To inspire means to give others ideas and push them to action. First used during the Middle English period between 1150-1500, the verb actually originates from the French word ‘enspiren,’ which means to fill the mind and heart and prompt someone to begin an endeavour; looking back even further, the Latin ‘inspirare’ means to blow life into something – so, perhaps it was only fitting that on 17 February 2025, after only a year of the resort being open, Bain Capital was motivated to accelerate Mohegan’s debts and acquire operational control of Inspire Entertainment Resort.
The move came as quite a shock to both the wider industry and Mohegan itself, if its Q1 conference call is anything to go by: “Following the earnings release this morning and just a few hours ago, we received notice from the agent for the lenders to MGE Korea Ltd…” But we might be getting a little ahead of ourselves. To understand why Bain Capital was inspired to take control of the resort, perhaps it’s necessary to take a closer look at the first year of operations and how a four-year construction project was only opened around a decade later.
With three hotel towers housing 1,275 rooms, a 15,000-seat arena and even an indoor water park, Inspire Entertainment certainly made a splash when it opened in Incheon, South Korea. But were there clues all along that Mohegan was diving into the deep end when it came to this venture?
Winning the bid (2016)
Clues 1 & 2: A plate of barbeque pork and all is not well next to Paradise
By 2015, South Korea had 17 casinos operating in the country, but only one was open to Korean citizens, while the rest operated on a strictly foreign-player-only basis. Although attitudes around gambling were still more conservative than those in the West, the South Korean Government opened up the chance to build another gambling resort and received 34 bids for the opportunity.
However, just as momentum was building, several of these companies suddenly retracted their offers. Bloomberry Resorts had bought several islands around Incheon Airport as part of its tender, but, along with Genting Singapore, both operators decided their time, energy and budget would be better spent elsewhere in Asia. This didn’t deter Mohegan, though, and on 26 February 2016, the tribal operator was announced as the winner: “We are pleased with the Korean Government’s decision to award us the opportunity to help fulfil their vision of driving economic development by growing tourism, creating jobs and showcasing Korean culture via the integrated resort,” said the Mohegan President at the time, Bobby Soper. As part of the deal, Mohegan would be required to invest at least a trillion Korean Won (US$811.3m), but the team was confident that its $1.24bn project would be ready to open by 2020.
Mohegan wasn’t the only US operator planning a major construction project in the country, though. A joint venture between Caesars and Lippo had already been approved by South Korea in 2014, but during an investors conference call in February 2021, the company dropped a bombshell. “Korea has gone, we sold it for some barbecue pork,” Tom Reeg, Caesars Entertainment CEO told listeners. “We sold it back to our partners and have no more commitment. We’re out.” Aside from Mohegan, the only other company that seemed all-in on opening a resort in Korea was Sega Sammy, the company best known for Sonic the Hedgehog. Much like the blue protagonist himself, the executives at Sega Sammy moved quickly to open the country’s first integrated resort in 2017 – which was also located just a few minutes from Incheon International Airport. There would be enough traffic through Korea’s biggest airport to sustain two casino-orientated resorts, right?
Securing the funding (2021)
Clues 3 & 4: Heavy investments; a new CFO
A year after the resort was projected to be operational, on 29 November 2021, Mohegan announced that it was 12% through the construction process and had finally closed $1.6bn in funding for the remainder of the project. This comprised of $300m from MGE, $275m from Bain Capital and MBK Partners, $890m from KB Securities, NH Investment & Securities and Hana Financial Investment and $85.5m from Hanwha Engineering & Construction Corp. This may seem normal in the West, but according to internal reports, even if an operator had a flawless record of gaming operations, a business licence could be refused to them if they “heavily relied on debt.” Construction is never cheap, but the Korean Government is very particular when it comes to foreign investors taking out loans as part of their business practice.
With such a hefty investment under Mohegan’s belt, let’s take a look at how Sega Sammy was doing. The Japanese-backed resort was going to be the direct competition for Mohegan Inspire and, despite initially promising results, the global pandemic had taken its toll on the resort. In 2021, between Paradise City in Incheon, Korea and Phoenix Seagaia Resort in Miyazaki, Japan, Sega Sammy’s net sales had fallen 39.7% to ¥6.32bn ($57.7m), while Paradise was operating at a ¥10.3bn loss. The company has since made a solid recovery and Paradise is now operating at an 84.6% hotel occupancy rate with 267,000 casino visitors and ₩45.4bn ($0.031bn) in net profit in its latest quarterly reports. But the potential success for integrated Korean resorts was still uncertain several years ago.
There was one final major development that unfolded before Mohegan could officially open Inspire Entertainment Resort. Carol Kline Anderson, Mohegan’s CFO since 2021, notified the company in October 2023 that she would not be renewing her employment contract on 31 March 2024. With almost two decades of experience in the industry, Anderson had served as VP for Lehman Brothers, an Associate for Latham & Watkins, the SVP of Treasury for Capital Markets and Associate General Counsel for Scientific Games. Ari Glazer was chosen as her successor, and he would officially start as Mohegan’s CFO on 1 May 2024, a few months before Inspire would open.
The one and only (year of operations... 2024)
Clues 5 & 6: K-Popping the bubble and when did the casino open?
