“It doesn’t mean they can’t still be profitable, but they will have to slim down operations,” he said.

The Mohegan Sun’s proposal for Palmer, in western Massachusetts, was rejected last November by a margin of 94 votes out of about 5,200 cast. Voters in Milford rejected a plan by Foxwoods and investment partner Crossroads Massachusetts to build a casino by a wide margin.

Mohegan Sun is now looking to build a $1.3 billion resort casino on land owned by Suffolk Downs in Revere. A referendum is scheduled for Feb. 25, and the state Gaming Commission has said it will decide on the casino’s application by May 30. Las Vegas casino operator Steve Wynn is competing with the Mohegan Sun in the region, proposing a casino along the Mystic River in Everett.

Foxwoods is proposing a $750 million resort casino in Fall River and is scouting for a site. A voter referendum has not been set.

The two Indian-owned casinos have generated billions in slot machine revenue since they opened in the 1990s, but they have been pounded by the recession and growing casino competition.

Revenue at Foxwoods has dropped 34 percent, from $819.8 million in the 2004-05 fiscal year to $542.8 million in 2012-13. At Mohegan Sun, revenue was off 31 percent, from $916.4 million in 2006-07 to $628.8 million in 2012-13.

The casinos have won some relief with renegotiated debt that provides more time and better terms to repay expansion-related debt taken on before the start of the recession. But a weak recovery, in which fewer customers are showing up at the slot machines than before the recession, and stiffer competition from other casino developers, have taken their toll.

The casinos know a Massachusetts property would hardly solve all their problems. Butera said Foxwoods does not make projections, but it will be facing a drag until the economy gains traction.

“The revenue side will be down until the jobs numbers improve,” he said.

In addition, Twin River Casino in Lincoln, R.I., has cut into Foxwoods’ revenue more than expected, particularly since it added table games such as roulette and blackjack last June, Barrow said. Mohegan Sun executives have said Resorts World Casino at the Aqueduct racetrack in New York City is drawing customers from the Connecticut casino.

And though Foxwoods and Mohegan Sun would boost revenue by setting up shop in Massachusetts, they would divert customers and money from their Connecticut operations.

“But look at the alternative,” said Keith Foley, an analyst at Moody’s Investor Service. “Having something compete with yourself is sometimes better than competing with others.”

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