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Mohegan Sun Enters Deal With Atlantic City Casino

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Mohegan Gaming Advisors (MGA), a subsidiary of the Mohegan Tribal Gaming Authority (MTGA), has signed a management contract and investment agreement with Atlantic City, New Jersey-based Resorts Casino Hotel, states a MGA press release. MGA plans to buy a portion of Resorts and manage its day-to-day operations including its accounting and marketing, reported the Philadelphia Inquirer.

“We intend to implement many of Mohegan Sun’s operational philosophies and proven successful concepts which will improve the guest and employee experience,” MGA President Gary Van Hettinga said in a statement.

During a recent press conference at Resorts, owner Morris Bailey called the new relationship “an ideal formula for success; melding the unique Resorts brand with Mohegan’s reputation for unparalleled service and guest experience.”

The arrangement, which still requires approval by the New Jersey Casino Control Commission, provides cross-marketing opportunities for the casinos and its customer-loyalty programs. Beginning this fall, players will be able to redeem their rewards points at the Mohegan Sun in Uncasville, Connecticut; the Mohegan Sun at Pocono Downs in northeast Pennsylvania; and at Resorts. Credits will also apply at the Connecticut casino’s gas station and golf course.

In addition, the Mohegan Tribal Gaming Authority (MTGA), operator of the Mohegan Sun casinos, hopes to win one of the remaining two licenses to operate a commercial casino in Palmer, in western Massachusetts.

If New Jersey regulators approve the partnership, MGA will become the first Indian-owned casino operator to enter the Atlantic City market. The tribe will also be managing the first casino established in Atlantic City (in 1978) and the first legal casino outside of Nevada.

“What it shows is how the gaming industry has changed, and how tribal gaming has grown,” MTGA Chief Executive Officer Mitchell Etess told the Associated Press. “It used to be that commercial casino companies would help tribes build and run casinos. Now it’s the other way around; things have progressed to the point where commercial casinos want us to come in and help them.”

Etess told the AP the tribe has eyed the Atlantic City market for years, but wasn't keen on investing upwards of $1 billion to build a casino from the ground up. Through this deal, the tribe is able to tap the Atlantic City market, and potentially pave the way for the tribe to make other management deals at non-Indian casinos.

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"It's a great opportunity to show what we can do," Etess said. "We know we can do a great job."

Resorts has planned a $35.5 million expansion, which will include two restaurants, a bar, retail shops and expanded gaming, reported The Press of Atlantic City. Construction is scheduled to begin in September, and be fully completed by May 2013.

As part of the expansion, Resorts is adding Jimmy Buffett’s Margaritaville to its 1920s-theme casino, which is modeled on the HBO series “Boardwalk Empire.”

The Margaritaville Cafe will sit 400 inside Resorts with an 40 additional seats on the Boardwalk, reported the Philadelphia Inquirer. On July 24, Gov. Chris Christie joined singer/songwriter Jimmy Buffett at Resorts to announce the first Margaritaville coming to Atlantic City.

The Mohegan Sun in Connecticut likewise operates a Margaritaville Cafe. “The potential for this kind of attraction literally right on the beach is just fantastic,” Etess told the AP.

According to Greg Roselli, a casino analyst for UBS Securities, the new Resorts-MGA deal is “not good news for the competitors,” he told The Press of Atlantic City. “Atlantic City is still a very challenged market. Before, you had a property that was not much of a competitor, but is now taking a big step to expand its customer base.”

Steve Norton, chairman and CEO of Norton Management, an Indiana-based casino consultancy, said Mohegan is an attractive partner to Resorts because of the company's strong financial standing.

"Mohegan, which was recently refinanced, brings a stronger balance sheet to the partnership, which is paramount in today's Atlantic City,"said Norton, who served as vice president of Resorts when it opened in 1978 . "The tribe and its excellent player base in New York and north Jersey can be shared by Resorts."