Mashantucket Pequot Gaming Enterprise Inc.

views updated

Mashantucket Pequot Gaming Enterprise Inc.

Route 2
Mashantucket, Connecticut 06339
U.S.A.
Telephone: (860) 312-3000
Fax: (860) 312-1599
Web site: http://www.foxwoods.com

Private Company
Incorporated: 1992
Employees: 11,500
Sales: $1 billion (1998 est.)
NAIC: 713210 Casinos; 721120 Casino Hotels; 722110, Full Service Restaurants; 722213 Snack and Non-Alcoholic Beverage Bars; 711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities; 713910 Golf Courses and Country Clubs

Mashantucket Pequot Gaming Enterprise Inc. operates the Foxwoods Casino Resort, a 4.7 million square-foot complex comprised of five casinos; three hotels; over 55,000 square feet in meeting space; a theater and entertainment district; a health spa; 17 retail shops; five gourmet restaurants; and a variety of casual restaurants, bars, and cafes. The resort’s casinos encom-pass over 315,000 square-feet of gaming space including a non-smoking casino. With over 340 gaming tables, Foxwoods offers poker, blackjack, craps, roulette, baccarat, and several novelty games. Other gaming options include keno, high stakes bingo, and more than 5,800 slot machines, including high-limit slots from $5 to $100. For family entertainment Foxwoods provides theaters, an arcade, Turbo Ride, and the Mashantucket Pequot Museum and Research Center. Gaming and many services are available 24 hours a day, every day of the year. Located on the Mashantucket Pequot reservation at Ledyard, Connecticut, Foxwoods towers above the wooded countryside with its striking turquoise roofs. The resort takes its name from the Mashantucket Pequot Tribal Nation; the Pequot Indians are known as “the fox people,” while Mashantucket means “much-wooded land.”

A Resort Rises Above the Woods

The history of Mashantucket Pequot Gaming may be traced to the efforts of the Pequot Indians to gain national recognition as a Tribe. History books had long held that the Pequots, of what is now southeastern Connecticut, virtually disappeared during the 17th century, following the Pequot War and the Colonial years of hardship and disease. Those who weren’t killed, historians maintained, were assimilated into the European culture of the time. Those descended from Pequots of the pre-Colonial area, however, begged to differ. In the 1970s, a man of Pequot descent, Richard “Skip” Hayward, led a successful movement for the federal recognition of the Pequot Tribe; Hayward was elected chairman of the Mashantucket Pequot Tribal Nation in 1975, and the government officially recognized the Tribe in 1983. Archeologists would later support the Tribe’s claims, as the discovery of artifacts revealed that the Pequots did indeed survive the 1637 war and lived as a Tribe for years to come, striving to maintain their culture. What had dwindled to a small parcel of reservation land was bolstered in the early 1980s by a $900,000 federal grant used to repurchase Pequot land; the Pequot reservation would eventually total some 2,500 acres.

As chairman of the Mashantucket Pequot Tribe, Heyward, who had worked as a pipefitter in the 1970s, announced that the Tribe would begin developing some of the reservation land in order to better the Tribe’s economic status. In 1986, they opened a 2,100-seat bingo hall on the reservation. Two years later, with the signing of The Indian Gaming Regulatory Act legalizing gambling on Indian reservations, Heyward and the Tribe decided to build a casino. Typically, Heyward encountered difficulties finding investors for the project, but he was eventually able to secure funds abroad, through a Malaysian developer who reportedly provided around $60 million in start-up capital. To consult in the management and legal issues surrounding the new casino, Heyward tapped G. Michael Brown, who would be named CEO of the company in 1993.

The new Foxwoods High Stakes Bingo & Casino opened in February 1992, offering poker, blackjack, roulette, and other games at 170 game tables. In addition to the 46,000 square-foot gaming casino, the facility included three restaurants, a museum, and a piano bar. The casino proved a success from the first day as charter and tour buses brought senior citizens and tourists from New York, Rhode Island, Massachusetts, and other areas of Connecticut. The Tribe did not originally intend to operate a 24-hour facility but quickly adapted to demand.

