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Mohegan Tribal Gaming Authority Moderator: Leo Chupaska August 15, 2011 11:00 a.m. ET


Good morning. My name is (Theresa) and I will be your conference operator today. At this time I would like to welcome everyone to the third quarter fiscal year 2011 earnings for Mohegan Tribal Gaming Authority. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Mr. Chupaska, you may begin your conference, sir.

Leo Chupaska:

Thank you, (Theresa), and good morning, everyone. Welcome to our third quarter 2011 earnings call for the MTGA. I'm Leo Chupaska and I'll moderate today's call. This morning, we issued a detailed press release that provides the operating results for the quarter ending June 30, 2011. That release is available on our website, at It's listed under Investor Relations/Financial News. Before we begin today's call, I'd like to introduce the participants. Bruce Bozsum, Chairman of the MTGA Management Board, is with us. He's on the phone. James Gessner, the Vice Chair of the Board, is with us; as is Jonathan Hamilton, who is a Board member. Also from the Tribe, Phil Cahill is here. He's the Tribe's Chief Operating Officer.

From MTGA, Mitch Etess is with us, our CEO; and also Jim Wood, our Director of Finance. He is also with us on the call. And from Mohegan Sun, Jeff Hartmann is here. He's the President and CEO here. Tim Williams is also with us. He's the Senior VP and CFO. On the line from Mohegan Sun at Pocono Downs in Pennsylvania is Bob Soper. He's the President and GM there, along with Tony McGowan, our CFO there. As we've been doing the last number of quarters, Mitchell will go through the significant events from the quarter. I'll give you a brief overview of the balance sheet matters, and then we'll open it up for your questions and answers. Before we start, we need to go through some cautionary language, and substituting for Peter, who is on vacation, is Jim Wood. Jim. James Wood: Thank you, Leo. I would like to remind you that our comments today may contain forwardlooking statements protected by the Safe Harbor provision of the Private Securities Litigation Reform Act. Such forward-looking statements are only predictions, and actual events or results may differ materially from the forward-looking statements made during today's conference call. Risks and uncertainties that can cause actual results to vary from these forward-looking statements are more fully described in our 10-K filing with the Securities and Exchange Commission for the fiscal year ended September 30, 2010. Forward-looking statements made during today's call represent the Authority's current outlook only as of today's date. The Authority undertakes no obligation to update or supplement any such forward-looking statements. Today's conference call may also include discussions concerning financial measures of conformance that are not calculated in accordance with generally

accepted accounting principles. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included on our earnings press release for your record. This call and its replay are the property of the Mohegan Tribal Gaming Authority, is not for rebroadcast or for use by any other person without the consent of the Mohegan Tribal Gaming Authority. If you do not agree to be bound by these terms, please disconnect now. By remaining on this line you agree to be bound by these terms. A replay of the call and related information will be made available on the Authority's website, at A telephone replay of the call will also be made available and instructions on how to access the replay, including the phone number and conference ID are include in the earnings press release. And, with that, I will turn it back over to your moderator, Leo Chupaska. Leo Chupaska: Thanks, Jim. This time I would like to introduce Bruce Bozsum, Chairman of the Mohegan Tribe and MTGA Management Board. Bruce is talking to us on the phone. Go ahead, Bruce. Bruce Bozsum: Thanks, Leo. Good morning, everybody. Thanks for coming back on again. Welcome to our third quarter earnings call. I have just a few short comments before I turn things over to Mitchell Etess. The Board and I are certainly pleased with the financial performance for the quarter, and from an overall company perspective and are especially upbeat regarding our table business results both here in Connecticut and at Mohegan Sun at Pocono Downs. We're also very supportive of our recent refocused marketing and operational plans with regards to our slot business, which continues to be sluggish in the Connecticut gaming marketplace and still difficult in the Northeast Pennsylvania market, and that's where an aggressive promotional environment continues, and Mitch and the team will have more later on this.

