“I Think The AIs Have It. The AIs Have It.”

The Artificial Intelligence Game Changer

In the House of Commons – the British parliament – a question is put to the House verbally by the Speaker. If there is a definitive answer, they use either the phrase, “The Ayes have it,” or “The Noes have it". Making a play on words, “AI” (Artificial Intelligence) sounds the same as “Aye”, so…

In the 1990s, our boutique consultancy was working on three projects simultaneously that were of a similar nature. We were working with Professor Andrew Ehrenberg, considered the father of loyalty marketing because his academic work helped to develop buyer-behavior and loyalty (database) marketing. The three projects our consultancy was working on had, in total, databases exceeding 100 million customers – the clients were publicly listed multi-site and multi-jurisdictional corporations. It took us months of tedious toil to find valuable data nuggets buried in the terabytes of transactional data in each ‘data lake.’

Nowadays, the recorded transactional data is not in terabytes but in multitudes of petabytes, and the compute power required to perform analyses is no longer open only to the likes of NASA and corporations with Cray supercomputers. Still, it leaves me speechless when I consider how vastly superior our data interrogation is today compared to what it was like back when I started my career.

Alongside the advancements in computer power, we have Artificial Intelligence to thank. As with all things ‘computing,' there's always the risk of 'rubbish in + rubbish out' = meaning. The humans creating and interpreting the interrogation and analyses still need to be more than artificially intelligent in order to deliver seriously valuable, EBITDA-enhancing nuggets of buyer behavior that can be influenced by high quality marketing. And, equally importantly, the behavior of non-buyers — it always surprises me how research so often ignores the non-buyers. That's the type of detail where human intelligence really makes a difference, in order to minimize the various biases and misses that are in-built when analyzing buyer behavior.

Damien Connelly, Editor EMEA

Buyers Galore

We will be attending G2E Asia Special Edition: Singapore, which is at Marina Bay Sands May 30 through June 1. You can read more about 'G2E Singapore' in my article in this issue. We look forward to catching up with everyone whilst we're there.

Another place where there are buyers galore is our social media channels. On LinkedIn, we have a closed group to ensure our membership is both highly relevant and very high quality. Our focus on quality is self-evident from our Twitter statistics — we only Follow 269 yet we have 4,325 Followers. We do not follow for the sake of getting a follow back ... we're not that superficial and we have sufficient marketing expertise to understand how quality social media works.

See you in Singapore?

Please join our LinkedIn Group and engage with our high-quality, industry-relevant community.

https://www.linkedin.com/groups/1813053/

Editor EMEA Damien Connelly

David McKee

Mohegan Gaming & Entertainment is dead. Long live plain old Mohegan because “that name is highly recognized in the resort business,” says CEO Ray Pineault. Crisp, candid and upbeat, Pineault makes an ideal ambassador for a gaming empire that is growing to embrace the globe. Starting with a casino, Mohegan Sun, built in 1994 from a converted plant formerly used to craft nuclear reactors for U.S. Navy submarines, the Mohegan Tribe’s business ambitions now reach as far as the shores of South Korea.

Not only is Mohegan’s long-aborning Inspire project near Korea’s Incheon International Airport coming very close to the finish line, the tribal colossus has also set its sights on New York City. Amid a scrum of competing bidders, Mohegan has teamed with Soloviev Group to pitch Freedom Plaza, a giant, mixed-use development that would run the gamut of offerings, near the United Nations’ headquarters on Manhattan’s East Side. Since Mohegan had just launched its Manhattan Momentum Partnership Program, the Big Apple seemed the obvious starting point.

How is your partnership on Freedom Plaza in New York City progressing?

The partnership has been on solid ground all along. Obviously, we’re in the midst of doing all the heavy lifting of preparing responses to the request for proposals, setting up programs properly. We’re working on getting community and political support, and just fine-tuning our product to bring the best that we can to New York City and the State of New York.

