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MGM Springfield President says level of loyalty to strong competitors was underestimated

Yogonet Gaming News

August 22, 2019

In July, MGM Springfield’s gross gaming revenue was $20.4 million, a 2.23 percent increase over gaming revenues in June. Since its opening, the first resort casino in Massachusetts has not come close to its expectations of raising $418 million in annual gross gaming revenues during its first full year of operation — or $34.8 million per month. In the first 11 months, MGM’s gross gaming revenue totaled just under $253 million, according to the Massachusetts Gaming Commission.

With MGM Springfield just days away from its one-year anniversary, president and COO Michael Mathis believes the $960 million resort casino has answered the gloom and doom predictions of the “naysayers.”

While revenues for the first year are significantly below its own predictions, Mathis said Monday during a press conference that the casino is doing fine, and he is bullish about the coming year.

“I think there were a lot of naysayers that first said we would never build this; then they said people wouldn’t come because it’s Springfield,” Mathis said, as reported by Mass Live. “And a year later, 6 million visitors later, we’re knocking the cover off the ball on many, many facets of it.”

The casino opened August 24, 2018. He cited examples of success as bringing in “world class” entertainment" to the downtown, hiring approximately 2,500 employees, and that about 40 percent of its workforce is from Springfield compared to its goal of 35 percent.

Casinos were pitched to Massachusetts voters in 2014 as job-generators. MGM officials repeatedly touted 3,000 jobs would be produced at the Springfield casino. Current employment is 2,300, according to Mathis.

Also, Mathis pointed to higher tax revenue collected by the city from restaurants and hotels as evidence of the casino’s impact on tourism and pointed to new projects recently launched downtown such as the $40 million redevelopment of the Paramount Theater. In addition, the casino has not caused the traffic congestion and crime that some of the naysayers predicted, Mathis said: "It just hasn't come to fruition.”

MGM Springfield’s highest gross gaming revenues were during its first full month of operations, September of 2018, when it took in nearly $27 million. Total gaming revenue and tax revenue are an important part of the casino, but "not the only part," Mathis said. The casino is providing jobs, and local jobs, as well as economic development spin-offs, he said.

MGM Springfield’s revenues increased in July despite the much larger Encore Boston Harbor casino having its first full month of operations. The Encore casino in Everett had $48.6 million in gross gaming revenues in July.

Mathis also maintained there was no lasting damage done by MGM’s interest in acquiring the Encore Boston Harbor Casino earlier this year. Prior to its opening this summer, Encore was under investigation by state gambling regulators about its handling of sexual abuse allegations against company founder Steve Wynn. And MGM looked into buying the property, despite a state law forbidding casino operators from holding more than one license.

"We've talked to our local stakeholders, the mayor, different legislative representatives," Mathis said. "We've talked to our employees. And they recognize we are a Fortune 500 company. We have an obligation to look at any opportunity, and that's what we did, and we passed on it. We're as dedicated to Springfield as we ever were."

Mathis said the revenue predictions for MGM occurred well ahead of the opening, and the market began to constrict during the construction phase. While he believes predictions were realistic, MGM Springfield has stressed that it expected a three-year ramp-up, he said.

The market has some really strong competitors that have been in operation for many years, Mathis said. MGM Springfield, in luring people to the Springfield casino, has been "really successful in getting return trips." "It's just a matter of when we are going to be able to get there," Mathis said, regarding revenues. "It's going to take some time in a market like this. If you look at any other facility in the market, there's always a ramp-up."

Regarding competition, Mathis said he believes "we can all co-exist," and he wishes the other casinos well. Another factor, he said, was some difficulty attracting customers away from the two Connecticut tribal casinos, Foxwoods and Mohegan Sun. "I think we may have underestimated that level of loyalty, and what it would take for those customers to give us a shot."

Mathis also addressed possible increased competition from Connecticut. The operators of Foxwoods and Mohegan Sun are looking to partner on a casino in East Windsor, a short drive from Springfield. Mathis said he thinks a casino in Bridgeport would be a better fit for Connecticut to help keep revenue from escaping to New York. MGM has shown interest itself in that market. As for East Windsor, Mathis said his resort could handle the competition.

MGM continues to work on branding the casino and Springfield itself, he said. The casino is making a number of changes, such as adding bars including a new VIP Lounge, adding new amenities, "and we will continue to get smarter about it and chip away into that number," Mathis said.

Mathis said MGM is pushing Massachusetts state legislators to approve sports gambling this fall. Several bills have been filed on Beacon Hill looking to do so, including by Governor Charlie Baker.

"In our other markets, we've seen as much as a 10% increase to the rest of the business, because people stay here longer, they go to restaurants, and they support the facility above and beyond the sports betting business," Mathis said. He added that MGM Springfield could have a sportsbook up and running quickly, if lawmakers and the governor were to make sports wagering law.

To mark the one-year anniversary this Saturday, MGM is planning a public celebration on the outdoor plaza with the New England Patriots’ Cheerleaders, food trucks, and a five-tier birthday cake.

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