UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549 

_________________________________

FORM 10-Q

 _____________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission file number 033-80655

 __________________________________________

MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)

 __________________________________________ 

Not Applicable			06-1436334
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)
One Mohegan Sun Boulevard,	Uncasville,	CT	06382
(Address of principal executive offices)			(Zip Code)

(860) 862-8000

(Registrant’s telephone number, including area code)

 ___________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No  ☒*

* The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports that would have been required during the preceding 12 months had it been subject to such filing requirements.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  ☒

MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-Q

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2021 and September 30, 2020 (unaudited)	3
	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three Months and Nine Months Ended June 30, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Changes in Capital for the Three Months and Nine Months Ended June 30, 2021 and 2020 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2021 and 2020 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 6.	Exhibits	30
Signatures.	Mohegan Tribal Gaming Authority	31

PART I. FINANCIAL INFORMATION

Item 1.     Financial Statements

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) (unaudited)

	June 30, 2021		September 30, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	158,406	$	112,665
Restricted cash and cash equivalents	2,002		934
Accounts receivable, net of allowance for doubtful accounts of $18,389 and $16,313, respectively	48,458		43,602
Inventories	17,699		16,773
Due from Ontario Lottery and Gaming Corporation	3,401		2,854
Casino Operating and Services Agreement customer contract asset	25,573		24,843
Other current assets	50,586		46,362
Total current assets	306,125		248,033
Restricted cash and cash equivalents	15,204		28,470
Property and equipment, net	1,554,248		1,498,047
Right-of-use operating lease assets	450,022		408,434
Other intangible assets, net	328,772		327,841
Casino Operating and Services Agreement customer contract asset, net of current portion	73,033		104,405
Notes receivable	2,514		2,514
Other assets, net	100,360		89,444
Total assets	$	2,830,278	$	2,707,188
LIABILITIES AND CAPITAL
Current liabilities:
Current portion of long-term debt	$	58,422	$	75,355
Current portion of finance lease obligations	5,283		2,802
Current portion of right-of-use operating lease obligations	12,312		19,939
Trade payables	26,243		22,469
Accrued payroll	38,944		32,705
Construction payables	47,588		40,932
Accrued interest payable	49,806		26,349
Due to Ontario Lottery and Gaming Corporation	22,112		25,405
Other current liabilities	195,031		157,910
Total current liabilities	455,741		403,866
Long-term debt, net of current portion	1,884,520		1,894,655
Finance lease obligations, net of current portion	108,989		28,209
Right-of-use operating lease obligations, net of current portion	456,623		411,698
Due to Ontario Lottery and Gaming Corporation	3,993		—
Accrued payroll	3,529		3,978
Other long-term liabilities	35,218		32,771
Total liabilities	2,948,613		2,775,177
Commitments and Contingencies
Capital:
Retained deficit	(129,541)		(75,692)
Accumulated other comprehensive income	9,507		223
Total capital attributable to Mohegan Tribal Gaming Authority	(120,034)		(75,469)
Non-controlling interests	1,699		7,480
Total capital	(118,335)		(67,989)
Total liabilities and capital	$	2,830,278	$	2,707,188

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(in thousands) (unaudited)

	For the		For the		For the		For the
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenues:
Gaming	$	241,289	$	89,379	$	623,674	$	569,642
Food and beverage	20,826		3,009		45,209		91,098
Hotel	22,188		2,589		55,882		50,293
Retail, entertainment and other	43,886		12,222		112,833		109,919
Net revenues	328,189		107,199		837,598		820,952
Operating costs and expenses:
Gaming, including related party transactions of $(345), $755, $1,262 and $2,265, respectively	122,326		41,834		329,392		330,200
Food and beverage	17,544		5,075		40,640		79,160
Hotel, including related party transactions of $2,161, $2,161, $6,483 and $6,483, respectively	8,926		4,296		25,907		26,611
Retail, entertainment and other	10,276		4,026		24,412		45,178
Advertising, general and administrative, including related party transactions of $6,327, $4,517, $22,604 and $23,129, respectively	55,661		35,672		154,165		172,768
Corporate, including related party transactions of $1,702, $1,679, $4,966 and $6,060, respectively	11,238		7,700		35,230		31,959
Depreciation and amortization	27,140		26,477		79,502		82,847
Impairment of Mohegan Sun Pocono's intangible assets	—		—		—		126,596
Other, net	11,037		2,656		28,843		9,000
Total operating costs and expenses	264,148		127,736		718,091		904,319
Income (loss) from operations	64,041		(20,537)		119,507		(83,367)
Other income (expense):
Interest income	125		270		129		1,549
Interest expense, net of capitalized interest	(43,929)		(32,478)		(128,256)		(98,830)
Loss on modification and early extinguishment of debt	(20)		—		(23,978)		—
Other, net	2,373		120		5,665		(2,904)
Total other expense	(41,451)		(32,088)		(146,440)		(100,185)
Income (loss) before income tax	22,590		(52,625)		(26,933)		(183,552)
Income tax benefit	3,312		2,696		10,101		3,016
Net income (loss)	25,902		(49,929)		(16,832)		(180,536)
Income attributable to non-controlling interests	(535)		(116)		(411)		(209)
Net income (loss) attributable to Mohegan Tribal Gaming Authority	25,367		(50,045)		(17,243)		(180,745)
Comprehensive income (loss):
Foreign currency translation adjustment	216		6,088		10,660		(1,076)
Other comprehensive income (loss)	216		6,088		10,660		(1,076)
Other comprehensive income attributable to non-controlling interests	—		(229)		(1,376)		(21)
Other comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority	216		5,859		9,284		(1,097)
Comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority	$	25,583	$	(44,186)	$	(7,959)	$	(181,842)

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(in thousands) (unaudited)

