House takes in a bit less

Mohegan Sun Weather, more than competition and economy, blamed for lower revenues at Plains Township casino

PLAINS TWP. – New competition from Mount Airy Casino Resort, some bad weather and “continued weakening of the regional economy” combined to lower revenues at Mohegan Sun at Pocono Downs by $1.3 million in the quarter that ended March 31, according financial results announced Wednesday.

Despite the reduced revenues, the casino-racetrack was able to show a nearly $1 million increase in earnings compared to the same period in 2007, primarily because of a $3.3 million extraordinary charge last year in connection with a settlement of property tax litigation with the Wilkes-Barre Area School District.

Higher costs for marketing and employee benefits weighed against the revenue slump this year.

“Our expenses are higher,” acknowledged chief executive Bobby Soper after the earnings report was released by the Connecticut-based Mohegan Tribal Gaming Authority. The report said advertising expenditures were 36.5 percent higher than in the first three months of 2007, while medical benefits costs soared 21.5 percent, due to an increase in eligible employees.

Soper said advertising was ramped up to fend off competition from Mount Airy but also to attract gamblers who face higher living expenses and to raise awareness of the permanent casino that is scheduled to open this summer. Spending also was higher simply because the customer base is larger, which increased printing and mailing costs.

“A softening economy is a national trend,” Soper said, although he believes the region has held up better than most.

Weather had a larger effect on revenues than any other factor, Soper contended. With only 1,200 slot machines on the interim gaming floor, it is difficult to make up for bad days, he said, because on good days most of the machines already are in use.

Still, Soper was satisfied with the casino’s performance, which was better than at Mohegan Sun in Connecticut, where slots revenue fell more steeply.

“The reality is our volumes were pretty consistent year over year,” he said.

During the week that ended May 4, the Downs reported $37.3 million in wagers compared to $36.6 million in the comparable week last year. But an increase in jackpot payouts reduced the casino’s hold from $3.4 million to $3.3 million.

The $208 million Project Sunrise, which will double the number of slot machines and add restaurants and other non-gaming amenities, could be completed by late July, earlier than the previously announced target of August, Soper said.

Gambling on horse races was steady from year to year, Soper said, once the sale of an off-track betting parlor in Erie is factored in. There was no live racing during the quarter, but he said results since opening day have been encouraging.

“More people are wagering across the country on our track,” he said. In addition to on-site gamblers, the Downs sells its signal throughout the nation, and higher purses fueled by taxes on slots revenue have produced a higher level of competition that attracts bettors.

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According to a quarterly earnings release from the Mohegan Tribal Gaming Authority, revenue at Mohegan Sun at Pocono Downs slipped $1.3 million in the Jan. 1-March 31, 2008 period compared to a year earlier.

Note: Revenues are reduced by promotional allowances and use of Player’s Club points

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