Foxwoods began to offer gaming on slot machines in early 1993. The Mashantucket Pequot Tribe and the State of Connecticut agreed that the Tribe would pay to Connecticut a 25 percent state tax on “net win,” or a minimum of $100,000 million per year. Foxwoods started with 1,500 machines and quickly reached an average daily win of $585, exceeding expectations. Foxwoods staff and consultants designed many of the slot machines. The Rock ‘n Reels quarter slots, based on the Wurlitzer jukebox of the 1940s, proved so popular that Foxwoods decided to manufacture and market the machines to other casinos in partnership with Anchor Game.

Foxwoods introduced the Wampum Club card to measure guest gambling activity and to provide guest discounts. A magnetic swipe code on the back of the card recorded game play and added points accordingly. With a free membership, Wampum Club card holders swiped the card at slot machines, bingo, keno, and table games and redeemed accumulated points toward meals, theater tickets, discounts at the salon or spa, merchandise, or admission to the Cinedrome. Foxwoods also awarded random cash prizes and offered special promotions to club members.

Hey ward’s hopes for property remained ambitious, and expansion plans were soon realized. In November 1993 Foxwoods completed a $240 million expansion, which transformed the casino into a complete destination resort, renamed Foxwoods Resort Casino. The expansion involved five large gaming areas, offering keno, Racebook, an additional 1,150 slot machines, and an additional 64 game tables. New services included a beauty salon, 17 retail shops, an ice cream parlor, a delicatessen, and a pizza stand. Facilities at the 312-room Great Cedar Hotel included a health spa, a fine dining restaurant, and meeting and conference rooms; the hotel has received the AAA Four-Diamond rating since opening. Moreover, the Mashantucket Pequot Tribe invested in the Two Trees Inn, a 280-room country inn adjacent to Foxwoods, which offered a 24-hour free shuttle service to the casinos.

For family fun and adult entertainment Foxwoods created a theater and entertainment district. The Cinetropolis District included the Cinedrome, a 360-degree video theater featuring family films during the day and high tech videos and live entertainment as a dance club at night, the Cinedrome Niteclub. The Turbo Ride comprised six-direction seats which moved with the action on the oversized video screen. Entertainer Frank Sinatra presided over the opening of the Fox Theater, a 1,400-seat live-performance center.

The spectacular financial success of Foxwoods allowed the Tribe to expand further. In June 1994 a $65 million project added 300,000 square feet and involved the relocation of the bingo hall to a larger space. The new multi-purpose center accommodated over 3,000 bingo players or up to 5,000 people for live performances and boxing events. Foxwoods placed 1,200 slot machines into the former bingo hall, increasing total slots to 3,864 and total gaming space to 190,000 square feet. New family-oriented entertainment included the Fox Arcade, featuring electronic video games, pinball, and other games.

Another $80 million expansion began in April 1995, adding a poker room and a high-limit gaming area with 30 tables. A 200-seat, state-of-the-art Racebook featured a 50-foot high resolution video screen, L.E.D. display boards, individual television carrels, and real-time odds. The second phase of the project involved a new casino for non-smokers, completed in spring 1996.

During this time, competition for Foxwoods emerged in the form of the new Mohegan Sun casino, just ten miles away. However, according to company management, the new casino only affected slot machine revenues temporarily as many gamblers preferred the ample amenities at Foxwoods, while the overall customer base continued to grow. Slot-win per day averages were comparable by fall 1996 as slot business increased 43 percent overall, with 3500 new machines between the two casinos. Foxwoods and Mohegan Sun, operated by the Mohegan Tribe, eventually would come to see themselves as partners in attracting tourism to Connecticut rather than as competitors.