	Retained Earnings (Deficit)		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Total Capital Attributable to Mohegan Tribal Gaming Authority		Non-controlling Interests		Total Capital
Balance, March 31, 2021	$	(142,563)	$	—	$	9,291	$	(133,272)	$	1,164	$	(132,108)
Net income	25,367		—		—		25,367		535		25,902
Foreign currency translation adjustment	—		—		216		216		—		216
Contribution from Mohegan Tribe	—		2,814		—		2,814		—		2,814
Distributions to Mohegan Tribe	(12,186)		(2,814)		—		(15,000)		—		(15,000)
Distributions to Salishan Company, LLC related to the Cowlitz Project	(159)		—		—		(159)		—		(159)
Balance, June 30, 2021	$	(129,541)	$	—	$	9,507	$	(120,034)	$	1,699	$	(118,335)
Balance, September 30, 2020	$	(75,692)	$	—	$	223	$	(75,469)	$	7,480	$	(67,989)
Net income (loss)	(17,243)		—		—		(17,243)		411		(16,832)
Foreign currency translation adjustment	—		—		9,284		9,284		1,376		10,660
Contribution from Mohegan Tribe	—		2,814		—		2,814		—		2,814
Distributions to Mohegan Tribe	(36,186)		(2,814)		—		(39,000)		—		(39,000)
Distributions to Salishan Company, LLC related to the Cowlitz Project	(420)		—		—		(420)		—		(420)
Other	—		—		—		—		(7,568)		(7,568)
Balance, June 30, 2021	$	(129,541)	$	—	$	9,507	$	(120,034)	$	1,699	$	(118,335)
Balance, March 31, 2020	$	(17,989)	$	—	$	(13,589)	$	(31,578)	$	6,827	$	(24,751)
Net income (loss)	(50,045)		—		—		(50,045)		116		(49,929)
Foreign currency translation adjustment	—		—		5,859		5,859		229		6,088
Distributions to Mohegan Tribe	(8,333)		—		—		(8,333)		—		(8,333)
Distributions to Salishan Company, LLC related to the Cowlitz Project	(248)		—		—		(248)		—		(248)
Balance, June 30, 2020	$	(76,615)	$	—	$	(7,730)	$	(84,345)	$	7,172	$	(77,173)
Balance, September 30, 2019	$	137,124	$	—	$	(6,633)	$	130,491	$	6,942	$	137,433
Net income (loss)	(180,745)		—		—		(180,745)		209		(180,536)
Foreign currency translation adjustment	—		—		(1,097)		(1,097)		21		(1,076)
Distributions to Mohegan Tribe	(32,333)		—		—		(32,333)		—		(32,333)
Distributions to Salishan Company, LLC related to the Cowlitz Project	(661)		—		—		(661)		—		(661)
Balance, June 30, 2020	$	(76,615)	$	—	$	(7,730)	$	(84,345)	$	7,172	$	(77,173)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

	For the		For the
	Nine Months Ended		Nine Months Ended
	June 30, 2021		June 30, 2020
Cash flows provided by (used in) operating activities:
Net loss	$	(16,832)	$	(180,536)
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:
Depreciation and amortization	79,502		82,847
Non-cash operating lease expense	9,072		9,364
Loss on modification and early extinguishment of debt	23,725		—
Accretion of discounts	974		857
Amortization of discounts and debt issuance costs	15,309		13,977
Provision for losses on receivables	3,493		2,676
Impairment of Mohegan Sun Pocono's intangible assets	—		126,596
Deferred income taxes	(10,382)		(3,262)
Other, net	(6,612)		2,255
Changes in operating assets and liabilities, net of effect of the MGE Niagara Resorts acquisition:
Accounts receivable	(7,823)		1,237
Inventories	(689)		714
Due from Ontario Lottery and Gaming Corporation	(194)		5,482
Casino Operating and Services Agreement customer contract asset	6,185		(78,210)
Other assets	(328)		398
Trade payables	2,565		6,672
Accrued interest	23,421		(5,402)
Due to Ontario Lottery and Gaming Corporation	6,101		3,598
Operating lease liabilities	13,016		(162)
Other liabilities	4,617		(22,713)
Net cash flows provided by (used in) operating activities	145,120		(33,612)
Cash flows used in investing activities:
Purchases of property and equipment	(33,358)		(104,384)
Acquisition of the MGE Niagara Resorts, net of cash acquired	—		(1,666)
Investment in Mohegan Hotel Holding, LLC	—		(10,750)
Other, net	1,206		(1,171)
Net cash flows used in investing activities	(32,152)		(117,971)
Cash flows provided by (used in) financing activities:
New senior secured credit facility borrowings - revolving and line of credit	540,866		—
New senior secured credit facility repayments - revolving and line of credit	(450,866)		—
Prior senior secured credit facility borrowings - revolving and line of credit	156,287		807,525
Prior senior secured credit facility repayments - revolving and line of credit	(353,287)		(662,525)
Prior senior secured credit facility repayments - term loans A and B	(1,056,061)		(37,104)
Proceeds from Main Street term loan facility, net of discounts	48,108		—
Repayment of Main Street term loan facility	(50,000)		—
Proceeds from issuance of senior secured notes	1,175,000		—
MGE Niagara credit facility borrowings - revolving and line of credit	—		77,537
MGE Niagara credit facility repayments - revolving and line of credit	—		(51,110)
MGE Niagara credit facility repayments - term loan	(2,992)		(2,770)
Repayment of Mohegan Tribe subordinated loan	(5,000)		—
Other borrowings	694		2,845
Other repayments	(21,303)		(14,230)
Payments on finance lease obligations	(808)		(1,034)
Contribution from Mohegan Tribe	2,814		—
Distributions to Mohegan Tribe	(39,000)		(32,333)

6

Distributions to Salishan Company, LLC related to the Cowlitz Project	(420)		(661)
Payments of financing fees	(24,082)		(34)
Other, net	(1,000)		(1,527)
Net cash flows provided by (used in) financing activities	(81,050)		84,579
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	31,918		(67,004)
Effect of exchange rate on cash, cash equivalents, restricted cash and restricted cash equivalents	1,625		(1,444)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	142,069		280,729
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	175,612	$	212,281
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the condensed consolidated balance sheets:
Cash and cash equivalents	$	158,406	$	149,435
Restricted cash and cash equivalents, current	2,002		1,698
Restricted cash and cash equivalents, non-current	15,204		61,148
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	175,612	$	212,281
Supplemental disclosures:
Cash paid for interest	$	86,810	$	95,211
Non-cash transactions:
Right-of-use operating lease assets	$	24,787	$	360,933
Right-of-use operating lease obligations	$	24,154	$	361,078
Finance lease assets and obligations	$	79,102	$	2,511
Construction payables	$	44,735	$	46,236
New senior secured credit facility reductions	$	45,000	$	—
Prior senior secured credit facility reductions	$	—	$	10,514
MGE Niagara Resorts - derecognition of build-to-suit asset and liability	$	—	$	90,675

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION:

Organization

The Mohegan Tribe of Indians of Connecticut (the “Mohegan Tribe”) established the Mohegan Tribal Gaming Authority in July 1995 with the exclusive authority to conduct and regulate gaming activities for the Mohegan Tribe on tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Mohegan Tribe is a sovereign Indian nation with independent legal jurisdiction over its people and land. Like other sovereign governments, the Mohegan Tribe and its entities, including the Mohegan Tribal Gaming Authority, are generally not subject to federal, state or local income taxes. However, MGE Niagara Entertainment Inc. (“MGE Niagara”), a wholly-owned subsidiary, is subject to tax in Ontario, Canada, and certain non-tribal entities are subject to state or local income taxes in the United States.

