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Inspire by Mohegan Sun

Follow-up Interview with Bobby Soper President & CEO, Mohegan Tribal Gaming Authority. By Steve Karoul

It is a pleasure to follow up with you to learn more about your massive new casino project in Korea. Our readers were very intrigued after our last interview with you about the Mohegan Sun Casino to learn more about your international expansion into Korea. To our knowledge, there are very few Native American Tribes looking to expand on a global basis. Therefore, it would be helpful if you could explain to our readers some of the background and history about both the Mohegan Sun Casino as well as the responsibilities of the Mohegan Tribal Gaming Authority and the role that both you and they played in the decision to seek out international casino opportunities as opposed to just focusing on opportunities within the United States?

The Mohegan Tribal Gaming Authority (MTGA) is an instrumentality of the Mohegan Tribe of Indians of Connecticut that owns and operates all of its gaming assets, including two of the most successful gaming and entertainment destinations in the United States, Mohegan Sun in Connecticut and Mohegan Sun Pocono in Pennsylvania.

Domestically, along with these properties, MTGA also provides development, consulting and management services for other casino developments. MTGA is credited with advancing the once struggling Resorts Casino Hotel in Atlantic City, New Jersey, into record profitability over the three years that it has served under its management and investment contract. MTGA’s venture with the Cowlitz Indian Tribe of Washington State will introduce the 500-million-dollar casino project that will be the West Coast’s premier gaming, dining, entertainment and meeting destination slated to open in spring of 2017. Most recently, MTGA announced a partnership with the Tunica-Biloxi Gaming Authority, the owner and operator of the Paragon Casino Resort in Marksville, Louisiana for a consulting agreement which started in the spring of 2016.

While we have been successful in extending our brand in the U.S., our desire to grow has led us to pursue opportunities internationally. We have been methodical and selective in such pursuits. In evaluating these international opportunities, the MTGA leadership team uses criteria with high hurdles to ensure appropriate ROI and to ensure our brand is not compromised in the long-term. In fact, while we have previously looked at numerous development opportunities outside of North America, our initiative in Incheon is one of a select few opportunities we felt compelling enough to pursue.

For the benefit of our readers who may have missed our previous interview, could you please tell us about yourself and your background and experience in the casino industry? Would you also explain how you personally view this new opportunity in Korea and what it will mean to the Mohegan tribal members and future generations?

I started my career as in-house counsel for the organization in 1997. In that capacity, I was involved with the transactional work associated with the financing, design-development and various other transactions related to our billion dollar expansion project which opened in 2001. Also, as part of my responsibilities I had the opportunity to work with most of the divisions within the company, helping me become familiar with the operations prior to being appointed as a Senior Vice President at Mohegan Sun in 2001. In 2005 I was appointed President & CEO of our sister property in Pennsylvania, where we opened the first casino in the Commonwealth. Subsequent to that, I had the opportunity to move back to CT to serve as President/CEO of Mohegan Sun in 2012 before moving into my current role in early 2015 as the President and CEO of our parent company, the Mohegan Tribal Gaming Authority.

The Tribe and I view our initiative in Korea as an opportunity to showcase the entertainment-driven brand of Mohegan Sun on the international stage. We strongly believe that Korea, and more specifically Incheon, will be the tourist hub of Northern Asia, and as such we feel this is a perfect location to extend our brand. Also, as mentioned before, because most of the gaming markets in the US are fully mature, it is important we diversify our portfolio geographically to ensure the economic sustainability of the Tribe for many generations to come. Project Inspire at Incheon, because of its market potential and the ability for us to develop a “complete experience” destination, is an ideal way to help create this diversification.

Our research indicates that the casino opportunity at the Incheon Airport in Korea was viewed as a very attractive new opportunity. In fact, the initial RFP attracted 34 casino companies from around the world of which only 6 made it to the final list of applicants. Why do you think this particular new casino opportunity was so popular?

As the closest gaming jurisdiction to Northern China, including the cities of Shanghai and Beijing, there are over 700 million Chinese residents within a two hour flight to Seoul. In fact, Korea is the closest gaming jurisdiction to most of these residents relative to any other gaming jurisdiction. Three of the four largest MSA’s in the world are only 2 ½ hours away, and Seoul has been, and continues to be, the most popular destination in the world for Chinese tourists.

In addition, Korea, one of the world’s top 10 economies, is an underserved leisure destination for North Asia, including Korea itself. Over 25 million people reside within a 2 hour drive from our site in Incheon, which provides an incredible opportunity to drive non-gaming revenue, especially when considering the limited entertainment and leisure product available there. There are over 50 million residents in Korea, and almost half live in the Seoul Capital Area which is only a subway ride from our site. The Seoul capital area is the world’s third largest urban area. Again, the opportunity to leverage these demographics is remarkable. In fact, our business model contemplates that Inspire will generate more non-gaming revenue than gaming revenue which is quite unusual for most Gaming resorts outside of Las Vegas.

Incheon Airport in Korea is already a major international hub in Asia. We learned that IIAC (Incheon International Airport Corporation) has already invested and committed to over US $300 million in infrastructure improvements with the hope of becoming one of the top five busiest airports in the world servicing over 80 million passengers per year by 2020. This will actually make Incheon Airport the single largest hub in Asia. The Incheon Airport is located very close to Seoul, Korea. Wikipedia states that Seoul proper is noted for its population density, which is almost twice that of New York City and eight times greater than Rome. Its metropolitan area was the most densely populated in the OECD in Asia in 2012 and second worldwide after that of Paris. Nearly all of Seoul’s residents are Korean, with some small Chinese, Japanese, and expatriate minorities. As of December 2013, the population was 10.14 million with approximately 700,000 foreign residents.

Our understanding is that the Mohegan Tribe in conjunction with KCC (Korean Construction Company) and the IIAC will develop an innovative new integrated resort on the 800 acres of land that are contiguous with the airport. Can you please give our readers some additional insight as to what will be included in this new U.S. $5 billion Integrated Resort? Phase I is estimated to cost US $1.6 billion so can you also break out what will be developed in Phase I and what will be developed during additional phases of development.

Inspire will truly be a visionary complex comprised of multiple developments planned to create an all-inclusive leisure and entertainment district that when fully enhanced, will represent the next evolution of the integrated resort. It can best be described as a diversified, resort district that is sustainable long term with “mass and premium mass” visitation and with multiple component products. Phase I of the project will include, among other elements: i) world class entertainment experiences including a 15,000 seat arena, ii) 1,350 hotel rooms in 6-Star and 5-Star hotel complex and Spa, iii) nearly 200,000 sq. ft. of convention and meeting space, iv) expansive luxury fashion and retail, dining and nightlife options with a variety of world-wide culinary experiences totalling more than 300,000 sq. ft., v) cultural and historical centres that pay tribute to the Native American and Korean culture, vi) an indoor-outdoor amusement park and eco-adventure park, vii) health, wellness and beauty medical facilities that will serve as the convenient epicenter for body enhancement in Asia, viii) a foreigners-only destination casino with 250 table games and up to 1,500 slot machines, and viii) a private Air Terminal access at the adjacent Incheon Airport to service high value patrons from around the world with maximum convenience.

We are currently in the process of master-planning future phases, which will be comprised of various mix-used components, both inside and outside the hospitality industry. We strongly believe that with the location, programming and expansive nature of this project, Inspire is destined to become the gateway to tourist globalization.

Even though the Mohegan Tribe does not have much experience operating casinos overseas we know that you are a very successful casino company with an excellent track record and that you understand the importance of recruiting an experienced “dream team” per se. We recognize a few veterans such as Gary Luderitz and Ken Davie. Can you give us some more background and your view about finding and hiring the right people for your new dream team in Asia?

Launching any large scale project is complicated and requires having the right team in place in order to ensure such launch is successful. This is especially true when doing business in a foreign jurisdiction which has unique challenges such as language barriers, cultural differences and different legal and regulatory rules and processes for development and operating. The large majority of the team will be recruited from the Korean market which is important to effectively navigate the waters there. We are still in the early stages of execution, and as such we are currently building the development team to represent MTGA’s interest in Korea, which as you note, is currently being led by Gary Luderitz who not only has many years experience in the gaming industry, but also has been a part of our initiative in Korea from the very beginning. The same holds true for Ken Davie as well, who is assisting Gary, especially as it relates to gaming and regulatory elements of the project.

The current law in Korea limits Korean nationals to playing in a legal casino in Korea. As of now there is only one approved casino so they are limited to Kangwonland which is located approximately four hours from Seoul. Do you think that this may change in the future and that Korea might opt for a new system similar to Singapore which would allow Koreans to purchase admittance on either a daily or annual basis? Understanding the current gaming limitations by Koreans, how will you capitalize upon your unique location to attract players as well as non-players especially from North Asia? Without giving away the “secret sauce recipe”, what will differentiate the new Mohegan integrated casino resort from others in Asia?

We pursued a license in Korea with the full understanding of the gaming restrictions governing local residents. The reality is that in this project, gaming is a mere complement and not the driver of programming or our business model. Only 3.8% of the total project real estate is devoted to gaming, and as mentioned previously, a majority of the revenues will be generated from non-gaming amenities—a much different model than seen at all other resorts operating in Southern Asia. Of course, if the law ultimately changes, we will be prepared to accommodate and welcome locals to the casino component of the resort consistent with the parameters of any new law.

We do believe that there are some true differentiators in our project relative to other Integrated resorts throughout Asia. For example, our super arena will be one of the largest in Asia, and along with our other entertainment offerings will make Korea a sporting and entertainment destination on its own. Inspire will be the only integrated resort with its own private air terminal. Also, I am not aware of any other resort with medical and wellness facilities similar to the ones included in the Inspire programming, which will be home to the best cosmetic surgeons in the world. Also, various cultural and recreational elements, including a life sciences centre, museum, indoor-outdoor theme park and entertainment district, and eco-park, we believe will further provide a truly unique total destination experience not typical in other integrated resorts Thank you once again for taking time from your busy schedule for this interview. I know that our readers around the world are already interested in and will be fascinated with following this exciting new project in Asia. Casino Life Magazine wishes you good luck and much success and we look forward to following your progress as the project develops.

Steve Karoul is a recognized casino consultant with over 37 years of hands-on experience with the best casinos both within the United States and internationally. He is also an authority on all aspects of casino marketing. Steve has lived in numerous countries and has conducted casino marketing activities in well over 100 countries around the world. He is an author, a lecturer and an educator who often injects his own hands on experiences and openly shares his ideas and thoughts with fellow industry executives. Telephone + (1-860) 536-1828 or skaroul@euroasiacasino.com or see www.euroasiacasino.com