And I also ­ I know that we're not providing much information this morning regarding the progress of our refinancing efforts, which is not complete yet, and I do want to say, however, that not yet reaching the finish line has not been the result of a lack of hard work, patience and diligence on the part of our team over many of these months. And I know that firsthand because the board has been extremely involved in all aspects of the refinancing from the very beginning. We continue to be optimistic that we will complete the refinancing process soon. And, once again, I want to thank you all for listening in today, and I will now turn the call back over to Mitchell Etess. Mitchell Etess: Thanks, Bruce, and hello everybody and thanks for joining us on the call. We're certainly pleased with the operating results of the third quarter. On a consolidated basis, MTGA adjusted EBITDA of $83.2 million represented a 20 percent increase over the prior year's quarter. These results reflect the impact of the various cost savings measures that were implemented company wide over the last 12 to 18 months. Mohegan Sun Connecticut adjusted EBITDA was $73.7 million for the quarter. This is a strong 17.1 percent increase over the previous year's quarter. Margins showed a great improvement as well, growing from 21.9 to 25.9 percent, a 400 basis point improvement. Both of these metrics would have been higher if not for a one time $3.7 million negative adjustment related to prior periods. The percent increase in adjusted EBITDA would have been 22.9 based on the property's actual performance, and the adjusted EBITDA margin 27.2 percent. Revenues in Connecticut continue to be challenging. Slot revenues were down 4.7 percent for the quarter. We still, however, hold a dominant market share of 52.3 percent. The promotional environment continues to be aggressive, as Bruce has said, from both the immediate competition, Foxwoods, and our convenience competition in New York and Rhode Island, who are now also utilizing Free Slot Play in their marketing efforts with greater frequency. Although our use of Free Slot Play in Connecticut grew

over the prior year, we are focusing on more profitable marketing programs and in some cases, we have foregone revenue, which was not productive for us. Connecticut table games showed an increase of 15.8 percent over the prior year's quarter. We did benefit from a higher hold than third quarter 2010's 13.5. And although table drop is down 5.8 percent, it did exceed our budgeted expectations. Mohegan Sun at Pocono Downs continues to benefit from the implementation of table games. Property adjusted EBITDA there increased 20.3 percent to $12.9 million, with an increase in margin to 16.7 percent from 15.9 one year ago. The Pocono results also reflect a one time charge of $676,000 for scheduled repayment for our proportional share of gaming oversight costs previously incurred by the Pennsylvania Gaming Control Board, pursuant to a repayment schedule adopted by the PGCB on June 28. Slots did decrease by 1.2 percent for the quarter, but the table games drop of $53 million was the highest quarter since the inception of table games. Pocono Downs also continues to refine its marketing programs, particularly on a fairly recently created Asian bus program. Overall, it's fair to say that we feel that we are of the opinion that the overall economic fears are impacting our guest discretionary spending and visitation at both properties. This is exacerbated in Connecticut where our residents have been anticipating increased taxes associated with resolving the state's budget deficit. We're continuing to work on developing strategic and intelligent ways to drive revenues and operate as efficiently as possible while we await full economic recovery. This quarter saw the debut in mid-May of our new advertising campaign for Connecticut, "Time to Shine", developed by People, Ideas and Culture of New York, our recently selected advertising agency. This campaign is on multiple channels, including television, radio, print, and, of course, all new media. I'm certain some of you who are listening from the Boston area have seen our station domination of South Station, as well as their ever popular Hot Summer Fun at Mohegan Sun Skywriting over the New England shore and Fenway