The Mohegan Tribal Gaming Authority d/b/a Mohegan Gaming & Entertainment (the “Company”) is primarily engaged in the ownership, operation and development of integrated entertainment facilities, both domestically and internationally. This ownership, operation and development includes the following: (i) ownership and operation of Mohegan Sun, a gaming and entertainment complex located on an approximately 196-acre site in Uncasville, Connecticut, (ii) ownership and operation of Mohegan Sun Pocono, a gaming and entertainment facility located on an approximately 400-acre site in Plains Township, Pennsylvania, (iii) operation of the Niagara Fallsview Casino Resort, Casino Niagara and the 5,000-seat Niagara Falls Entertainment Centre under a Casino Operating and Services Agreement (the “Casino Operating and Services Agreement”), all in Niagara Falls, Canada (collectively, the “MGE Niagara Resorts”), (iv) development and management of ilani Casino Resort in Clark County, Washington, and development rights to any future development at ilani Casino Resort, (v) management of Resorts Casino Hotel in Atlantic City, New Jersey and ownership of 10% of the casino’s holding company and its subsidiaries, including those conducting or licensing online gaming and retail sports wagering in New Jersey, (vi) operation of the Mohegan Sun Casino at Virgin Hotels Las Vegas (“Mohegan Sun Las Vegas”) in Las Vegas, Nevada, (vii) development and construction of an integrated resort and casino project to be located adjacent to the Incheon International Airport in South Korea and (viii) development and construction of an integrated resort and casino project to be located near Athens, Greece.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic and the United States federal government declared it a national emergency. The spread of COVID-19 has affected most segments of the global economy, including the Company’s operations. In March 2020, the Company temporarily suspended operations at its North American owned, operated and managed properties to ensure the health and safety of its employees, guests and the surrounding communities in which the Company operates, consistent with directives from various government bodies. Following these closures, the Company reopened its properties as follows: (i) ilani Casino Resort on May 28, 2020, (ii) Mohegan Sun on June 1, 2020, (iii) Mohegan Sun Pocono on June 22, 2020, (iv) Resorts Casino Hotel on July 2, 2020 and (v) the MGE Niagara Resorts on July 23, 2021. Mohegan Sun Pocono was again temporarily closed from December 12, 2020 through January 3, 2021 due to a resurgence of COVID-19 at that time. In addition, Mohegan Sun Las Vegas opened to the public on March 25, 2021.

The impact of COVID-19 on the Company's operations has been significant, though the full extent of its impact will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of COVID-19 or the extent of any resurgence of COVID-19, the manner in which the Company’s guests, suppliers and other third parties respond to COVID-19, including the perception of safety and health measures taken by the Company, new information which may emerge concerning the severity of COVID-19 and the actions to contain or treat it, as well as general economic conditions and consumer confidence. Accordingly, the Company cannot reasonably estimate the extent to which COVID-19 will further impact its future financial condition, results of operations and cash flows.

The Company could experience other potential adverse impacts as a result of COVID-19, including, but not limited to, charges from further adjustments to the carrying value of its intangible assets, as well as other long-lived asset impairment charges. Actual results may differ materially from the Company’s current estimates as the scope of COVID-19 evolves, depending largely, but not exclusively, on the duration and extent of the Company’s business disruptions.

In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying condensed consolidated financial statements are issued. As further discussed within Note 3, on January 26, 2021, the Company (i) entered into a new credit agreement which, among other things, provided for an approximately $262.9 million senior secured revolving credit facility, removed the financial covenants (other than a minimum liquidity covenant) applicable for the fiscal quarter ended

December 31, 2020, modified the financial covenants applicable for the fiscal quarters ending March 31, 2021 and thereafter and extended the maturity date of the new senior secured revolving credit facility to April 14, 2023 and (ii) issued approximately $1.2 billion of new senior secured notes due February 1, 2026. The proceeds from these transactions were used to refinance certain existing indebtedness of the Company (refer to Note 3). Based on the aforementioned and the Company’s existing resources, there are no current indicators of substantial doubt as previously disclosed in the Company's Annual Report filed on Form 10-K for the fiscal year ended September 30, 2020, and the Company expects to have sufficient resources to meet its existing obligations for the next twelve months and to remain in compliance with its financial covenants.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete consolidated financial statements. The accompanying year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by US GAAP. All adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Company's operating results for the interim period, have been included.

The Company’s results for the three months and nine months ended June 30, 2021 are not indicative of operating results expected for the entire fiscal year, particularly given the impact of COVID-19 as discussed above.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020. The preparation of financial statements in conformity with US GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.

Mohegan Sun Las Vegas

The Company owns 100% of MGNV, LLC (“MGNV”), which was formed to operate Mohegan Sun Las Vegas. In July 2019, MGNV entered into a casino lease agreement with JC Hospitality, LLC, which developed the former Hard Rock Hotel and Casino in Las Vegas, Nevada, into an integrated resort under the Virgin Hotels brand, which includes Mohegan Sun Las Vegas. Pursuant to the lease agreement, MGNV leases and operates the more than 60,000-square-foot gaming facility at the integrated resort. On March 25, 2021, Mohegan Sun Las Vegas opened to the public. During the initial term of this 20-year lease agreement, the Company is required to make annual minimum rent payments of $9.0 million, subject to escalators which could result in annual minimum rent payments of up to $15.0 million, plus consumer price index inflators and additional common area maintenance fees. Annual minimum rent payments commence upon the first anniversary of the Lease Commencement Date, as defined under the lease agreement, and continue until the end of the lease term, which concludes in 2041, subject to additional extensions at MGNV's option. This lease is classified as a finance lease. Accordingly, the Company recorded a related finance lease asset and liability.

8

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

Revenue Disaggregation

The Company is primarily engaged in the ownership, operation and development of integrated entertainment facilities both domestically and internationally. The Company’s current wholly-owned operations are primarily focused within Connecticut and Pennsylvania. The Company also currently operates and manages other gaming facilities elsewhere within the United States and Canada. The Company generates revenues by providing the following types of goods and services: gaming, food and beverage, hotel, retail, entertainment and other and management and development.

Revenue disaggregation by geographic location and revenue type was as follows (in thousands):

	For the Three Months Ended June 30, 2021
	Connecticut		Pennsylvania		Nevada		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(Mohegan Sun  Las Vegas)		(MGE Niagara Resorts) (1)		Other
Gaming	$	163,938	$	57,134	$	6,934	$	13,283	$	—
Food and beverage	16,770		2,940		1,133		—		(17)
Hotel	20,758		1,430		—		—		—
Retail, entertainment and other	18,595		1,427		295		1,097		179
Management and development	—		—		—		—		21,782
Net revenues	$	220,061	$	62,931	$	8,362	$	14,380	$	21,944

________

(1)Gaming revenues represent revenues earned under the Casino Operating and Services Agreement.

	For the Three Months Ended June 30, 2020
	Connecticut		Pennsylvania		Nevada		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(Mohegan Sun Las Vegas) (1)		(MGE Niagara Resorts) (2)		Other
Gaming	$	67,966	$	10,112	$	—	$	11,301	$	—
Food and beverage	2,779		231		—		—		(1)
Hotel	2,568		21		—		—		—
Retail, entertainment and other	4,926		148		—		45		211
Management and development	—		—		—		—		6,546
Net revenues	$	78,239	$	10,512	$	—	$	11,346	$	6,756

________

(1)Mohegan Sun Las Vegas did not open to the public until March 25, 2021.

(2)Gaming revenues represent revenues earned under the Casino Operating and Services Agreement.

	For the Nine Months Ended June 30, 2021
	Connecticut		Pennsylvania		Nevada		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(Mohegan Sun Las Vegas) (1)		(MGE Niagara Resorts) (2)		Other
Gaming	$	434,928	$	141,795	$	8,449	$	38,502	$	—
Food and beverage	39,022		4,913		1,310		—		(36)
Hotel	52,566		3,327		—		—		(11)
Retail, entertainment and other	48,458		3,357		318		2,691		2,996
Management and development	—		—		—		—		53,691
Net revenues	$	574,974	$	153,392	$	10,077	$	41,193	$	56,640

________

(1)Mohegan Sun Las Vegas opened to the public on March 25, 2021.

