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MGM Springfield where executives didn’t anticipate customer loyalty to area tribal casinos. (Image: TripAdvisor)
With just four days left until its first anniversary, MGM Springfield is sitting on GGR of $252.82 million (as of July 31), well below estimates of $412 million when the project was approved nine years ago. The property posted $20.39 million of GGR last month, its third-worst full month since opening.
This market has some really strong competitors that have been in the market for 20-plus years,” Mike Mathis, head of MGM Springfield, said in recent media interviews reports the Hartford Courant. “So I think we under-estimated that level of loyalty and what it would take for those customers to give us a shot.”
Indeed, the two Connecticut tribal casinos are entrenched competitors. Foxwoods opened in 1993 while Mohegan Sun debuted in 1996.
What Say The Data
Competition is a fact of life in the gaming industry. But for MGM Resorts International (NYSE:MGM) investors waiting for the company’s New England venture to bear fruit, the assessment that the Nutmeg State’s tribal casinos are proving resilient at keeping gamblers away from rival Massachusetts venues isn’t necessarily borne out by data.
As Manaslot88 Casino.org recently reported, Mohegan Sun’s July slots revenue slipped 15.1 percent on a year-over-year basis, while the comparable metric at Foxwoods was lower by 11.2 percent. Total handle at Foxwoods dipped by 10.3 percent, while Mohegan Sun’s handle was lower by 14.1 percent.
In 2006, the two tribal gaming properties directed $433.6 million to Connecticut coffers. But those receipts plunged to $263.6 million last year, and it is estimated that this year’s number will be even lower.
MGM has tried an array of tactics to jump-start the Springfield property. In late June, the company said it closed its Starbucks location and replaced the venerable coffeehouse with an area dedicated to VIP gamblers. The operator has also sought to take advantage of favorable summer weather in New England with outdoor concerts and dining options. Other efforts to boost foot traffic include re-configuring the menu at the Chandler Steakhouse and a recent outdoor boxing event.
The Elephant In New England
Mathis said the Southern New England area, which includes Boston, Rhode Island, and Connecticut, can sustain another casino. But the recently opened Encore Boston Harbor is fast-establishing a dominant perch among the region’s gaming venues.
Perhaps it’s just a coincidence, but Wynn’s Everett, Mass. property posted July (its first full month of business) GGR of nearly $48.6 million, and in the same month, the Connecticut casinos and MGM Springfield struggled. Additionally, Twin River Worldwide Holdings, Inc. (NYSE:TRWH), the operator of the two gaming venues in Rhode Island, has overtly said it’s feeling the heat from Encore Boston Harbor and is having to shed staff as a result.