Park. We're thrilled with the creative and strategic elements of "Time to Shine" and feel it is already paying dividends for us. Similarly, we're very excited about the opening of the completely renovated Seasons Buffet. This incredible facility, designed by the Marnell Group, is beautiful, and our culinary staff has developed a similarly outstanding cuisine. Coverage is strong, and we firmly believe we have the finest buffet on the East Coast, without question. We also believe the continued refinement of our non gaming amenities is progressively more important as we compete with the convenience markets. We also have two personnel announcements. Here in Connecticut, we're delighted to announce that Mr. Paul Wright has joined the Mohegan Sun Connecticut team as Chief Marketing Officer. Paul comes to us with experience from brands such as Coke, Bacardi, and Warner Lambert. There's no doubt that his perspective will be extremely helpful to the company moving forward. And, sadly, as many of you know, Leo Chupaska will be retiring from his position as MTGA Chief Financial Officer at the end of this fiscal year. Fortunately, Leo will be staying on in the capacity of Vice President of Investor Relations, so all of you out there will still be able to talk to him, except during spring training and major UCONN sporting events. Assuming the position of MTGA's CFO, working with Peter Roberti and his team, will be Mario Kontoemerkos. Mario joins us most recently from Penn National Gaming and will be on board with us as of September 6. We will have co-CFOs for a month to assure a smooth transition, and then Mario and Leo will step into their new roles individually. Lastly, as we previously announced, and as Bruce alluded to, we continue to engage Blackstone Advisory Partners to assist us in our strategic planning relating to our debt maturities, and Credit Suisse to assist in the evaluation and implementation of refinancing alternatives. As these efforts are ongoing, we have no further comments at this time. That is all we will be saying relative to our refinancing in this part of the call or in the Q&A.

And, with that, I'll turn it over, probably for the last time on a conference call, to Leo Chupaska. Leo Chupaska: Thanks. Thank you, Mitch. Just a few comments on our balance sheet. At the quarter end, MTGA was in compliance with all of its covenants. Total Leverage under the Bank Credit Facility was 6.25 times, against ­ up against a covenant of 6.75 times. Our Senior Leverage was 3.76 times against a covenant of 4.25. Total debt at the end of the quarter was $1.59 billion, and the amount drawn on our BCF was $479 million. The Authority has approximately $123 million available for borrowing under the BCF when we factor in our restrictive covenant. Distributions to the Tribe for the quarter was $14.6 million. CapEx for the quarter was $16.9 million and are forecasted to be about $51.5 for the fiscal year, there's a schedule on this in the press release, which sort of lays out very nicely for you, the nine-month total and then the remaining forecast and then the total for the year, so I wouldn't go through those numbers that's laid out for you with there in the press release. Cash and cash equivalents at the end of the quarter totaled $65.7 million. So just a few points of information there. We will now turn it to Q&A. (Theresa), if you would do whatever you have to do and we'll open it up for questions. Operator: At this time, I would like to remind everyone, in order to ask a question press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. And your first question comes from the line of Larry Klatzkin with Klatzkin Advisers. Larry Klatzkin: Hi guys. Leo, the best of luck. I hear you're going to help coach the basketball team too?

Leo Chupaska: Larry Klatzkin:

Mitchell won't let me do that guaranteed. Thanks, Larry. The Massachusetts developments, what do you see, what's happening out there, I know there's some talk now, and also the Catskills, if you could talk about those two things? Sure. Well, as far as Massachusetts, you know, we're seeing what you're seeing. Most of the language indicate that some time in September the legislature up there will begin to aggressively pursue a legislation. Of course, you know, it's tough speculating exactly how that will materialize. So we are anxiously watching, and, as you know, we have a lease on a great piece of land in Palmer and have had a storefront there for several years and are ready to make ourselves part of that process when we have the legislation. As far as New York, I can talk about the Mohegan Sun at Concord Downs as we are proceeding full speed ahead to get financing in place prior to November. We have the equity in place and Mr. Capelli has put the equity in place, we've submitted everything to lottery and racing, we submitted for ­ we refined the program, and we are proceeding with that project in hopes of getting it going as quickly as possible.

Mitchell Etess:

Larry Klatzkin:

All right. And then are you guys looking at any other jurisdiction? Are you guys are looking for more development anything in Florida or Texas or anything else you guys are kind of exploring, or is it to early to say? We ­ you know, we're really focus on Mohegan Gaming Advisers. We're looking for management contracts and consulting type deal, and we are ­ we're really now working mostly on the Cowlitz project, which is finally ­ you know, got their (land) the trust pending, the resolution of law suits, and that's kind of mostly the focus of MGA right now.