(2)Gaming revenues represent revenues earned under the Casino Operating and Services Agreement.

9

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

	For the Nine Months Ended June 30, 2020
	Connecticut		Pennsylvania		Nevada		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(Mohegan Sun Las Vegas) (1)		(MGE Niagara Resorts) (2)		Other
Gaming	$	352,946	$	107,499	$	—	$	109,197	$	—
Food and beverage	52,734		10,899		—		27,544		(79)
Hotel	40,491		3,485		—		6,319		(2)
Retail, entertainment and other	57,689		3,685		—		24,542		519
Management and development	—		—		—		—		24,012
Net revenues	$	503,860	$	125,568	$	—	$	167,602	$	24,450

________

(1)Mohegan Sun Las Vegas did not open to the public until March 25, 2021.

(2)Gaming revenues represent revenues earned under the Casino Operating and Services Agreement.

Amendments to MGE Niagara Casino Operating and Services Agreement

MGE Niagara operates the MGE Niagara Resorts under the terms of a 21-year Casino Operating and Services Agreement with the Ontario Lottery and Gaming Corporation. On June 18, 2021 (the “Amendment Date”), the Casino Operating and Services Agreement was amended to provide for, among other things, a three-year replacement of annual Thresholds (as defined in the Casino Operating and Services Agreement), subject to certain conditions, with a fixed revenue share percentage. Annual Thresholds may be reinstated at any time during this three-year period under certain conditions specified in the amended Casino Operating and Services Agreement. The amended Casino Operating and Services Agreement also provides for a change in the payment schedule for fixed and variable lease payments relating to Fallsview Casino Resort, which were originally due during the closure of the MGE Niagara Resorts, to the last twelve months of the lease term. These fixed and variable lease payments totaled $26.9 million and $11.5 million, respectively. As of the Amendment Date, such amounts were recorded within current portion of right-of-use operating lease obligations and due to Ontario Lottery and Gaming Corporation, a current liability. On the Amendment Date, these amounts were discounted to an aggregate present value of $4.0 million, which is now recorded within due to Ontario Lottery and Gaming Corporation, a long-term liability. The discount totaling $34.4 million represents additional non-cash consideration from the Ontario Lottery and Gaming Corporation and, accordingly, is recorded as a contract liability. The contract assets related to the Casino Operating and Services Agreement are reported net of this contract liability. The contract liability will be recognized as revenue over the remaining term of the Casino Operating and Services Agreement, on a straight-line basis, consistent with other components with fixed consideration under the Casino Operating and Services Agreement.

Contract and Contract-related Assets

As of June 30, 2021 and September 30, 2020, contract assets related to the Casino Operating and Services Agreement totaled $98.6 million and $129.2 million, respectively.

Contract and Contract-related Liabilities

A difference may exist between the timing of cash receipts from patrons and the recognition of revenues, resulting in a contract or contract-related liability. In general, the Company has three types of such liabilities: (1) outstanding gaming chips and slot tickets liability, which represents amounts owed in exchange for outstanding gaming chips and slot tickets held by patrons, (2) loyalty points deferred revenue liability and (3) patron advances and other liability, which primarily represents funds deposited in advance by patrons for gaming and advance payments by patrons for goods and services such as advance ticket sales, deposits on rooms and convention space and gift card purchases. These liabilities are generally expected to be recognized as revenues within one year and are recorded within other current liabilities.

The following table summarizes these liabilities (in thousands):

	June 30, 2021		September 30, 2020
Outstanding gaming chips and slot tickets liability	$	8,576	$	7,623
Loyalty points deferred revenue liability	40,095		35,368
Patron advances and other liability	26,695		17,340
Total	$	75,366	$	60,331

As of June 30, 2021 and September 30, 2020, customer contract liabilities related to Mohegan Sun Pocono's revenue sharing agreement with Unibet Interactive Inc. totaled $15.9 million and $16.8 million, respectively, and were primarily recorded within other long-term liabilities.

10

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

Fair Value of Financial Instruments

The Company applies the following fair value hierarchy, which prioritizes the inputs utilized to measure fair value into three levels:

•Level 1 - Quoted prices for identical assets or liabilities in active markets;

•Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets or valuations based on models where the significant inputs are observable or can be corroborated by observable market data; and

•Level 3 - Valuations based on models where the significant inputs are unobservable. The unobservable inputs reflect the Company's estimates or assumptions that market participants would utilize in pricing such assets or liabilities.

The Company's assessment of the significance of a particular input requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy.

The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, receivables and trade payables approximates fair value. The estimated fair values of the Company's long-term debt were as follows (in thousands):

	June 30, 2021
	Carrying Value		Fair Value
New senior secured credit facility - revolving (1)	$	45,000	$	44,381
2021 8% senior secured notes (1)	1,156,911		1,222,000
2016 7 7/8% senior unsecured notes (1)	493,140		516,875
MGE Niagara credit facility - revolving (1)	28,231		28,231
MGE Niagara credit facility - term loan (1)	71,806		72,594
MGE Niagara convertible debenture (2)	32,264		32,264
Mohegan Expo credit facility (3)	26,211		26,535
Guaranteed credit facility (3)	27,789		28,438
Redemption note payable (3)	57,278		57,278
Other (3)	4,312		4,312
Long-term debt	$	1,942,942	$	2,032,908

________

(1)Estimated fair values were based on Level 2 inputs (quoted market prices or prices of similar instruments) as of June 30, 2021.

(2)Estimated fair value was based on Level 3 inputs (changes in market conditions) from date of issuance (June 11, 2019) to June 30, 2021.

(3)Estimated fair values were based on Level 3 inputs (present value of future payments discounted to carrying value) as of June 30, 2021.

New Accounting Standards

The following accounting standards were adopted during the nine months ended June 30, 2021:

ASU 2016-13

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”), which sets forth a current expected credit loss model requiring a company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This model replaced the prior incurred loss model and applies to the measurement of credit losses on financial assets measured at amortized cost, as well as certain off-balance sheet credit exposures. Effective October 1, 2020, the Company adopted ASU 2016-13 and its adoption did not have a material impact on the Company's financial statements.

ASU 2018-13

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which added, amended and removed certain disclosure requirements related to fair value measurements. ASU 2018-13 requires enhanced disclosures on valuation techniques and inputs that a reporting entity uses to determine its measures of fair value, including judgments and assumptions that the entity makes and the uncertainties in the fair value measurements as of the reporting date. Effective October 1, 2020, the Company adopted ASU 2018-13 and its adoption did not have a material impact on the Company's financial statement disclosures.

11

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

The following accounting standards will be adopted in future reporting periods:

ASU 2019-12

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which simplifies various aspects related to the accounting for income taxes. This new standard removes certain exceptions to the general principles in ASU 2019-12 and clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020. The Company is currently evaluating the impact ASU 2019-12 will have on its financial statements, but does not expect its adoption to have a material impact.

