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Among the benefits of having a dynamic business with multiple revenue streams is that the business isn’t wholly dependent on any single facet to succeed. The first quarter of fiscal year 2024 for the Mohegan Tribal Gaming Authority is a great example of this strategy.
While the bottom line for the quarter for the business is anything but awe-inspiring, there’s at least one division that Mohegan can’t blame for the net loss. Mohegan Digital has continued to see a marked improvement in its contributions toward the corporation.
An unimpressive bottom line for Mohegan’s Q1 2024
In Mohegan’s Q1 2024 earnings report, several numbers matter. Perhaps most prominent is the bottom line or the company’s net income for the first quarter of its current fiscal year. That came to a loss of over $97 million.
Among the factors that Mohegan lists for that loss are “operating costs related to the opening of Mohegan INSPIRE, non-controlling interest adjustments at Niagara Resorts, and low table hold at a few of our properties.”
Compared with the first quarter of fiscal year 2023, Mohegan’s net income is down almost $100 million as that previous quarter saw the company barely eke out some positive net income.
Heightened costs; like those associated with the opening of Mohegan INSPIRE, the company’s first venture in South Korea, seem to be the main culprit for the variance. The company’s revenues increased by over $18 million for the first quarter year-over-year.
A lot of that revenue growth came from one source; Mohegan Digital.
Mohegan’s online gambling products continue to outperform
According to the earnings report, revenues for the first quarter of FY2024 for Mohegan Digital came to over $36.1 million. That’s an improvement of more than $25 million or about 224.1% compared to Q1 FY2023.
However, people looking at these numbers should keep two things in mind. First, as the report points out, part of the year-over-year increase is “due to an accounting adjustment which increased both net revenues and expenses by $14 million due to how Connecticut requires that online casino and sports wagering payments be made.”
That points to the second caveat. As this report does not break down expenses for the quarter on a line-item basis, it’s impossible to tell just from this report how much it cost Mohegan Digital to make that $36.1 million in revenue. More revenue does not mean that Mohegan Digital is profitable.
While revenue grew for Mohegan Digital, the situation for its brick-and-mortar gaming enterprises was not as positive.
Mohegan retail casinos lag behind prior numbers
Looking at the numbers for Mohegan Sun in Uncasville, Connecticut, and Mohegan Pennsylvania in Wilkes-Barre, there isn’t much for either to write home about for the quarter. Net revenues on a year-over-year comparison at both properties were down marginally.
Operating income took a bigger hit, however, being down 21.4% at Mohegan Pennsylvania and 19.1% at Mohegan Sun. For both properties, Mohegan explained that volume in its gaming activity was down while for Mohegan Sun, the casino’s hold on table games dropped as well.
While Mohegan’s Canadian property (Niagara Resorts) did see a marginal revenue increase, it wasn’t enough to offset losses at the other two aforementioned facilities. Despite all of that, gaming was still Mohegan’s single largest source of revenue for the quarter, accounting for over 67.1% of the whole.
While the bottom line for the quarter was undoubtedly the opposite of what investors like to see, there were some significant one-time expenses. The challenge for Mohegan going forward will be how to build on its success with Mohegan Digital while shoring up its in-person gaming to get closer to desirable results.
