The first Indian-owned casino operator in Atlantic City received approval Friday from the New Jersey Casino Control Commission to assume daily operations of Resorts Casino Hotel.
Mohegan Gaming Advisors, which owns Mohegan Sun operations in Connecticut and Pennsylvania, will take over management of the resort’s oldest casino for at least five years under the agreement. Mohegan will also acquire a 10 percent share in the casino.
“With our approval of this agreement, Mohegan will be able to implement policies and practices that have helped to make its Connecticut casino one of the most successful ever,” commission Chairman Matthew Levinson said. “Mohegan will have the ability to cross-market Resorts with its casinos in Connecticut and Pennsylvania. That will be an extraordinarily valuable tool not only to strengthen Resorts’ financial position but to attract new visitors to Resorts and to Atlantic City.”
As soon as this fall, customers who visit Resorts and either of the Mohegan casinos will be able to redeem rewards points at any of the three locations. Mohegan officials have said the details of the rewards program are still being decided, but the program will tentatively include dining, shopping, hotel reservations, concert tickets and spa treatments, but not casino play.
Approval for the management agreement comes two days after the same Florida-based Seminole tribe abandoned plans to build a smaller “boutique” Hard Rock casino with as few as 200 rooms in Atlantic City, saying market conditions precluded the project from moving forward.
Mohegan’s management agreement with Resorts cannot be terminated by either party for the first two years except under very limited circumstances, such as a bankruptcy proceeding. After December 2014, the circumstances for termination broaden, but the intended duration of the agreement is five years.
That term is a “sufficient duration to ensure reasonable continuity, stability and independence in the management of operations,” state Division of Gaming Enforcement Director David Rebuck wrote in a letter to the commission.
The commission was originally scheduled to vote on the measure Wednesday, but the vote was postponed to allow the commission more time to review the terms of the deal.
The approval also comes on the heels of an announcement that Resorts will add Margaritaville-themed restaurants, bars and gaming to the casino. Mohegan is already familiar with the brand associated with singer Jimmy Buffett, as its Uncasville, Conn., casino has a Margaritaville restaurant as well.
The planned $35.5 million expansion project that will see the reconstruction of Steeplechase Pier received a state environmental permit earlier this week that was necessary to move the project forward. It’s expected to be open by May.
Morris Bailey retains 90 percent ownership of the casino in the agreement. He turned to Mohegan after the February death of his business partner Dennis Gomes, the creative mastermind behind the casino. Gomes’ son, Aaron, resigned as the casino’s executive vice president last week to manage a casino in Australia.
Mohegan will now have to apply to the state for a casino service industry enterprise license. The commission ruled Friday that Mohegan will only need to obtain that license rather than a full-fledged casino license. The enterprise license is less expensive but requires nearly the same background checks and investigations as a casino license.
A law changed last year gives the commission discretion to require a company with a management contract to obtain the casino service industry enterprise license rather than the full license. This was the first case in which the commission was charged with deciding which level of licensure would be required, Levinson said.
The decision for the lesser level of licensure was based, in part, on the fact that Bailey maintains overwhelming control of the casino, and Mohegan requires prior approval for significant changes.
The management agreement gives Mohegan oversight over the selection of games and the configuration of the gaming floor. DGMB Casino LLC, of which Bailey is the managing member, retains the authority to provide input on major theme or design changes even if those changes don’t affect the budget. Mohegan also must receive prior approval from DGMB for any major decisions on branding, marketing and the competitive position of Resorts.
“I will support this motion, but let me say that I do so with a certain degree of trepidation. It is clear that if this matter had come before the commission two years ago, Mohegan would have needed a full casino license,” Commissioner Alisa Cooper said prior to the vote. “If there is change to (the financial conditions), I would support revisiting this issue in the future.”
According to the management agreement, after a little more than two years have passed, Mohegan has a five-month period in which it can purchase as much as an additional 15 percent interest in the casino. Increasing that interest could affect the DGE’s view as to the extent of Mohegan’s control in the operation, Rebuck said.
Mohegan is required to give the DGE and the commission 30 days notice of its intentions to purchase additional interest, so that the licensing status may be reevaluated if necessary.
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