AP News

Mohegan Sun casinos post steep 2Q fall in profit


UNCASVILLE, Conn. (AP) — The parent company of the Mohegan Sun casinos in Connecticut and Pennsylvania reported on Wednesday a nearly 32 percent drop in second-quarter profit, driven largely by lower slot machine revenue and a brutal winter that forced many senior citizens to stay home.

Mitchell Grossinger Etess, chief executive of the Mohegan Tribal Gaming Authority, said the Uncasville, Conn., and Wilkes-Barre, Pa., casinos "performed quite well" despite the weather and persistently weak economy that he said were beyond anyone's control.

"The winter's been horrible and I can tell you I've never been more excited about the arrival of spring," he said in a conference call with investor analysts.

"Beyond the snow days we were also impacted by these very, very cold weather days that really seemed to never end," Etess said. "We know this impacts visitation primarily among the older demographics."

The bitter cold also helped account for a "huge increase" in utility costs, he said.

Still, Etess said the Mohegan casinos "fared relatively well," particularly in comparison with other casinos.

Net income for the quarter ending March 31 was $9.6 million, down 31.6 percent from the same period last year. Revenue was $316.7 million, down about 3 percent from last year's second quarter.

One bright spot was a nearly 10 percent increase in non-gambling revenue, such as entertainment and hotels, to $60.5 million.

Keith Foley, an analyst at Moody's Investor Service, said it was more important to see gambling revenue pump up.

"It's a majority of what they do," he said.

Foley said in an investor note that April gambling revenue numbers will provide a "critical signal" of demand for casino gambling. The severe winter can be blamed for keeping gamblers at home, but "bad weather may be masking a more fundamental shift in gaming demand," Foley said.

A sizable drop in U.S. gambling revenue in April compared to a year ago could indicate that demand is down and "gaming company earnings may be in for a rough ride" for the rest of 2014 and possibly more permanently, he said.

Asked about the Mohegan Sun's performance in April, Etess suggested not too much has changed, saying "you're basically seeing the same kinds of things."

He said he is "feeling a little optimistic" about May and June.

Foley said consumer spending for gambling is easy to cut in a weak economy and although revenue has stabilized since the recession, it's "not shown signs that it has, or will, improve along with the broader economy."

If the economy does not improve and boost casino gambling, Foley said casinos face difficulty paying off debt taken on to finance expansion.


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus