Mohegan Gaming Raises Alarms Over Korean Casino Debt’s Impact on Future Prosperity

Obligations associated with investments in a casino in South Korea jeopardize Mohegan Gaming & Entertainment’s capacity to maintain operations in the upcoming year, based on its annual report issued this week.

“The organization is facing maturing debts and a breach of debt covenant and has indicated that significant uncertainty surrounds the company’s capacity to remain a going concern,” states a paragraph in the Mohegan Tribal Gaming Authority’s annual report for the 2024 fiscal year.

The concern involves over $1.2 billion in loans tied to Mohegan Inspire, a casino situated in Incheon, South Korea, which commenced gaming operations in February. Besides loans, the Korean facility also confronts lawsuits from contractors, as per the annual report.

The overall debt of Mohegan Gaming & Entertainment is reported at $3.1 billion, according to the annual report, with $471.7 million set to mature in fiscal 2025. The company anticipates a default on $441.8 million of the loans linked to South Korea, alongside another $762 million that requires refinancing.

Mohegan executives mentioned plans to refinance the debts and pursue additional sources of funding, though expressed concerns regarding the organization’s financial health in the annual report.

“These strategies have yet to be finalized, are influenced by market conditions, and are not within the organization’s control, hence cannot be considered likely,” the annual report noted. “Consequently, the company has determined that management’s strategies do not alleviate significant doubt concerning the organization’s ability to persist as a going concern.”

Revenue at the South Korean casino is increasing, and the debts do not pose a threat to the company’s other operations, Ari Glazer, Mohegan Gaming’s chief financial officer, asserted in a statement on Friday. Gains from Inspire and digital gaming contributed to the company elevating its net revenues in the fourth quarter of 2024 to $497.7 million, marking a 12% increase from the same timeframe the previous year. In addition to the resort in South Korea and its premier Mohegan Sun casino in Uncasville, Mohegan Gaming & Entertainment also oversees casinos in Pennsylvania, Las Vegas, and Niagara Falls, Ontario.

“Despite the short-term challenges we encountered during our initial year of operations, we maintain confidence in the long-term prospects of Mohegan Inspire in Korea and are encouraged that performance has been consistently improving,” Glazer remarked.

The casino in South Korea remains operational, Glazer confirmed, adding that “a default or acceleration of obligations under this term loan in Korea does not signify a default under any of Mohegan’s other financial agreements or any of its subsidiaries in the United States or Canada.”

The state Department of Consumer Protection, which oversees casinos in Connecticut, reported a “positive working relationship” with the Mohegan Tribal Gaming Authority.

“The agency is informed of the circumstances and will persist in monitoring the process,” a spokesperson for the state agency stated on Friday.

The Mohegan Tribal Gaming Authority issued a comparable warning regarding its capacity to persist as a “going concern” in 2021 following losses from pandemic-related closures.

Mohegan Gaming & Entertainment’s international challenges arise as gambling revenue in the state lags significantly behind pre-pandemic figures.

As per the state’s Gaming Division portal, Mohegan Sun’s slot revenue for November reached $10,373,615, in contrast to Foxwoods’ $7,676,724.

Slot machine revenues at Connecticut casinos have yet to recover from their pandemic lows in 2020 and previous highs earlier in the century, according to state data. At the height of casino gaming in the state, in 2006, Mohegan Sun contributed over $229 million in slot revenue to the state, versus $122 million in the calendar year 2023.

In fiscal year 2022, Mohegan Sun casino allocated $126,208,362 in revenue to the state’s general fund, alongside $3,528,888 from online sports betting and $10,975,012 from online casino revenues.

The Mohegan Tribe has contributed $4.1 billion to the state’s coffers as of 2022 since gaming commenced at the casino in 1997, according to state statistics.

With 5,000 employees in the state as of 2023, Mohegan Sun positioned itself as No. 14 on the list of Connecticut’s largest employers compiled by Connecticut by the Numbers.