When Inspire finally did open, the focus was never on the casino. In fact, these facilities were the last to open – just over two months after the soft launch that saw the hotel, arena and MICE areas open. With the soft launch on 30 November, Mohegan wasted no time in scheduling the first event at Inspire for 2 December, a K-Pop Music Awards ceremony. This featured the likes of BTS and NewJeans, while the first month saw other acts such as Taemin, SHINee, Stray Kids and Enhyphen all perform at the new arena. Despite the star-studded inauguration, the audience was not impressed. The audio mixing was apparently so bad people couldn’t hear the singers during performances, bands were introduced with incorrect names and there were several cases of another band’s song starting midway through a performance. There are always teething problems with new locations, sure, but there were also concerns about whether Mohegan had bitten off more than it could chew.
What does this have to do with gambling? Just bear with me for a moment longer. K-Pop is a multi-trillion won industry and is the pride and joy of the country. In fact, this is one of the main factors Korean Government officials would look at when granting a business licence. Korean pop culture is one of the biggest drivers for the economy and, in a recent report by Lee et al named ‘Integrated Casino Resort Development in South Korea: Perspectives from the Government Representatives and Industry Professionals,’ it was confirmed that “satisfying all the bidding requirements is necessary but does not seem to be sufficient to obtain a business licence in Korea. It is equally important to understand the unique political, social and cultural knowledge of the host country to enter the gaming market in Korea.” If Inspire Arena was mishandling performances, Mohegan may have been getting off very much on the wrong foot. Had the operator gambled on making a good impression through the music industry and not quite hit the right note?
But the show must go on, as they say. On 5 March, the official Grand Opening took place, featuring performers such as PSY, Taeyang and Maroon 5 at the Inspire Arena. You might be mistaken by the ‘opening’ sentiment of the ‘Grand Opening’ title, though; by this time, Inspire Casino had already been operating for over a month.
That’s right, the casino part of the resort had quietly opened on 3 February to no fanfare. If the proverbial spotlight was focused on Inspire Arena, Inspire Casino wasn’t even on the stage – gambling operations were probably still at home wondering when it was their turn to debut. If you weren’t aware that the casino opened a month before the Grand Opening, don’t worry, you weren’t the only one. The casino reported only 10,771 visitors during February and a mass table drop of $31.1m, when compared to 15,803 visitors and $61.7m one month later after the Grand Opening in March.
Bain Capital takes control (2025)
Clues 7 & 8: Net loss growing and Korea’s tolerance for debtOn the topic of financials, let’s discuss Mohegan’s reports. During the time of Bain Capital’s takeover, figures at Mohegan were looking steady – or stagnant, depending on how you look at things. Since June 2024, Inspire Resort had plateaued at around $60m in revenue per quarter, which is the same number seen at both Mohegan’s Pennsylvania and Niagara resorts. Casino visitation numbers had also levelled out at around 31,000 each month, while hotel occupancy had been steadily on the decline from 89.7% in August to 66.7% in December. The main problem, as it often is with financial reports, was in the net income – or in this case, the net loss. For the last year, Mohegan had been operating at a net loss, totalling $234.5m in FY24, with foreign loss documented as $346.2m, although this does include Niagara Resorts too. By comparison, the company’s net income in FY22 was $75.7m and in FY23 it had fallen to $22.9m, but foreign loss was $20.4m and $61.9m respectively. One of the few positives was mass table drop, which was increasing steadily during the last half of 2024, averaging around $85m per month and peaking at $117.5m in December.
So, was there a problem with the location? Well, to deduce that, let’s take a look at the direct competition 4.2 miles down the road. In 2024, not only did Paradise City report positive growth in revenue and income, it also had its highest levels of casino and hotel activity since opening, “driven by continued strong casino sales centred on Japanese VIP customers.” If it wasn’t the location, then, what was the issue? As part of the report compiled by Lee et al, when interviewing Korean Government officials who had been part of the Incheon licence process for Paradise City, several said that one of the most important things was the “foreign investors financial status” and “an investor’s debt ratio should not exceed 40%.” Officials also explained there were concerns that an operator could obtain a licence, rack up debt and then file for bankruptcy. This worry stemmed from several unsuccessful investment schemes in the past, many of which led to the nation’s financial crisis in 1997; as such, “the Government has tried to avoid any possible risks associated with working with foreign capital, particularly with national development projects such as the integrated casino resort.” Perhaps the most important assessment from this report is that “the Korean Government seemed to put more weight on the financial integrity and health of foreign investors and high ethical business standards.”
At the time of Bain Capital’s takeover, Mohegan had $3.2bn in assets and $3.1bn in long-term debt. While the specific loan to Bain Capital wasn’t due to mature until 2027 and there were no principal payments expected until then, there was $685.9m due to Korean credit facilities, which would mature later this year. It seemed that, with Mohegan’s long history of operating some of the biggest integrated resort casinos in the US, the operator was an easy choice for the Korean Government to make. Yet, despite strong financial backing and a vision, Mohegan may not have been a good fit for Korean culture. The operator understood gaming and hospitality, that much is clear from its operations in North America, but Korea demands something very different: A particular care for its culture and little reliance on debts that seemingly caught Mohegan unawares. It might’ve been a successful first year for the resort, just not in the eyes of the people whose judgment mattered most.
