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With Mass. deal, Mohegan could promote Conn. casino

The Casino of the Sky at the Mohegan Sun.

Matthew J. Lee/Globe Staff

The Casino of the Sky at the Mohegan Sun.

As it vies for a Boston-area gambling license, Mohegan Sun has consistently denied it would try to steer high-stakes players away from Massachusetts and toward its flagship casino in Connecticut, where the company pays less in taxes.

The company’s financing partner even suggested that a confidential marketing agreement bars the Connecticut casino from trying to lure away Greater Boston gamblers with enticing promotional offers.

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But that is not the case, according to a copy of the agreement obtained by the Globe through the state public records law.

If the Revere project wins the license, Mohegan Sun in Connecticut could still offer customers in Greater Boston a marketing benefit — such as free slot play or a free room — to come to the Connecticut property as long as those offers are no better than offers sent to those customers to entice them to come to Revere, according to the agreement. Greater Boston, as defined by the agreement, is slightly broader than the area within Interstate 495 and includes portions of southern New Hampshire.

The agreement does not appear to bar Mohegan Sun from favoring the Connecticut casino in marketing outside the zone, such as to customers in Worcester, who have comparable drive times to Revere, to the Connecticut casino, and to a proposed MGM casino in Springfield.

Mitchell Etess, chief executive of the Mohegan Tribal Gaming Authority, insisted this week that the partnership did not intentionally mischaracterize the agreement in public statements, and said the marketing deal provides Massachusetts taxpayers with valuable protections and benefits.

“This assures we will not market in excess of what is appropriate to any customers in that zone, to over-market to them to send them to Connecticut,” Etess said.

This debate highlights a key question in the battle between Mohegan Sun and Wynn Resorts for the sole resort casino license in the Greater Boston region, which could be decided next week. Wynn Resorts chairman Steve Wynn has long contended that Mohegan Sun will not be able to resist the temptation to direct high-stakes players to Connecticut, where it pays the state no share of table game revenue and 25 percent on slots. In Massachusetts, by contrast, resort casinos will pay a 25 percent tax on all gambling revenue.

“What do you think they’re going to do with a big customer?” Wynn said during a hearing before the state gambling commission in January.

Mohegan Sun’s partner in Massachusetts, Brigade Capital Management, would become majority owner of the Revere casino, should the project win the license.

Doug Pardon, a partner at Brigade, told state regulators at a public meeting in June that in its marketing agreement with Mohegan Sun, Brigade had “insisted on a nonsolicitation agreement protecting a specified zone around Mohegan Sun Massachusetts from targeted marketing by other Mohegan properties.”

Carl Jenkins, managing director at the financial firm Duff & Phelps, who has studied the local casino market, said the potential conflict for Mohegan Sun remains a hurdle for the company’s application.

“Mohegan Sun may try to pooh-pooh it, but how can you not look at the fact that $1 gambled by a customer in Connecticut is worth more to them than $1 in Massachusetts?” he said.

Jenkins also questioned the value of a marketing restriction that does not cover the whole state.

Etess insisted that the marketing agreement with Brigade offers strong protection for Massachusetts taxpayers: Without the ability to give substantially better freebies and discount marketing offers, it would be very difficult to persuade customers in the state’s most populous region to make the longer drive to Connecticut, he said.

“If you have someone with the same offer and you’re 30 minutes away or 90 minutes away, it’s very simple,” he said. The Connecticut casino “will not be able to effectively compete” within the Greater Boston area.

The marketing agreement also requires Mohegan Sun to use its existing customer database to “seed” the database of the Revere property, he said, sharing detailed player information that the Connecticut casino has collected for years.

“We’re going to be providing not just our brand, which is meaningful to people in Massachusetts, but this database to get things up and running,” Etess said. Managers of the Revere property “will understand all the playing data and information related to these people so Mohegan Sun Massachusetts will be able to be very targeted in their initial offers.”

Etess added that Wynn has suggested Massachusetts could help feed Wynn’s Las Vegas casinos, should Wynn earn the license. The top Nevada tax rate on gambling revenue is 6.75 percent, according to the American Gaming Association.

“We are the only applicant that provides any protection whatsoever in how we’re going to market to the Commonwealth,” Etess said.

Wynn Resorts spokesman Michael Weaver, in response, said it is silly to suggest Wynn “would somehow incent Boston residents to make the 2,800-mile trip to Las Vegas instead of the 10-minute ride to our Everett resort.”

The state gambling commission is expected on Monday to begin its final deliberations before granting the Greater Boston license, with a decision possible by the end of next week.

Voters will have the final say in November, when they decide whether to repeal the casino law and ban the casino industry from the state.

Mark Arsenault can be reached at mark.arsenault@globe.com. Follow him on Twitter @bostonglobemark.
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