Girding for the competition

March 3, 2016

The two casinos in southeastern Connecticut, Foxwoods and Mohegan Sun, will soon be facing competition from new casinos to be built in the Boston and Springfield areas of Massachusetts, closer to where many of their existing customers live.  How to maintain the loyalty of those customers who will soon have options involving far less travel is a challenge, to say the least, especially since the new competition will be run by experienced, quality operators (Wynn and MGM, respectively).

I recently visited both existing casinos, and noticed a lot going on.  Mohegan Sun is changing its mix of shops and restaurants (what the new ones will be is not readily apparent); I was surprised to see its Tiffany’s store shuttered.  It also is building a new hotel.  Foxwoods has added an entire Tanger outlet mall to its property and is changing the mix of games on its floors.  Both continue to run promotions, including drawings, tournaments and the like; Foxwoods is running a series of events tied to its 24th anniversary.

The outlets at Foxwoods impressed me, though I am not much of a shopper.  The mall provides a strong attraction for non-gamblers, in addition to the restaurants and entertainment found at both resorts.  More importantly for me, most of the shops in the mall accept Foxwoods player’s club points at face value for purchases, opening up a whole world of shopping opportunities.  A serious gambler is always looking for ways to spend those points on the necessities of life; typical casino shops focus on high-priced luxury goods.  One can buy gas and gift cards at Foxwoods, but at a 50% premium (i.e., a $100 gas card costs $150 worth of points), and free play requires payment of a 100% premium (i.e. $100 free pay costs $200 worth of points).  The outlets appear to be selling things I need, such as everyday clothing and shoes, at “street” prices, in addition to life’s nice extras.

Although the new hotel at Mohegan Sun is still under construction, and judgment on it therefore must be reserved, it’s hard for me to see how it’s a better investment than the outlets at Foxwoods.  Certainly there are times (holiday periods, headliner shows and other events) when the existing hotel is sold out, but it’s not clear to me that the excess demand is enough to fill another hotel on enough nights to make it profitable.  Of course, that demand can be increased with more events to draw more people, but the number of people a given event can draw is limited by the size of the facility in which it takes place.

In my experience, casinos have responded to competition or economic downturn in two contradictory ways, sometimes simultaneously.  One way has been to tighten the games by changing the pay tables on video poker, changing the rules on blackjack (the most notorious being reducing payouts on blackjacks to 6:5, which no player should accept), and the like.  Another way has been to offer more, especially to regular, substantial players, in terms of free rooms, free play, dining credits and the like.  Serious gamblers probably should expect both at Foxwoods and Mohegan Sun.  As always, buyer beware.