Foxwoods enhanced its services with the implementation of ATM network multimedia applications. Basic applications included interactive information kiosks throughout the resort and in hotel guest rooms. The technology also allowed Racebook patrons to stop and replay videos of horse races at individual television carrels, allowing them to review the last three races. The addition of a photo into the Wampum Card member’s record allowed a MagScanCard reader to project the image and name of a bingo winner onto a large video screen along with the winning bingo card.

Company Perspectives:

The Mashantucket Pequot Tribal Nation shall promote spirituality, strong family values, education, social stability, economic independence, and the well-being of tribal members, employees, and guests in a healthy supportive environment. The ultimate goal is to protect and advance the sovereign rights of the Tribal Nation in order to build and preserve a cultural, social, and economic foundation that can never be destroyed.

Conventions and an Upscale Clientele in the Late 1990s

Already attracting 30,000 visitors per day, in December 1995 Foxwoods unveiled a $350 million plan to add 1.4 million square feet of resort facilities. The 18-month project involved a 824-room hotel and over 50,000 square feet of conference and meeting space designed to attract large and small conferences, trade shows, meetings, and special events. In addition to grand views of the Connecticut woods, the Grand Pequot Tower included a three-story atrium, the 25,000 square-foot Grand Pequot Ballroom which featured crystal chandeliers, two gourmet restaurants, and a cafe. Meeting facilities included rooms ranging from 3,000 square-feet to 6,300 square-feet, while the ballroom provided up to five divided rooms. The Foxwoods Business Center offered office supplies and a variety of business services. The addition of 50,000 square-feet of gaming space included 958 slot machines, 60 game tables as well as high-stakes gaming in the exclusive Club Newport International.

The major portion of the Grand Pequot Tower opened in July 1997. Additional floors were completed in November followed by the opening of additional meeting space in April 1998. By the time the expansion was complete, Foxwoods became the most profitable casino in the Western hemisphere and the slot machines garnered more revenue per day than slots in New Jersey or Nevada.

To complement the resort’s upscale image, Foxwoods introduced a private-label fragrance, designed by Georges and Vivian Gotlib, in May 1997. The couple had been seeking new outlets for their fragrances and presented a classic floral fragrance to Foxwoods’ merchandising division. The products fit with the resort’s fashion-forward boutiques and salons. Promotions involved posters displayed throughout the resort, advertisements on the in-house television channel, and sample and information tables at a Paul Anka concert. The launch of a bath and body care line, Sea and Forest, was planned for July.

Other activities of the Mashantucket Pequot Gaming Enterprises involved a partnership with the Bernard Investment Group. The joint venture acquired two area golf courses, renamed the Foxwoods Golf and Country Club at Boulder Hills, a champion-ship, 18-hole course, and the Foxwoods Executive Golf Club at Lindhbrook, a smaller 18-hole course in nearby Rhode Island. Foxwoods provided a shuttle service for hotel patrons. The Mashantucket Pequot Tribe began development of Fox Navigation, a ferry service from Long Island to New London, Connecticut, with bus transportation to Foxwoods from New London.

The rapid expansion of Mashantucket Pequot Gaming was not without its hitches, however. The company met with resistance from some vocal southeastern Connecticut citizens, who claimed that the casino brought traffic congestion and crime to their towns. Some alleged that organized crime had entered the area as well. Residents of one neighboring town brought a lawsuit against the federal government, hoping to curtail the company’s expansion efforts. However, the company prevailed in its efforts to expand and improve the resort. Moreover, it addressed concerns about a possible increase in gambling ad-diction by working with the Connecticut Council on Problem Gambling. Brochures and posters with a toll-free help line number were distributed throughout the gaming centers. Also during this time, the company brought in a new management team, after suspecting some illegal financial dealings, or at best conflicts of interest, on the part of CEO Brown and another former manager, Alfred J. Luciani. The new management, including Hilton Hotels executive Bud Celey as CEO, set to work improving the company’s fiscal accountability.