Mitchell Etess:

Larry Klatzkin:

All right. And then September trends, I know were the normalization, you actually ­ you know, Connecticut wasn't really up ­ is it any better in the ­ in the next quarter? How (does it look so far, as you're into it)?

Mitchell Etess: Jeff Hartmann:

You know, it's very similar so far. The July, you know, July was very strong in terms of profitability, so similar trending. You know, August, you know, kind of early in the month. So the July was ­ July was very strong. It just turned out that Jeff's turned out to be a really good closer at the end of the month in his operating roll. We have to wait and see. And then the last question, any preparations for the, you know, what the Aqueduct's going to do, and do you see anything from that or ­ as you kind of ­ kind of Yonkers have kind of taken the blow and you're not worried or are you doing something to try to ramp up to that when that gets opened, I know you have, a little bit a time? I'll talk and I'll let Jeff talk, both a little bit. We do as a company believe that, you know, Yonkers has already taken a big bite that there's already a convenience destination between us and Aqueduct, so we feel that it will have a minimal impact, maybe one or two percent. However, I'll let Jeff talk about the fact that we are making some plans for that.

Mitchell Etess:

Larry Klatzkin:

Mitchell Etess:

Jeffrey Hartmann: Yes. We've been prepared. We've studied the marketing dynamics for the Asian customer, and a lot of that's been going on since the introduction of Table Games in Pennsylvania. So we have ­ you know, we've been working on that for as least the past 90 days, preparing for that opening, you know, looking at marketing programs, solidifying some of our relationship in New York's marketplace in preparation for that opening in October. Larry Klatzkin: Leo Chupaska: Operator: Greg Roselli: All right. Well, great, guys. And Leo, again, good luck. Thank you very much, (Larry). And your next question comes from the line of (Brett Bozzelli) with UBS. Hey, guys. How you doing?

Leo Chupaska: Greg Roselli:

Hi. I assume this is Greg Roselli. This is Greg Roselli. Yes. Hey, first off, you know, congrats to Leo on the retirement. Thank you. Yes. Very glad to hear that. You are still going to be around, though? Thank you. And hopefully you can go out on a high note, if you guys get the refi done. Yes. That would be nice. That would be very nice. Yes. As usual, can you tell me if you guys are above or below your 2 times test for the quarter? For our 6/30 we're above. Oh, you guys are above? OK. Then the excess distribution that we saw, was that just taken as normal or did that come out of your RP basket? Well, we're above for the quarter, and we gave ­ we gave the Tribe in the quarter an additional $10 million from the RP basket, the so-called 407B basket, which now is zero. So that's what the additional was provided in the quarter. Got you. Have you guys made public the availability in that basket or I guess what's left in that basket? We have now. Oh, so can I assume that was all of it? Pretty much. Got you. Now, you're over two times 6/30, so for the next quarter are you going to be limited to that 4.6 million or (did you) make extra distributions.

Leo Chupaska: Greg Roselli: Leo Chupaska: Greg Roselli: Leo Chupaska: Greg Roselli:

Leo Chupaska: Greg Roselli:

Leo Chupaska:

Greg Roselli:

Leo Chupaska: Greg Roselli: Leo Chupaska: Greg Roselli:

Leo Chupaska: Greg Roselli: Leo Chupaska: Greg Roselli:

No, we're not. No. No. OK, great. And then it just kind of continues to your... 2.0. As long as we're above the 2.0. We're not at 6/30. Got you. All right. In terms of the revolver pay down of the 14 million, it looks like you just used, at least in my model the, you know, the bulk of your excess free cash flow on the quarter, pay down the revolver?

