LEDYARD, Conn. — It is no surprise that Foxwoods, the 2-year-old casino that is the pride and joy of the 305-member Mashantucket Pequot tribe, is doing so well. Its success, said G. Michael Brown, the casino's president, was virtually guaranteed by "location and exclusivity."
But the magnitude of that success is still setting pulses racing in an industry not easily excited by big numbers.
Marvin Roffman, an investment consultant in Philadelphia, judges Foxwoods to be "the most profitable casino in the world." And back-of-the-envelope calculations indicate the tribe is clearing more than $400 million a year in profit.
The sheer scale of the casino and its market explains much. Foxwoods grosses about $800 million a year-half again as much as Donald Trump's Taj Mahal, the largest casino in Atlantic City, N.J. But unlike the Taj Mahal, which spends a fortune to keep patrons from going to any of the 11 neighboring rival casinos, Foxwoods has no nearby competition.
Federal law requires states to permit any gambling game on Indian reservations that is permitted off-reservation-say, church bingo and roulette for charity fundraising. But the key provision in the January 1992 pact between Connecticut and the Mashantucket Pequot nation authorized slot machines, which cannot otherwise be operated legally in the state. In return, the Pequots agreed to pay the state 25 percent of the machines' revenues, or a minimum of $100 million a year.
That monopoly, along with the $100 million obligation, assured that the tribe would think big-very big.
Now, the gambling floor at Foxwoods is the largest in America and, says Brown, only slightly smaller than the largest casino in the world, the Genting Highlands, in Malaysia.
Roughly a third of its 7.6 acres of gambling is devoted to slot machines: There are 3,879 lined up in tight formation, barely leaving room for feather-clad hostesses carrying free drinks to circulate.
Another few acres are set aside for 190 table games. Blackjack is by far the most popular, but virtually every other game (craps, roulette, baccarat, pai gow, even acey-deucey) is packed into the cavernous casino.
The football field-size bingo hall seats 3,100 at two sessions a day. A 47-table poker room is open 24 hours and parimutuel betting for races across the country is available on the casino floor.
Then there are two hotels with a total of 592 rooms.
None of this sets it apart from the big casinos in Las Vegas or Atlantic City. All casinos try hard to keep serious customers from straying, all rely on slot machines for 60 to 70 percent of revenue and most add entertainment to appeal to marginal gamblers.
What distinguishes Foxwoods is that it has been "running at capacity" since it opened, said Andrew Zarnett, a senior analyst at Furman Selz in New York. Indeed, over the four-day July 4 weekend, 164,000 people squeezed into the complex-and left behind more than $40 million.
The popularity should not shock anyone who has seen the demographics. About 28 million people live within 150 miles of Atlantic City's 12 casinos, notes Brown, and 22 million live within 150 miles of southeastern Connecticut, with its one casino.
"It's a fabulous franchise," concludes Zarnett; it has a monopoly on day-trip business from Massachusetts, Rhode Island and Connecticut and is far easier than Atlantic City to get to from Long Island and the northern suburbs of New York City.
The monopoly works to raise operating margins as well as to increase demand. Roffman, the consultant, said the Taj Mahal cost $1 billion to build, three times as much as Foxwoods.
While some of that difference may reflect avoidable cost overruns at the Trump extravaganza, the far more expensive glitz of the Atlantic City casinos also reflects the realities of selling in a competitive market.
Then, too, the lack of competition frees Foxwoods from the promotional games other casinos must play. For example, the average price of a room in Las Vegas is about $60. Rooms at the two Foxwoods' hotels run $150 and up and the hotels average 80 percent occupancy.
Because Foxwoods is not a publicly held corporation and not regulated by government agencies, it need not publish its revenues and expenses. But the handful of numbers volunteered, plus the state-required audit of slot machine revenues, are enough to estimate the bottom line.
Last year Foxwoods' 3,000 slots produced revenues of more than $400 million, suggesting that the 3,879 machines in the coming year will easily exceed $500 million.
Brown estimates that slots provide 60 percent of the gaming-floor revenue, which would put Foxwoods' total take from gambling at more than $800 million.
Revenues from the hotels, restaurants, rides and shops are tougher to estimate. But if the hotels average the minimum list price per room, they are grossing, conservatively, about $25 million a year.