ASU 2020-06

In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), which simplifies the accounting for convertible instruments by removing major separation models required under current guidance. ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact ASU 2020-06 will have on its financial statements and related disclosures, but does not expect its adoption to have a material impact.

NOTE 2—LEASES:

Lessee

The Company leases real estate and equipment under various operating and finance lease agreements. The leases have terms ranging from approximately one month to 50 years and do not contain any material residual value guarantees or restrictive covenants. Rental payments under these lease agreements are fixed and/or variable based on periodic adjustments for inflation, performance, usage or appraised land values. Variable components of lease payments are not included in the calculation of right-of-use assets and liabilities.

The Company’s lease arrangements contain both lease and non-lease components. For instances in which the Company is a lessee, the Company accounts for both lease and non-lease components as a single lease component for substantially all classes of underlying assets (primarily real estate and equipment). Leases with an expected or initial term of 12 months or less are not recorded on the Company’s condensed consolidated balance sheet and the related lease expenses are recognized on a straight-line basis over the expected lease term.

Information related to weighted average lease terms and discount rates is as follows:

	June 30, 2021
Weighted average remaining lease terms (years):
Operating leases	23
Finance leases	19
Weighted average discount rates:
Operating leases	7.68	%
Finance leases	7.76	%

12

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

The components of lease expense are as follows (in thousands):

	For the		For the		For the		For the
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Operating lease expense	$	11,456	$	9,046	$	34,160	$	28,022
Short-term lease expense	9,248		2,747		23,464		20,297
Variable lease expense	4,666		2,354		12,531		9,161
Finance lease expense:
Amortization of right-of-use assets	1,602		593		2,854		1,806
Interest on lease liabilities	2,067		373		2,942		1,161
Less: sublease income (1)	(5,410)		(69)		(13,467)		(16,794)
Total	$	23,629	$	15,044	$	62,484	$	43,653

________

(1)Represents income earned by the Company from the rental of hotel, convention or retail space at the MGE Niagara Resorts and the Earth Hotel Tower at Mohegan Sun, both of which are leased properties.

Supplemental cash flow information related to lease liabilities is as follows (in thousands):

	For the		For the
	Nine Months Ended		Nine Months Ended
	June 30, 2021		June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Payments on operating lease obligations	$	12,072	$	18,820
Payments for interest on finance lease obligations	174		853
Payments on finance lease obligations	808		1,034
Total	$	13,054	$	20,707

Maturities of right-of-use lease obligations are as follows (in thousands):

	Operating Leases		Finance Leases
Fiscal years:
2021 (1)	$	12,614	$	3,719
2022	39,458		8,144
2023	40,437		12,269
2024	40,240		11,839
2025	40,499		11,439
Thereafter	839,308		172,231
Total future lease payments	1,012,556		219,641
Less: amounts representing interest	(543,621)		(105,696)
Plus: residual values	—		327
Present value of future lease payments	468,935		114,272
Less: current portion of lease obligations	(12,312)		(5,283)
Lease obligations, net of current portion	$	456,623	$	108,989

________

(1)Represents payment obligations from July 1, 2021 to September 30, 2021.

Lessor

The Company leases space at its facilities to third parties. Lease terms for these non-cancelable operating leases range from approximately one month to 21 years. Rental income under these lease agreements is fixed and/or variable based on percentage of tenant sales or periodic adjustments for inflation. Rental income is recorded within hotel and retail, entertainment and other revenues. For instances in which the Company is the lessor, and the class of underlying asset represents retail space, the Company accounts for both the lease and non-lease components, such as common area maintenance and tenant services, as a single lease component. In all other instances, non-lease components are accounted for separately in accordance with applicable guidance, most commonly ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”.

13

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

Lease income consists of the following (in thousands):

	For the Three Months Ended June 30, 2021				For the Three Months Ended June 30, 2020
	Hotel		Retail, Entertainment and Other		Hotel		Retail, Entertainment and Other
Fixed rent	$	14,635	$	742	$	2,444	$	1,299
Variable rent	—		1,634		—		(96)
Total	$	14,635	$	2,376	$	2,444	$	1,203

	For the Nine Months Ended June 30, 2021				For the Nine Months Ended June 30, 2020
	Hotel		Retail, Entertainment and Other		Hotel		Retail, Entertainment and Other
Fixed rent	$	36,137	$	3,626	$	29,542	$	5,964
Variable rent	—		3,079		—		3,035
Total	$	36,137	$	6,705	$	29,542	$	8,999

Future fixed rental income that the Company expects to earn under non-cancelable operating leases, exclusive of amounts under contingent escalated rent clauses, is as follows (in thousands):

Fiscal years:	Operating Leases Fixed Rental Income
2021 (1)	$	1,608
2022	5,293
2023	4,629
2024	4,113
2025	2,876
Thereafter	7,830
Total	$	26,349

________

(1)Represents future fixed rental income from July 1, 2021 to September 30, 2021.

Due to the evolving nature of COVID-19 and the related economic uncertainties, the Company cannot be certain that the contractual future fixed rental income presented above will be realized in its entirety.

The portions of Mohegan Sun, including the Sky Hotel Tower and the Earth Expo & Convention Center, and Mohegan Sun Pocono that are leased to third parties under operating leases are recorded within property and equipment, net as follows (in thousands):

	June 30, 2021		September 30, 2020
Property and equipment, at cost	$	491,527	$	484,143
Less: accumulated depreciation	(216,354)		(198,080)
Property and equipment, net	$	275,173	$	286,063

14

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

NOTE 3—LONG-TERM DEBT:

Long-term debt consisted of the following (in thousands):

	June 30, 2021		September 30, 2020
New Senior Secured Credit Facility - Revolving	$	45,000	$	—
Prior Senior Secured Credit Facility - Revolving	—		197,000
Prior Senior Secured Credit Facility - Term Loan A, net of discount and debt issuance costs of $4,199	—		227,710
Prior Senior Secured Credit Facility - Term Loan B, net of discount and debt issuance costs of $20,809	—		792,829
2021 8% Senior Secured Notes, net of discount and debt issuance costs of $18,089	1,156,911		—
2016 7 7/8% Senior Unsecured Notes, net of discount and debt issuance costs of $6,860 and $8,179, respectively	493,140		491,821
MGE Niagara Credit Facility - Revolving	28,231		26,187
MGE Niagara Credit Facility - Term Loan, net of debt issuance costs of $788 and $847, respectively	71,806		69,297
MGE Niagara Convertible Debenture	32,264		29,928
Mohegan Expo Credit Facility, net of debt issuance costs of $324 and $658, respectively	26,211		27,750
Guaranteed Credit Facility, net of debt issuance costs of $649 and $877, respectively	27,789		29,529
Mohegan Tribe Subordinated Loan	—		5,000
Redemption Note Payable, net of discount of $10,302 and $15,701, respectively	57,278		69,099
Other	4,312		3,860
Long-term debt	1,942,942		1,970,010
Less: current portion of long-term debt	(58,422)		(75,355)
Long-term debt, net of current portion	$	1,884,520	$	1,894,655

Maturities of long-term debt are as follows (in thousands):

Fiscal Years
2021	$	8,063
2022	58,447
2023	74,793
2024	130,252
2025	500,025
Thereafter	1,208,374
Total	$	1,979,954

Refinancing Transactions

On January 26, 2021, the Company completed a series of refinancing transactions, including (i) entering into a new senior secured credit facility, (ii) issuing new senior secured notes, (iii) prepaying its prior Senior Secured Credit Facilities, (iv) prepaying the Main Street Term Loan Facility and (v) repaying the Mohegan Tribe Subordinated Loan. The Company incurred $24.0 million in costs in connection with these refinancing transactions. Previously deferred debt issuance costs and debt discounts totaling $23.7 million, as well as $0.1 million in new transaction costs were expensed and recorded as a loss on modification and early extinguishment of debt. New debt issuance costs totaling $4.5 million were capitalized as an asset and will be amortized over the term of the related debt. The remaining $19.4 million in new debt issuance costs was reflected as debt discount and will be amortized over the term of the related debt.