Leo Chupaska: Greg Roselli: Leo Chupaska:

Yes. Yes. All right. Can we assume that's the case going forward? Sure. As this continues, as Jeff mentioned, and we're ­ you know, we're doing well. Absolutely. Excellent. All right. Just lastly, on the ­ on the $3.7 million slot adjustment, can you just give us a bit more info on that, just so we can make sure non cash and where it came from?

Greg Roselli:

Leo Chupaska:

A lot of this really developed when we put some new software in place in our ACSC system earlier this year. And the new software now allows us to differentiate the floor totals between tickets and cash. Before, we didn't have that ability and we had to do a lot of estimating. So after we did implement the new software we still found some unreconciled differences to our program, which led to, you know, a considerable amount of work for our account, internal accounting staff. And, working with PWC, we found that some of these differences are really traced back to a number of years back ­ '05, '06 and '07. So after, like I said, you know, considerable work, we determined that the net amount of these errors ­ and they were errors, and failure to actually do some proper recording at period end, was 3,668,000, or 3.7, as we mentioned in the call. So what we did is ­ you know, it ­ this in effect had a ­ the effect of over stating cash and revenues. We made the adjustments in the quarter, the 6/30

quarter. We don't really see any future impact at all, and we feel this is correct. Greg Roselli: All right. Great. So then as far as it relates to the results, I can increase the net revenues and EBITDA at Mohegan Sun accordingly? We adjusted them, but, you know, as I think in some of our statistical tables that you see further on in the press release, you can see where we actually and we footnoted it such that we've included them back for proper comparative analysis. Mitchell Etess: Greg Roselli: Except in the slot, all the statistical analyses are there. Got you. So it's reflected in the slot numbers, not necessarily in the net revenue EBITDA numbers? Right. It's deducted from the EBITDA. So the EBITDA should be more. Got you. All right. Thanks a lot, guys. And your next question comes from the line of David Farber with Credit Suisse. Hello, guys. Hi. Two quick questions. It Seems like you guys have been pretty successful driving EBITDA despite flatish revenue. I'm just curious how you see this dynamic playing out over the next couple of quarters and when you start anniversering some of the cost savings? Jeff Hartmann: Yes. This is Jeff Hartmann. You know, I think that as we go forward, the property, you know, our competative advantage will be, you know, number one the brand, the product, and we'll have the ability on the table games side to offer products and betting limits that will not be able to be offered at Empire and Aqueduct. So we're

Leo Chupaska:

Mitchell Etess: Greg Roselli: Operator:

David Farber: Mitchell Etess: David Farber:

going to continue to exploit that advantage, you know, to offset what may be declines in slot revenue. You know, we're going to look at all our marketing programs as it relates to, you know, what drives slot revenue. We'll look to make some modifications in how we market some of these guests and try to, you know, look at our use of Free Slot Play and look to quite honestly reduce that because, as many of you know who follow this industry, you know, the improper use of Free Slot Play erodes customers' wallets and we're studying that dynamic very closely and hope to be able to, you know, reduce our Free Slot spending. But, you know, we're looking at the next year and trying to introduce some new marketing programs here at Mohegan Sun. Obviously I cannot disclose those, but we're, you know, starting with bringing on Paul Wright, our new Chief Marketing Officer, who brings in a lot of great experience, as Mitchell indicated, working on various brands. Paul will complement our very talented marketing team we have, you know, on property. And, you know, we're aware of the changing dynamic in the marketplace and how we must, you know, operate differently going forward. Mitchell Etess: And the other thing is, you know, as you're dealing with these convenience competitors and that increases, we believe it's more and more important for us to round out our products more, which is why if you take a look at what we've done here over the last several years, going back to the Casino of the Wind and working through the whole property, adding Bobby Flay, adding Pepe's Pizza, adding The Burger Palace, renovating the Season's Buffet, which is an incredible, incredible asset for us. And now, the next recent opening of Ballo, basically we've totally redone our entire food and beverage amenities. And we're trying to focus as much as we can on experiential things. Which basically the convenience places can't do. David Farber: OK, two others. Did you guys ­ as far as locking the quarter, did you guys quantify what you think the impact would have been there? Jeff Hartmann: You know, we think when ­ I guess if you define normal hold is around 15 percent, so, you know, it's between $4 million and $6 million.