When were you brought into the Freedom Plaza project?

It goes back. It’s probably not as long as some of these other operators have been working on New York but we’ve been together five or six months now. We’re quite honestly drinking from a fire hose to make sure we get caught up on everything that’s happening. Being a Northeast operator, we have followed the track of New York downstate gaming for a long time. Once we found a symbiotic partner, like we did in the Soloviev Group, it was incumbent upon us to put our best foot forward, to but the best best proposal forward with the best property. So we’re really excited about it.

It’s an unusual project, incorporating a Ferris wheel, soccer pitches and low-income housing, plus a casino. What makes such disparate elements hang together?

This is a total utilization of the property. It’s just under seven acres. We’re looking to find the highest and best use for the property, for the community and for the City of New York. How do we generate maximum value to the community and the city? The casino is going to take up less than 10 percent of the entire project footprint, but as you know, New York City is in desperate need of affordable housing. Our partners have committed to providing a good number of affordable housing as part of the project. That is a good development for the community. And then open space: New York City has a dearth of areas for open space and providing a community with areas where people can go and use the open space we plan to provide, again, is for the benefit of the community and making sure we’re giving the maximum value back.

What’s the background of your partner, Soloviev Group?

Their father was a New York City developer for quite a long time. They have a lot of commercial real estate in New York already. They’ve actually owned this piece of property for several years. In fact they built the apartment/condo complex directly across the street that was part of the initial purchase, so the family— particularly through the eldest son, Stefan—has developed a very large business outside of Manhattan and they have many holdings, but they still have realestate holdings in New York.

Together, you’re pitching something called the Manhattan Momentum Partnership Program. What is it, in essence?

It’s a loyalty program. Put it in terms of your favorite loyalty program, whether it’s with your favorite hotel chain, a Marriott or a Hilton, or your loyalty program with your local grocery store or with a retailer that you do particular business with. When you’re a member of the Mohegan Momentum program, you earn money back during your spending with our facilities and then that money can be utilized for goods and services, whether at our property or with partners that we sign up to redeem your rewards. The way we look at it in New York is we want to have as many partners as possible and we promote your business, and we promote our guests to use your business by being part of the Mohegan program. You can use the rewards that you’ve earned at Mohegan to go dine at another restaurant, to shop at a local shop or use other local services, such as tax services. In Connecticut we have relationships with auto-body shops or car dealerships or local retailers. You get to use rewards that you earn within the resort itself and outside to promote local businesses.

You’re trying, through the Momentum Partnership, to incentivize patronage of affiliated restaurants and amenities. Who are some of these affiliates so far and are many of them nearby?

Just having come back from the site this past weekend, there’s not a lot of business in the one- or two-block radius of the site itself. But we’re going to solicit all the businesses and local community. Our team has told us we’ve had a few express interest and sign up. Anybody within the Manhattan area, we’re happy to work out a partnership deal to promote your business in conjunction with ours.

Will they eventually find themselves in competition with Freedom Plaza’s own amenities?

I don’t think we see it as competition. We see it as an overall enhancement to our product. When we’ve done this at our other properties, whether it’s partnering with another hotel, partnering with a local restaurant, it just provides an additional incentive for our guests to say, ‘Hey, I can use it at Mohegan but I can also go out to my favorite restaurant or my favorite car dealership.’ Yeah, they’re they competitors for discretionary spend, but it enhances the overall value of the program and creates greater guest loyalty. At the end of the day it’s a net positive.

There are at least seven other casino proposals circling New York City at present. What has to happen for Freedom Plaza to be one of the final three?

Wow, that’s a great question. Your count’s probably a little bit light on the seven. There’s going to be more than that and heavy competition for getting this. When you take into account the location, that it’s a shovelready piece of property, all that we’re going to give back with open space, affordable housing and a casino taking up less than 10 percent of the total square footage, then it is the best project for New York City, for the state of New York. But at the end of the day, the siting board is going to make that determination and we’re going to put our best foot forward and talk about the value and benefits of our project.