New Senior Secured Credit Facility

On January 26, 2021, the Company entered into a credit agreement (the “Credit Agreement”) among the Company, the Mohegan Tribe, Citizens Bank, N.A., as administrative agent, and the other lenders and financial institutions party thereto, providing for a $262.875 million senior secured revolving credit facility (the “New Senior Secured Credit Facility”). The New Senior Secured Credit Facility matures on April 14, 2023.

15

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

The initial draw under the New Senior Secured Credit Facility, together with proceeds from the 2021 Senior Secured Notes (defined below), was used to (i) prepay all amounts outstanding under the prior Senior Secured Credit Facilities, (ii) prepay all amounts outstanding under the Main Street Term Loan Facility, (iii) repay the Mohegan Tribe Subordinated Loan and (iv) pay related fees and expenses. The New Senior Secured Credit Facility will otherwise be available for general corporate purposes.

The Credit Agreement contains certain customary covenants applicable to the Company and its restricted subsidiaries, including covenants governing: incurrence of indebtedness, incurrence of liens, payment of dividends and other distributions, investments, asset sales, affiliate transactions and mergers or consolidations. Additionally, the Credit Agreement includes financial maintenance covenants pertaining to total leverage, secured leverage and fixed charge coverage, as well as a minimum liquidity covenant. The Credit Agreement also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations.

Borrowings under the New Senior Secured Credit Facility bear interest as follows: (i) for base rate loans, a base rate equal to the highest of (x) the prime rate, (y) the federal funds rate plus 50 basis points and (z) the one-month LIBOR rate plus 100 basis points (the highest of (x), (y) and (z), the “base rate”), plus a leverage-based margin of 100 to 275 basis points; and (ii) for Eurodollar rate loans, the applicable LIBOR rate (subject to a 0.75% LIBOR floor) plus a leverage-based margin of 200 to 375 basis points. The Company is also required to pay a leverage-based undrawn commitment fee on the New Senior Secured Credit Facility of between 37.5 and 50 basis points. Interest on Eurodollar rate loans is payable in arrears at the end of each applicable interest period, but not less frequently than quarterly. Interest on base rate advances is payable quarterly in arrears.

The New Senior Secured Credit Facility is fully and unconditionally guaranteed, jointly and severally, by each of Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P., Northeast Concessions, L.P., Mohegan Commercial Ventures PA, LLC, Mohegan Basketball Club LLC, Mohegan Ventures-Northwest, LLC and Mohegan Golf, LLC (the “Guarantors”; and the Guarantors other than Mohegan Basketball Club LLC, the “Grantors”). The New Senior Secured Credit Facility is secured on a first priority senior secured basis by collateral constituting substantially all of the Company’s and Grantors’ assets. In the future, certain other subsidiaries of the Company may be required to become Guarantors and/or Grantors in accordance with the terms of the Credit Agreement and related loan documents.

Senior Secured Credit Facilities - Non-cash Transactions

On June 30, 2021 and 2020, the bank that administers the Company's debt service payments for its New Senior Secured Credit Facility and prior Senior Secured Credit Facilities made principal payments on behalf of the Company totaling $45.0 million and $10.5 million, respectively, but did not accordingly debit the Company's bank account for these payments. As of June 30, 2021 and 2020, the Company reflected these non-cash transactions as reductions to current portion of long-term debt and corresponding increases to other current liabilities. On the respective following banking days, the bank withdrew the payments from the Company's bank account, resulting in reductions to the Company's cash and cash equivalents and other current liabilities.

Line of Credit

On January 26, 2021, in connection with the New Senior Secured Credit Facility, the Company entered into a $25.0 million revolving credit facility with Bank of America, N.A. (the “Line of Credit”). The Line of Credit is coterminous with the New Senior Secured Credit Facility. Pursuant to provisions of the New Senior Secured Credit Facility, under certain circumstances, the Line of Credit may be converted into loans under the New Senior Secured Credit Facility. Each advance accrues interest at a base rate plus a spread. The Line of Credit contains negative covenants and financial maintenance covenants that are substantially the same as those contained in the New Senior Secured Credit Facility.

Main Street Term Loan Facility

On December 1, 2020, the Company entered into a loan agreement (the “Loan Agreement”) among the Company, the Mohegan Tribe and Liberty Bank, as lender, in connection with the Main Street Priority Loan Facility established by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) under Section 13(3) of the Federal Reserve Act. The Loan Agreement provided for a senior secured term loan facility (the “Main Street Term Loan Facility”) in an aggregate principal amount of $50.0 million, subject to approval by the Federal Reserve, which was received on December 15, 2020. On December 15, 2020, the Company borrowed the full $50.0 million in principal amount under the Main Street Term Loan Facility. The proceeds from the Main Street Term Loan Facility were used: (i) to fund transaction costs in connection with the Loan Agreement and (ii) for working capital and general corporate purposes. The Main Street Term Loan Facility accrued interest at a rate equal to the three-month LIBOR plus 3%, payable quarterly in arrears, and was scheduled to mature on December 1,

16

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

2025. On January 26, 2021, the Company prepaid all amounts outstanding under, and terminated, the Main Street Term Loan Facility.

2021 8% Senior Secured Notes

On January 26, 2021, the Company issued $1.175 billion in aggregate principal amount of second priority senior secured notes due 2026 (the “2021 Senior Secured Notes”) in a private placement. On the same date, the Company, the Guarantors and the Mohegan Tribe entered into an indenture agreement (the “Indenture”) with U.S. Bank National Association, the trustee for the 2021 Senior Secured Notes.

The 2021 Senior Secured Notes bear interest at a fixed rate of 8% per annum and mature on the earlier of February 1, 2026 and the Springing Maturity Date (as defined in the Indenture). Interest on the 2021 Senior Secured Notes is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2021. The 2021 Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, by each of the Guarantors and will be guaranteed by each other restricted subsidiary of the Company that becomes a guarantor in accordance with the terms of the 2021 Senior Secured Notes. The 2021 Senior Secured Notes are secured on a second priority senior secured basis by collateral constituting substantially all of the Company’s and Grantors’ assets.