David Farber:

OK. That's helpful. And finally, I believe there was an election maybe intra quarter on the Management Board or Tribal Council side. Correct me if I'm wrong, but if there was, I'm just looking for an update on that curious whether the philosophies of the board has changed at all as a result one way or the other? This is the Chairman. The primary was back in June. The final election is coming up in about two more weeks. All of our incumbents have made the primaries, and, you know, the philosophy will always be the same in Mohegan, you know? Take care of our business and be good partners with everything. So not much is going to change there.

Bruce Bozsum:

David Farber: Operator:

OK. That's good to know. Thank you, guys. Once again, if you would like to ask a question, press star then the number one on your telephone keypad. Your next question comes from James Kayler with Bank of America-Merrill Lynch.

Leo Chupaska: James Kayler: Leo Chupaska: James Kayler: Leo Chupaska: James Kayler:

Hey, James. Hi, you guys. How you doing? All right. Sad to see you go, Leo, but glad you'll be sticking around. Well, thank you. Just a little bit. Can ­ on the cost side, you know, you guys have laid out this $30 million cost savings target for the ­ for the fiscal year. My understanding is that's mostly, you know, labor and other operating costs. Are some of the marketing stuff

that you're talking about, would that be incremental, A? And, I guess, B, is there more you can do just on the ­ on the actual operational side, if, you know, the top line stays under pressure? Jeff Hartmann: James, you know ­ it's Jeff Hartmann. You know, we're constantly looking for process improvement. You know, we have taken out, you know, the $30 million of costs. Now we're looking for efficiencies. You know, the marketing will be reallocation of current spending dollars, so to look to get higher ROI, on that marketing spend. So, you know, we're looking at all marketing costs right now and there will be some substitution of current programs for new programs which will result with total spend being relatively the same. Mitchell Etess: It's more about ­ in our marketing stuff, it's more about truly using marketing programs to pursue more profitable revenue as opposed to just revenue period. OK. That's helpful. Is there any update on the, you talked about third party hotels at both properties, it seemed to me that the potential in Pennsylvania was kind of a nearer term opportunity. Any update there? Mitchell Etess: Yes. Actually we've been, we were down to one clause for about a month with the Pocono hotel developer and we actually just on Friday, the Tribal Council approved the final MOU, which we're anticipating being shipped out to the developer today, and hopefully that can be signed and he can begin the process of getting his financing in place and getting that rolling. And as far as Connecticut goes, so Pennsylvania is pretty much almost there. As far as here goes, we have ­ working with a group of developers and we're targeting the end of August to kind of have a final list of them together and working to get a deal in place by maybe some time after the actual calendar year. James Kayler: OK. Very good.

James Kayler:

And then just, finally, you gave good disclosure about the sort of cash back environment or the free play environment. Overall, what is ­ I guess what's the competitive environment like? And also, if you can give us any sort of sense for how your customer sort of is behaving, whether it's, you know, talking about win per visit or trip frequency? Jeff Hartmann: It's Jeff Hartmann again. You know, our customer behavior, I think you really have to look at the various segment, you know, those who, you know, come in low frequency, have low spend. They're looking at value. You know, similar to retail industry, you know, the less frequent, low value customers looking for that free play offer to drive the guest. You know, we're seeing as our mid frequency and high frequency, you know, customers that come to Mohegan Sun, you know, are looking for the experience, as Mitch talked about. You know, we deliver the right combination of offers combined with what we give the guests here, you know. The trip frequency is still about flat year-over-year. You know, the Free Slot Play program, I think the biggest concern is, you know, really from that Asian customer in New York, you know, we recently eliminated our Free Slot Play for our Asian bus customers effective August 1. And for those who follow the Pennsylvania slot revenue, saw a huge migration to Sands Bethlehem last week, and a huge uptick in Free Slot Play, as reported by the Commonwealth of Pennsylvania. You can see evidence where, you know, people in that segment are shopping for offers and, you know, we've been working those as we prepare for the resort that are opening in Aqueduct and being very careful and mindful of the offers and making sure that we market responsibly and profitably. Mitchell Etess: Robert Soper: Bobby, you want to talk a bit about PA? Certainly. I mean, it's certainly ­ the trend, as Jeff pointed out ­ has been an upward progression of Free Slot Play. You know, we actually, you know, have been coordinating efforts, you know, with Connecticut in that regard and actually been, you know, delayering ourselves.