Various revenue projections have been tossed around for a Class III casino in New York City. How much money do you feel there is to be made?

I don’t want to go into exact projections. Everybody has been projecting what the size of the market is and what it could generate. You could do some extrapolation from publicly reported facilities that exist as electronic table games and slots only. The projections that we’re seeing are not that far off from what probably the total market is. But it also depends on where it’s located as well. Is there ease of convenience of getting to the property? Is it offering the right amenities? There’s a lot of factors that go into maximizing the value of the overall project and that’s we’re focused on. That’s why we think between location, amenities and community involvement, we’re gonna offer the state the best project.

How would a Freedom Plaza casino impact business back at Mohegan Sun?

Listen, we’ve dealt with this in Connecticut for many, many years. You can go back to the late 1990s-early 2000s when Connecticut had essentially a duopoly with Foxwoods and Mohegan Sun, and Atlantic City was kind of our closest competitor. Since that time we’ve had New York open additional gaming facilities. We’ve had Pennsylvania. We’ve had Massachusetts. We’ve had Rhode Island expand. This is something that is not new. Anytime there’s a market that is bearing rewards, people want to enter into it and we’ve been prepared for it. Quite honestly, this New York legislation is something that’s been around for it is now seven years, because this would have been the time period there were going to talk about downstate casinos anyway. Gov. Kathy Hochul just moved forward the time frame we expected, so this is something we’ve been prepared for. If we were to win the New York license we think it will be a net positive for both facilities, because the New York facility will be tremendously successful and we’ve got the Connecticut property right here that we can work together on co-marketing.

What is Mohegan Sun doing to remain competitive if gambling comes to Manhattan?

As a corporate entity, to remain competitive—as you may or may not be aware—we’ve expanded outside of Connecticut. We own a property in Pennsylvania. We have a long-term lease to operate two casinos up in Niagara Falls. We’re currently managing the gaming floor and actually own the gaming floor out in Las Vegas at Virgin Hotel. We’re also in the process of building a multi-billion-dollar resort at Seoul, South

Korea. But from a property perspective we’re always looking at ways to enhance the overall property. A few years back, we brought in a staple of New York, Tao, as one of our restaurant groups here. We redid all of our retail offerings, bringing in things like Coach to enhance our overall retail. We’ve recently remodeled our highend lounges for our guests, to give them a better product and more convenience. So obviously this is something we’re constantly evolving and staying on top of but we think we continue to offer a first-class, toprate property here in Connecticut. We continue to look for ways where our brand can be found worldwide.

You mentioned Virgin Las Vegas. How is your casino doing, given that it’s not on the Las Vegas Strip? It’s not and visitation is still down from 2019. We continue to see our Las Vegas property continue to ramp and build. Obviously, we were new to the market so we had to start fresh and build our customer base. Our team out there continues to do that. When you look at the future of Las Vegas, with Formula One coming, with the Super Bowl coming, with many of the conventions starting to return to pre-pandemic levels, we have continued confidence in the growth and expansion of that product there. It’s the top gaming market in the world. We felt that we had to be a part of it, and we’re going to grow our database and enhance our product.

It’s a chain-dominated market. What are the challenges of operating a stand-alone brand in Las Vegas?

Obviously you’re competing with the Wynns, the MGMs, the Caesars, the Sands. But there’s a lot of local operators too, and it’s a matter of what business you’re going after and where you’re looking to garner that business. When you look at the airport traffic, it’s at the highest levels that it’s ever been and it’s continuing to grow. Therefore, we just have to make sure that we identify our market, that we utilize our existing network of properties, and continue to solicit and move people across our network. Having the database we have here in the Northeast, along with what we’ve been able to generate in Niagara and what we have with our other properties, we can provide a feeder market to Las Vegas from our existing properties.