Prior to February 1, 2023, the Company may redeem some or all of the 2021 Senior Secured Notes at a redemption price equal to 100% of the principal amount of the 2021 Senior Secured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus the “make-whole” premium described in the Indenture. In addition, the Company may, during the twelve-month period commencing on the issue date of the 2021 Senior Secured Notes and during the twelve-month period subsequent to such initial twelve-month period and prior to February 1, 2023, redeem in each such twelve-month period up to 10% of the initial aggregate principal amount of the 2021 Senior Secured Notes at a redemption price equal to 103% of the principal amount of the 2021 Senior Secured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, provided that if the Company does not redeem 10% of the initial aggregate principal amount of the 2021 Senior Secured Notes during the initial twelve-month period commencing on the issue date of the 2021 Senior Secured Notes, the Company may, in the subsequent twelve-month period prior to February 1, 2023, redeem the 2021 Senior Secured Notes in an amount that does not exceed 10% of the initial aggregate principal amount of the 2021 Senior Secured Notes plus the difference between (i) 10% of the initial aggregate principal amount of the 2021 Senior Secured Notes and (ii) the aggregate principal amount of any 2021 Senior Secured Notes redeemed during such initial twelve-month period. On or after February 1, 2023, the Company may redeem some or all of the 2021 Senior Secured Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

The Indenture contains certain customary covenants, including in respect of the Company’s and its restricted subsidiaries’ ability to incur additional debt, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company or sell assets. The Indenture includes customary events of default, including, but not limited to, failure to make required payments and failure to comply with certain covenants.

The proceeds from the 2021 Senior Secured Notes were used as described above.

Debt Covenant Compliance

As of June 30, 2021, the Company was in compliance with its required financial covenants.

17

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

NOTE 4—SEGMENT REPORTING:

The Company, either directly or through subsidiaries, operates Mohegan Sun, along with its other Connecticut operations (the “Connecticut Facilities”), Mohegan Sun Pocono, along with its other Pennsylvania operations (the “Pennsylvania Facilities”) and the MGE Niagara Resorts. Certain other properties that are managed or under development by the Company are identified as the management, development and other reportable segment.

The Company's chief operating decision maker currently reviews and assesses the performance and operating results and determines the proper allocation of resources to the Connecticut Facilities, the Pennsylvania Facilities, the MGE Niagara Resorts and the properties managed or under development on a separate basis. Accordingly, the Company has four separate reportable segments: (i) Mohegan Sun, which includes the operations of the Connecticut Facilities, (ii) Mohegan Sun Pocono, which includes the operations of the Pennsylvania Facilities, (iii) the MGE Niagara Resorts and (iv) management, development and other. Certain other gaming and entertainment operations (“all other”), which are not individually reportable segments, the Company's corporate functions and inter-segment activities are each disclosed separately in the following segment disclosures to reconcile to consolidated results.

18

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

	For the Three Months Ended				For the Nine Months Ended
(in thousands)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Net revenues:
Mohegan Sun	$	220,061	$	78,239	$	574,974	$	503,860
Mohegan Sun Pocono	62,931		10,512		153,392		125,568
MGE Niagara Resorts	14,380		11,346		41,193		167,602
Management, development and other	21,782		6,546		53,691		24,012
All other	8,362		—		10,077		—
Corporate	162		210		2,949		438
Inter-segment	511		346		1,322		(528)
Total	$	328,189	$	107,199	$	837,598	$	820,952
Income (loss) from operations:
Mohegan Sun	$	65,183	$	1,692	$	144,195	$	65,951
Mohegan Sun Pocono	12,319		(8,888)		20,116		(122,635)
MGE Niagara Resorts	(11,755)		(9,778)		(35,553)		(10,163)
Management, development and other	5,711		2,200		12,711		1,871
All other	(1,045)		—		(499)		—
Corporate	(6,374)		(5,749)		(21,459)		(18,360)
Inter-segment	2		(14)		(4)		(31)
Total	$	64,041	$	(20,537)	$	119,507	$	(83,367)
					For the Nine Months Ended
(in thousands)					June 30, 2021		June 30, 2020
Capital expenditures incurred:
Mohegan Sun					$	12,680	$	9,839
Mohegan Sun Pocono					4,182		3,108
MGE Niagara Resorts					9,654		15,330
Management, development and other					6,974		112,161
All other					89,019		—
Corporate					307		483
Total					$	122,816	$	140,921
(in thousands)					June 30, 2021		September 30, 2020
Total assets:
Mohegan Sun					$	1,279,799	$	1,271,435
Mohegan Sun Pocono					406,393		409,630
MGE Niagara Resorts					581,360		581,562
Management, development and other					453,071		423,313
All other					100,704		—
Corporate					1,011,071		992,874
Inter-segment					(1,002,120)		(971,626)
Total					$	2,830,278	$	2,707,188

NOTE 5—COMMITMENTS AND CONTINGENCIES:

The Company is a defendant in various claims and legal actions resulting from its normal course of business, primarily relating to personal injuries to patrons and damages to patrons' personal assets. The Company estimates litigation claims expense and accrues for such liabilities based upon historical experience. In management's opinion, the aggregate liability, if any, arising from such legal actions will not have a material impact on the Company's financial position, results of operations or cash flows.

19

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

NOTE 6—SUBSEQUENT EVENTS:

Amendments to the MGE Niagara Credit Facilities

On July 14, 2021, MGE Niagara entered into an amendment to the terms of its bank credit facilities pursuant to an Amended and Restated Credit Agreement with, among others, Bank of Montreal, as Administrative Agent, and the lenders party thereto (the “MGE Niagara Amended Credit Agreement”). Among other things, the amendments contained in the MGE Niagara Amended Credit Agreement provide for a revolving credit facility in the amount of up to 180.0 million Canadian dollars (the “MGE Niagara Revolving Facility”), a swingline facility in the amount of up to 20.0 million Canadian dollars (the “MGE Niagara Swingline Facility”) and a term loan facility in the amount of 90.0 million Canadian dollars. The MGE Niagara Amended Credit Agreement also reduced the Letter of Credit Sub-Limit under the MGE Niagara Revolving Facility to 45.0 million Canadian dollars from 100.0 million Canadian dollars. Availability under the MGE Niagara Revolving Facility and the MGE Niagara Swingline Facility will be determined based on Province of Ontario-approved gaming capacity levels as set forth in the MGE Niagara Amended Credit Agreement.

In addition, the Applicable Margin and Undrawn Fee (each as defined in the MGE Niagara Amended Credit Agreement) were adjusted to provide for an additional pricing level, commencing from the closing date of the MGE Niagara Amended Credit Agreement until the end of the Initial Retesting Quarter (as defined in the MGE Niagara Amended Credit Agreement), which Initial Retesting Quarter commences with the first full fiscal quarter where gaming capacity is equal to or greater than 50% for the entirety of such fiscal quarter, or during any voluntary or involuntary closing period, as follows: (i) Bankers’ Acceptances, Letters of Credit, LIBOR Loans and CDOR Loans equal to 500 basis points, (ii) Prime Rate Loans and USBR Loans equal to 350 basis points and (iii) Undrawn Fee equal to 125 basis points.