So I think there's a lot ­ a lot of offers out there to non-profitable customers, and what we're finding is there's a much better, more strategic way, you know, at this property and probably at other Pennsylvania properties, frankly, to offer free play in a more profitable way. And so, I think you're starting to see some stabilization and a recognition by Pennsylvania properties that free play can be more prudently offered, and I think those efforts in Connecticut of delayering and reducing the Free Slot Play on the bus packages, especially out of New York, are going to show some good return. James Kayler: Operator: Very good. Thank you, guys. Your next question comes from the line of (Tom Maxwell) with Jefferies and Company. Hey, John. Hey. How are you ­ are you guys? Leo, again, all the best, and I'm sure we'll still be talking. Hey, Bobby, just ­ if you could, a little bit more color in terms of Pennsylvania. Are you seeing anything ­ I would think not ­ from the Sands Bethlehem Hotel open up? And also how do you think the table game market plays out now that you're anniversaring? Are you still adding customers or do you just get, you know, more efficient with the customers that have been coming there? Robert Soper: Yes, to your first question, really do not see an impact from the Sands Hotel. I think, you know, without speaking for them, I think the hotel really serves some of their markets in New Jersey, particularly ­ potentially New York. But I would say primarily New Jersey, especially the table games customers coming from New Jersey. And we really, frankly, haven't seen any impact on business after their opening. In regards to the majority of markets as it relates to table games here, you know, clearly, once you have a year under your belt, you know, the growth

Leo Chupaska: John Maxwell:

starts to wane and by the same token we've all become more sophisticated. We certainly have, and have a better understanding of our database. That being said, I don't think it's fully mature. I think there's definitely an opportunity, especially in some of these outer markets, that we just frankly haven't penetrated, no different in slots. It usually takes two to three years to, you know, have a complete acquisition and, you know, trial by potential customers. You know, once we get a hotel, our opportunities are going to be that much greater from some of these other markets. So we're starting to shift some of these marketing dollars to the other markets, to grow those markets. So I think we still have some opportunities for growth there, but clearly there's going to be, you know, a point where market saturation is going to be closer to full in the Pennsylvania market. John Maxwell: OK. Great. And Leo, could you ­ was there any investments made into any of your development projects through MTGA weather anything in Massachusetts, New York, or any of the other regions you're looking at? Yes, we have. I'm going to let Jimmy comment on it, because he's real close to it. You're really passing the buck, Leo. Yes. There are, you know, operating expenses of, you know, some of our Massachusetts ­ our Massachusetts entity and other Mohegan Resorts we funded through our capital contributions and in our partnership with the Tribe. But they have not been significant over the past quarter. John Maxwell: OK. OK, great. And then just lastly, Mitchell, any comments you can make on Governor Cuomo's comments last week in New York and how that may affect your potential. Any decisions ­ if I recall, doesn't ­ New York needs like two consecutive legislative approvals before anything could change. Is that ­ is that correct?

