Published on: January 3, 2025, at 04:19h.
Last updated on: January 3, 2025, at 04:19h.
Inspire Korea is experiencing challenges according to Connecticut-based Mohegan.
Mohegan, the tribal and commercial gaming firm controlled by the Mohegan Tribe, held its grand opening of the first phase of the Inspire Entertainment Resort, a $1.6 billion endeavor, last March. In Mohegan’s full-year 2024 fiscal year financial report, company officials detail that the integrated resort casino destination at Incheon International Airport has not met expectations.
In the fourth quarter, Inspire resort-wide operations generated net revenue of just $62.2 million. For the year, net revenues totaled only $163.3 million.
Ari Glazer, Mohegan’s chief financial officer, mentioned that Inspire has faced higher-than-expected operating costs related to the resort’s opening and operational build-up, including a costly marketing campaign across South Korea and Asian markets. The casino has also struggled, with Glazer pointing to “low table hold.”
The Inspire casino, like most in Asian markets, relies more on table games and baccarat compared to U.S. casinos where slot machines are predominant. The gaming space at the Korean resort includes 150 live dealer table games, a 176-seat electronic table gaming stadium, and 373 slots.
Inspire Faces Challenges
Mohegan achieved record annual net revenues exceeding $1.88 billion, a 13% year-over-year increase. Along with the launch of Inspire, Glazer attributed continued growth in Mohegan Digital and strong non-gaming revenues at U.S. resorts and in Canada for the $216.7 million rise.
Despite the record revenue, Mohegan reported a significant decrease in consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) from a profit of $34.5 million in fiscal year 2023 to a loss of more than $36.1 million in FY24 — a difference of $79.6 million.
Inspire was a major factor in this decrease. The company also warned that without securing new lenders in South Korea, it could default on its Korea Term Loan.
The company faces upcoming debt maturities and the risk of debt covenant violation under its Korean Term Loan facility, which pose significant risks to investors,” the financial presentation highlighted.
Inspire’s adjusted EBITDA recorded a loss of $49.5 million.
Operational Issues
All indicators suggest that Inspire is proving to be a difficult venture for Mohegan. The potential loan default indicates deeper operational challenges.
The Inspire casino generated $94.7 million from table games and only $6.8 million from its slots in the 2024 fiscal year. Mohegan Sun in Connecticut, the company’s flagship property, earned nearly $400 million from slots and $189.2 million from table games during the same period.
Mohegan’s two Canadian casinos — Fallsview Casino Resort and Casino Niagara, reported gross gaming revenue (GGR) of $210.9 million. Even Mohegan Pennsylvania in the Pocono Mountains generated gross gaming revenue of $196.6 million.
Inspire’s hotel occupancy rate for the year was only 69%. This data suggests that Mohegan’s $1.6 billion investment in the belief that foreign visitors to Incheon and Seoul for business would be willing to stay 45 minutes outside of downtown Seoul for gambling may not be panning out as expected.
Incheon remains a foreigner-only casino. South Koreans can legally gamble only at Kangwon Land, a government-owned resort in a remote area of the Kangwon Province.