How is Mohegan Sun Pocono Downs performing following its rebranding?

We rebranded it in alignment with the rebranding of the entire organization as Mohegan. It has become a highly recognized and respected name, particularly in the north. It has been actually been very well received by our guests. Pocono Downs was a name that we adopted when we purchased it and, as we thought about it, it wasn’t really fitting for the property. Mohegan has become very well accepted by our guests. We’re pleased with the performance that the team is having down there. Obviously, during the pandemic everything was shut down like everywhere else. But it’s come back very strong and they continue to come back.

How is Inspire progressing in South Korea?

Inspire is progressing tremendously well. We continue to say, as we have for many quarters now, that the opening of Inspire will be in the fourth quarter of this year. We’re going to begin the mass-hiring process in a few short months. Our team is continuing to prepare for those hiring events. We’re continuing to fine-tune the product on-site that we have. The construction team has 3,000 people on a daily basis and it’s going up swiftly. We think it’s going to be a tremendous product, akin to Mohegan Sun. I like to tell people we’re building Mohegan Sun – which took us four phases to do – in one phase in Korea.

Mohegan recently upped its equity contribution to the project. What’s going on with that?

Yes, we did announce that. There were a few things that went around. When we first priced Inspire was back during Covid, which with inflation, with the delay, the price had obviously gone up. We wanted to deliver the first-class product that we promised the South Korean government that we would deliver and in order to do so we had to make sure that we covered some of those cost escalations that resulted. Some things that had originally been cut from the program we wanted to put back because they were enhancements to the overall product. So we added a few things back, like the convention center all of the breakout rooms and if we wanted to run a first-class convention space you had to have the breakout rooms. The buffet, which in Korea is a highly profitable generator, had not been in the original program. As a first-class resort in Southeast Asia, a buffet was necessary. We obviously, due to Covid and price-escalation supply issues, wanted to make sure the project was fully funded.

Given the crackdown on VIP play from China and capital flight, where do you now expect to make your bread and butter?

The crackdown in China really has been on the junket operators. Their activity was suspect at best and in fact one of the largest junket operator-owners [Alvin Chau] was recently sentenced to a prison term for their conduct. There’s business that can be garnered and we’re actually closer to more Chinese citizens than is Macao. When you think about where we’re located, which is in the northern part, we’re actually closer to China than Macao is. We do still think we’ll get business from China. We’re very close to Japan, which recently announced that they’re going to issue a resort license but that’s not supposed to open for eight more years and Japan is a tremendous market. And so is the rest of Southeast Asia, whether it’s Taiwan or Vietnam. Incheon, pre-pandemic was the seventh-busiest airport in the world and, on top of that it is the hub for layovers for many, many countries, traveling on to other places. The typical stayover time is six to eight hours on a layover. In Korea you can get a 24-hour visa to leave the airport and we’re located within a mile and a half of the airport. We will be running shuttles and picking up people to come enjoy our facility. So we think we’ll be getting people from all over the world. There’s two million expats as well as dual-passport holders that reside in Korea [where gambling by citizens is confined to one casino], which has a population of about 25 million.

How are your digital operations performing? Fantastic. Beating our expectations. Performing beyond what he had expected in the first year and a half of operation. We said from the get-go that we were going to enter digital gaming and enter it profitably. I’m happy to report that we had a profitable year last year and we’re seeing significant growth again this year. We’ve since expanded into Ontario, where we continue to see growth in our base there and we’re currently looking at other jurisdictions to expand to expand our digital footprint.

What other irons do the Mohegans have in the fire?

We are always looking at opportunities. We get calls constantly. We have a development department that goes out and looks at various opportunities. There’s a couple of things we’re looking at right now. Nothing to announce today. We’re going to look for opportunities to expand and bring the Mohegan name to other parts, other properties and other jurisdictions as the opportunities arise.

Feature: Thunder Valley Casino Resort