32.

Strategy

Our overall strategy is to profit from expanding demand in the gaming market in the northeastern United States. ’s initial success has resulted primarily from guests living within 100 miles of Mohegan Sun, which represents our primary market. We have also enjoyed additional success from guests living within a 100 to 200 mile radius of Mohegan Sun, which represents our secondary market. Based upon Mohegan Sun’s results and experience, we believe the gaming market in the northeastern United States is strong. We have developed Mohegan Sun into a full-scale entertainment and destination resort, which has led to increases in the number of guests and lengthened the duration of their stays at Mohegan Sun. We have recently completed Project Sunburst, a major expansion of Mohegan Sun, which included the addition of a luxury hotel, increased gaming and retail space, a convention center and an entertainment arena. With additional gaming capacity and the ability to capture a share of the overnight market, we believe Mohegan Sun’s market penetration will increase. We believe that Project Sunburst will create a long-term competitive advantage for Mohegan Sun in the gaming market in the northeastern United States.

Market and Competition from Other Gaming Operations

Mohegan Sun and the Foxwoods Resort Casino, or Foxwoods, are the only two legally authorized gaming operations offering both traditional slot machines and table games in New England. Foxwoods, operated by the Mashantucket Pequot Tribe under procedures approved by the United States Department of the Interior, is located approximately 10 miles from Mohegan Sun and is currently the largest gaming facility in the United States in terms of total gaming positions. Based on the size and success of Foxwoods and the rapid growth of Mohegan Sun, we believe that the gaming market in New England and the remaining northeastern United States remains underserved.

The existing gaming industry in the northeastern United States is highly competitive. Mohegan Sun currently competes primarily with Foxwoods. Foxwoods has been in operation for approximately twelve years and may have greater financial resources and more operating experience than us. In addition, for a number of years Foxwoods has offered several amenities that Mohegan Sun only recently began to offer to its guests, including hotel accommodations and convention center services. The Mohegan Sun approximately 1,200-room hotel was fully completed and opened in June 2002 and the 100,000 square foot convention center opened in April 2002.

As a result of the opening of our luxury hotel, we have broadened Mohegan Sun’s target market beyond day-trip customers, to include guests making overnight stays at the resort. Consequently, Mohegan Sun now competes with casinos in Atlantic City, New Jersey for customers and, to a lesser extent, gaming resorts such as those in the Bahamas and Las Vegas, . Many of these casinos and other resorts have greater resources and greater name recognition than Mohegan Sun.

Mohegan Sun also currently faces competition from several casinos and gaming facilities located on Indian tribal lands in the State of New York. In addition, other Indian tribes have announced potential casino projects, which if completed, will add significant casino and gaming space and hotel rooms to the northeastern United States market.

Under current law, outside of Atlantic City, New Jersey, full-scale commercial casino gaming in the northeastern United States may be conducted only by federally recognized Indian tribes operating under federal Indian gaming laws pursuant to a compact with the state in which they operate or on cruise ships in international