Bolstering its tourist draw, the Tribe opened a museum near the Foxwoods cite in August 1998. The Mashantucket Pequot Museum and Research Center traced the history and way of life of the Tribe from the Ice Age to the present day reservation. The museum included a life-size 16th-century Pequot village including hand-crafted human figures, and an outdoor living-history museum which recreated an 18th-century two-acre farm. Film and video presentations included a computer-animated production of a caribou kill of 11,000 years ago, projected on a spherical screen 50 feet in diameter. The facility also included a library and archives, available for research by students and scholars.

To streamline its food preparation operations Foxwoods constructed a central kitchen facility to support the preparation of over 40,000 meals per day at 29 restaurants. Equipment included a 50-gallon steam-jacketed kettle for the preparation of soups, stews, and cooking stock and a wood-chip smoking cabinet for seafood and poultry. A warming/steaming table connected to the heating, ventilation and air conditioning system to provide a continual supply of steam while the drainage system for a fish freezer connected to the resort’s drainage system. Kitchen facilities included a 2,000 square-foot cook/ chill commissary for baking and food preparation.

Foxwoods completed the final phase of the Grand Pequot Tower Hotel in the fall of 1998. The 20,000 square-foot Grand Spa and Salon provided Jacuzzis, steamrooms, an exercise room, a heated swimming pool, and beauty and massage services. Accommodations at the hotel included 23 luxury villas for premium players, including the two-story, 5,000 square foot Mashantucket Villa. Located on the 22nd and 23rd floors, the villas featured original artwork, large screen televisions, and gold-plated bathroom fixtures. Services included on-call butlers, available 24 hours a day.

Continued Success at the End of the 1990s

Despite some local opposition, the people of Connecticut were generally satisfied with the effects of reservation gaming on the state. Over $100 million a year in state taxes on slot machines funded economic development in 169 cities and towns throughout Connecticut. Foxwoods became the largest employer in southeastern Connecticut and was significant in recruiting employees from Rhode Island as well. After decreases in defense spending led to massive layoffs in the area around 1990, Foxwoods provided many new jobs to fill the void. While many of the jobs paid less than one could earn in the defense industry, the health care and other benefits were comparable. New positions included technicians for the design and repair of high tech slot machines as well as for the building of ferry boats for Fox Navigation, a high-speed ferry service. The ferry service also sparked economic renewal at New London where terminal facilities were refurbished.

Key Dates:

1986:: Pequot Tribe opens a high stakes bingo hall.
1988:: U.S. government legalizes reservation gambling.
1992:: The Foxwoods High Stakes Bingo & Casino opens for business.
1993:: Foxwoods becomes a destination resort with a $240 million expansion.
1995:: Tourist traffic reaches 30,000 visitors per day.
1997:: Opening of Grand Pequot Tower.
1999:: Arrival of one millionth bus passenger.

A new advertising campaign launched in May 1999 involved a new slogan. From “experience the wonder of the Connecticut woods,” a tagline that had originated with the bingo hall, Foxwoods adopted “the wonder of it all” to reflect its appeal as a resort destination. The print and television campaign targeted residents of New York, Massachusetts, Rhode Island, and Connecticut. At the end of 1999, the campaign focused primarily on New Yorkers as Fox Navigation’s ferry service neared implementation.

Foxwoods continued to be a popular gambling destination as 1999 produced record revenues, including a record slot win of $70.4 million for the month of July. The facilities attracted more than 40,000 visitors on an average day in 1999, and for the third year in a row, more than one million people arrived at the resort by tour bus. In December Foxwoods gave the one-millionth passenger over $1,000 in prizes, while all passengers on that patron’s bus received gifts and a private party. The December 1999 issue of Casino Player magazine named Foxwoods among its “Best of the Millennium” list of casinos in the United States and the Caribbean. Of its 33 ratings categories, the magazine commended Foxwoods in several, praising in particular its restaurants, bars and lounges, family attractions, high-limit slot salons, casinos, shopping, and hotel rooms.