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Mohegans lead Native inroad into national sports

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UNCASVILLE, Conn. -- A national major league championship just barely
eluded the grasp of the casino-rich Mohegan Indian Tribe, but that hasn't
slowed its emergence as a power in the sports industry.

In the same week that its Connecticut Sun professional women's basketball
team narrowly missed winning the WNBA championship, the Mohegans announced
a $505 million deal to take sole ownership of Pocono Downs, a 40-year-old
harness track in north central Pennsylvania. The deal will make it a major
player in the emerging "racino" and simulcasting business.

Other tribes are already planning to expand the racino foothold, buying
thoroughbred horse and greyhound dog tracks as well. And several are highly
interested in the business model of owning a professional sports team to
draw visitors to a casino and related arena.

The Mashantucket Pequot Tribal Nation, near neighbors of the Mohegans in
southeastern Connecticut, once made a serious bid for the New England
Patriots, last year's NFL champions. The Seneca Tribal Nation designed its
temporary new casino in Salamanca, N.Y., for eventual use as a lacrosse
arena and might acquire a professional lacrosse team to play there.

The Mohegans showed the feasibility of diversifying into sports when they
purchased the WNBA franchise the Orlando Miracle two years ago and brought
it to their 9,341-seat Mohegan Sun arena. They were the first WNBA owner
outside of the companion National Basketball Association. In less than two
years, they transformed the mediocre team into a spirited national

The acquisition of an aging racetrack for standardbred trotters and pacers,
a venerable but not the most fashionable sport, has the added bonus of
exploiting the Mohegan's gaming expertise. The $280 million purchase from
current owner Penn National Gaming Inc. of Wyomissing, Pa., would bring the
tribe into the hottest new gaming market in the Northeast. New Pennsylvania
state legislation signed in July authorizes up to 61,000 slot machines at
14 sites, primarily horse racetracks.

The Mohegan Tribal Gaming Authority will acquire sole ownership of the
400-acre site as well as a chain of five off-track wagering parlors. It
plans a major $175 million revitalization of the track and construction of
a new facility for slot machines. It would also pay $50 million for a state
gaming license.

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The Authority would operate under state law as a commercial entity, not
under tribal sovereignty, said Mohegan Tribal Chairman Mark Brown. The
Mohegans own and operate the Mohegan Sun casino on trust land in
Connecticut as a tribal enterprise. The deal appears to be well received by
local officials. In addition to a full range of tax revenue, the host
Plains Township will receive about $2.2 million a year from the casino's
slots take.

William Velardo, chief executive officer of the Authority, told the
Wilkes-Barre Times Leader the proposal was brought to the Mohegans by Bear
Stearns, investment bankers hired by Penn National to divest its interest
in the track. SG Americas Securities LLC advised the Mohegans on the

Under the Pennsylvania law, a racetrack owner adding a slot parlor to
create a "racino" could own no more than one-third interest in another
racino in the state. Penn National also owns a thoroughbred track near
Harrisburg and has decided to make that the main focus for its own proposed
slot parlor.

The Mohegan purchase would have to run a gamut of state approvals,
including a license from the state gambling commission. The first hurdle
could come at the next scheduled meeting of the Pennsylvania State Harness
Racing Commission, which would have to approve the sale.

If successful, the bid for the track would be one of the first major tribal
footholds in the rising racino industry. But several tribes have already
expressed a strategic interest in joining their potential rivals. The
Mohegans have already signed development and management contracts with the
Menominee Tribe of Wisconsin to build a casino at the Dairyland Greyhound
Park in Kenosha. As part of an agreement with local officials, which will
be on the local ballot in November for an advisory referendum, the tribes
would continue the greyhound racing program.

The Choctaw and Cherokee tribes have both purchased financially troubled
thoroughbred tracks in Oklahoma.

And the Mashantucket Pequot Tribal Nation of Connecticut, which owns
Foxwoods Casino Resort a short distance from the Mohegan Sun, has reported
holding talks with a consortium of Pennsylvania horsemen to explore
purchasing a track, although it has taken no definite action.