Leo Chupaska:

John Maxwell: Leo Chupaska: James Wood:

Mitchell Etess:

Yes. And my understanding is that they'll need a Constitutional amendment. You have to have the same, exact bill passed by two separately elected House of the Legislature, and then a public referendum that would change that. So I guess it's kind of a wait and see approach, but we believe strongly in the Mohegan Sun at Concord Downs project, so we're proceeding with that. I think it shows that, you know ­ look, I've been involved with trying to get gambling in New York since 1976, and there's been ­ it's maybe the first time they've talked about it. But I think it shows that, as many other states and jurisdictions are going, as things are going now, everybody wants to get into the game. And it shows that if you have a governor that wants something, it certainly makes it a little easier to get it through. So, I guess it just kind of shows he's seen the desire to do that.

John Maxwell: Mitchell Etess: Operator:

OK. Great. Thanks again. All right. Thank you. And your next question comes from the line of James Mosher with Bulletin Newspaper. Hello everyone. Hello, James. Hello, James. Mitchell, can you clarify that point you made about the hotel in Connecticut? What's going to happen in August, exactly?

James Mosher: Leo Chupaska: Mitchell Etess: James Mosher:

Mitchell Etess:

In August I hope to have amassed an actual list of developers who we're going to proceed with and hopefully have selected a developer to build third party hotel here and have it done by some time ­ have the deal with them about the hotel, arrange with them, complete it some time after 2011 ends, early 2012.

James Mosher:

OK. And can you give me a progress report on the Connecticut workforce, still kind of holding where it was, you know, within the last few months or you adding on at all or what's happening there? Talk about jobs at Mohegan Sun in Connecticut? Yes. Well, you were here for the governor's tour, I think. Yes. I mean, we talked about adding jobs in the buffet, and now there's no ­ there's no plans for any reductions in jobs, if that's what you're alluding to. And we continue every single day to operate more efficiently. And also, remember, we will be opening a new Ballo Restaurant, which you probably also saw. That's about 100 jobs, 120? A hundred and forty jobs. They're not Mohegan Sun MTGA jobs, but they are jobs that we will be operating here on premise. So we're continuing to operate, and that's 160 jobs that we're talking about increasing over the ­ between July and October. So that answers your question.

Mitchell Etess: James Mosher: Mitchell Etess: James Mosher: Mitchell Etess:

James Mosher:

It does. Yes. Thank you. One final thing. The 15th anniversary, are you ready to announce anything specific as far as that goes, the celebration?

Mitchell Etess: James Mosher: Mitchell Etess: James Mosher:

There will be a celebration. OK. But we're not going to talk about it right now. All right. Fine. Thank you.


And your next question comes from the line of Kevin Coyne with Goldman Sachs. Hello. Hey. How are you? All right. Just a couple of questions. I know you mentioned on the frequency or the visitation's been flat by the mid to high frequency guests. Could you comment at all in terms of spend per visit when they show up? Is that starting to trend up? You know, it's slight ­ still slightly down a little bit, you know, on each visit. It depends, you know, I don't want to get into it, but, you know, some of our segments, spend has recovered, you know. Some are still slightly down. So kind of a mixed bag between the two upper segments. OK. And have ­ I guess in terms of that same group, with a lot of the volatility over the last few weeks in the stock market, have you seen any changes in terms of their habits, perhaps pulling back if they have some of their wealth in the ­ in the market? No. It ­ you know, at this point it's not discernible. Excellent. And then, just one final one. As we think about our model for the back half of the year, are there any big events or one time items that we should be thinking about? Back half of the year, meaning through the end of September? September? Meaning ­ sorry ­ calendar. Like over the next few quarters? No. No.

Leo Chupaska: Kevin Coyne: Mitchell Etess: Kevin Coyne:

Jeff Hartmann:

Kevin Coyne:

Jeff Hartmann: Kevin Coyne:

Leo Chupaska: Mitchell Etess: Kevin Coyne: Mitchell Etess:

Kevin Coyne: Leo Chupaska: Operator: Leo Chupaska:

No? OK. Thank you. OK. And there are no further questions. OK. I'm seeing none. I want to thank everyone for joining in, and we'll be talking to you soon. Thank you.


That does conclude today's conference call. You may now disconnect. END


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