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Wednesday, August 26, 2009

Tribe That Runs Foxwoods Facing 'Dire' Finances

NEW HAVEN, Conn. (AP) -- The chairman of the tribe that runs Foxwoods Resort Casino is warning of ''dire financial times'' that he says threaten the tribe's living standards.

Michael J. Thomas, chairman of the Mashantucket Pequot Tribal Nation, sent a letter to tribal members last week noting earnings ''are down considerably'' in the recession with no signs of immediate improvement. He also noted the likely legalization of gambling in Massachusetts and New York will eat away at profits and market share.

''These are dire financial times for our tribe,'' Thomas wrote in the letter, obtained by The Associated Press on Wednesday. ''The situation is serious and threatens our tribe.''

The tribe is on the brink of default and is trying to restructure $2.3 billion in debt, the New London Day reported Wednesday, citing an adviser to the tribe who spoke on condition of anonymity. The debt is $1 billion more than the tribe can sustain, and it is at risk of defaulting Monday on a $700 million line of credit with lenders, the newspaper reported.

Telephone messages were left Wednesday with tribal officials for comment on the report, which also cited a plan by an investment bank to continue operating the casino while the debt is restructured.

The tribe opened Foxwoods in 1992 and the casino has become one of the world's largest. Foxwoods last year opened the $700 million MGM Grand, a 30-story, 2-million-square-foot property that includes a new casino, hotel, a 4,000-seat performing arts theater, restaurants, luxury stores, the largest ballroom in the Northeast and new convention space to accommodate thousands.

Thomas alluded to the troubles in his letter, saying he intended to introduce a resolution to put the tribe's money in a ''lock box'' only to be used for government and incentive payments to tribal members.

''Regardless of what may happen, I have made it clear that we will not accept Wall street mandates for cuts to tribal government or the incentive,'' Thomas wrote. ''Anyone who puts the interests of consultants, bankers and bond holders ahead of our tribal community will have to answer to me.''

Foxwoods has laid off 800 casino workers since last summer as a result of declining slot revenue because of the poor economy.

Mohegan Sun, Connecticut's other tribal casino, has cut more than 500 jobs through attrition and delayed an expansion project. But Mohegan Sun, operated by the Mohegan Tribe, said in a statement Wednesday that the casino is financially healthy.

The casinos turn over 25 percent of their slot profits to the state under an operating agreement.

Paul Young, executive director of the Connecticut Division of Special Revenue, said his agency has not been notified of a plan to restructure Foxwoods' debt.

Young said he would expect the tribe to continue operating and making its payments to the state.

Gov. M. Jodi Rell said Wednesday Foxwoods' financial woes were a concern.

''We know that they have been experiencing financial difficulty for some time and I think that they're working to try to address it with their lenders and hopefully they can,'' Rell said. ''Obviously, it's a concern to us. It's a revenue to the state.''

Connecticut officials said Wednesday the two tribes will pay the state $25 million in slot revenues to compensate for promotions that allowed gamblers to use slots for free.


Associated Press writer Susan Haigh contributed to this story.

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