The MGE Niagara Amended Credit Agreement also amended the financial maintenance covenants applicable to MGE Niagara as follows: (i) during any Closure Period (as defined in the MGE Niagara Amended Credit Agreement), (a) minimum weekly liquidity in the amount of 12.5 million Canadian dollars and (b) minimum monthly contractual payments from the Ontario Lottery and Gaming Corporation in the amount of 3.75 million Canadian dollars; (ii) after a reopening of the MGE Niagara Resorts, minimum liquidity in the amount of 15.0 million Canadian dollars, tested weekly until such time as the MGE Niagara Resorts have been open for twelve consecutive months, and then monthly for an additional six months thereafter; (iii) commencing with the first full month after the 50% Gaming Capacity Start Date (as defined in the MGE Niagara Amended Credit Agreement), until a trailing twelve-month test is achieved (annualized as provided under the terms of the MGE Niagara Amended Credit Agreement), minimum monthly Fixed Charge Coverage Ratio (as defined in the MGE Niagara Amended Credit Agreement) of not less than 1.10:1.00 (once testing of four consecutive fiscal quarters is achieved without any closure of the MGE Niagara Resorts, such covenant to be tested quarterly); and (iv) commencing with the Initial Retesting Quarter, maximum Total Leverage Ratio (as defined in the MGE Niagara Amended Credit Agreement) tested quarterly and determined on a consolidated trailing twelve-month basis (annualized as provided under the terms of the MGE Niagara Amended Credit Agreement) initially set at 5.00:1.00, then stepping down to 4.50:1.00 commencing with the fiscal quarter ending March 31, 2023 and 4.00:1.00 commencing with the fiscal quarter ending March 31, 2024.

Finally, the MGE Niagara Amended Credit Agreement restricts Permitted Management and Consulting Fees and other Distributions (as defined in the MGE Niagara Amended Credit Agreement) to those permitted by lender consent until (i) the completion of four consecutive fiscal quarters demonstrating compliance with the maximum Total Leverage Ratio (as defined in the MGE Niagara Amended Credit Agreement) and (ii) a Total Leverage Ratio (as defined in the MGE Niagara Amended Credit Agreement) of less than 3.00:1.00 for the two most recent consecutive fiscal quarters.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information relating to business development activities, as well as capital spending, financing sources, the effects of regulation, including gaming and tax regulation and increased competition. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect” or “intend” and similar expressions. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated future results, and accordingly, such results may differ materially from those expressed in any forward-looking statements made by us or on our behalf. These risks and uncertainties include, but are not limited to, those relating to the following:

•the COVID-19 pandemic and the related social and economic disruption, including “stay at home” orders and similar regulations, or decreased interest in attendance at our facilities, and any plans or expectations around the reopening or resumption of operations at any of our facilities;

•the financial performance of our various operations;

•the local, regional, national or global economic climate;

•increased competition, including the expansion of gaming in jurisdictions in which we own or operate gaming facilities;

•our leverage and ability to meet our debt service obligations and maintain compliance with financial debt covenants;

•the continued availability of financing;

•our dependence on existing management;

•our ability to integrate new amenities from expansions to our facilities into our current operations and manage the expanded facilities;

•changes in federal or state tax laws or the administration of such laws;

•changes in gaming laws or regulations, including the limitation, denial or suspension of licenses required under gaming laws and regulations;

•cyber security risks relating to our information technology and other systems, including misappropriation of patron information or other breaches of information security;

•changes in applicable laws pertaining to the service of alcohol, smoking or other amenities offered at our facilities;

•our ability to successfully implement our diversification strategy;

•an act of terrorism;

•our customers' access to inexpensive transportation to our facilities and changes in oil, fuel or other transportation-related expenses;

•unfavorable weather conditions;

•risks associated with operations in foreign jurisdictions;

•failure by our employees, agents, affiliates, vendors or businesses to comply with applicable laws, rules and regulations, including state gaming laws and regulations and anti-bribery laws such as the United States Foreign Corrupt Practices Act, and similar anti-bribery laws in other jurisdictions; and

•fluctuations in foreign currency exchange rates.

Additional information concerning potential factors that could affect our financial results is included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as well as our other reports and filings with the SEC. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances, except as required by law. We cannot assure you that projected results or events will be achieved or will occur.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes beginning on page 3 of this Quarterly Report on Form 10-Q.

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Overview

Our Company

We were established in July 1995 by the Mohegan Tribe, a federally-recognized Indian tribe with an approximately 595-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a compact with the affected state. The Mohegan Tribe and the State of Connecticut entered into such a compact, the Mohegan Compact, which was approved by the United States Secretary of the Interior. We were established as an instrumentality of the Mohegan Tribe, with the exclusive authority to conduct and regulate gaming activities for the Mohegan Tribe on tribal lands and the non-exclusive authority to conduct such activities elsewhere. We are governed and overseen by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council, the governing body of the Mohegan Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

We are primarily engaged in the ownership, operation and development of integrated entertainment facilities, both domestically and internationally. This ownership, operation and development includes the following: (i) ownership and operation of Mohegan Sun, a gaming and entertainment complex located on an approximately 196-acre site in Uncasville, Connecticut, (ii) ownership and operation of Mohegan Sun Pocono, a gaming and entertainment facility located on an approximately 400-acre site in Plains Township, Pennsylvania, (iii) operation of the Niagara Fallsview Casino Resort, Casino Niagara and the 5,000-seat Niagara Falls Entertainment Centre under a Casino Operating and Services Agreement (the “Casino Operating and Services Agreement”), all in Niagara Falls, Canada (collectively, the “MGE Niagara Resorts”), (iv) development and management of ilani Casino Resort in Clark County, Washington, and development rights to any future development at ilani Casino Resort, (v) management of Resorts Casino Hotel in Atlantic City, New Jersey and ownership of 10% of the casino’s holding company and its subsidiaries, including those conducting or licensing online gaming and retail sports wagering in New Jersey, (vi) operation of the Mohegan Sun Casino at Virgin Hotels Las Vegas (“Mohegan Sun Las Vegas”) in Las Vegas, Nevada, (vii) development and construction of an integrated resort and casino project to be located adjacent to the Incheon International Airport in South Korea and (viii) development and construction of an integrated resort and casino project to be located near Athens, Greece.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic and the United States federal government declared it a national emergency. The spread of COVID-19 has affected most segments of the global economy, including our operations. In March 2020, we temporarily suspended operations at our North American owned, operated and managed properties to ensure the health and safety of our employees, guests and the surrounding communities in which we operate, consistent with directives from various government bodies. Following these closures, we reopened our properties as follows: (i) ilani Casino Resort on May 28, 2020, (ii) Mohegan Sun on June 1, 2020, (iii) Mohegan Sun Pocono on June 22, 2020, (iv) Resorts Casino Hotel on July 2, 2020 and (v) the MGE Niagara Resorts on July 23, 2021. Mohegan Sun Pocono was again temporarily closed from December 12, 2020 through January 3, 2021 due to a resurgence of COVID-19 at that time. In addition, Mohegan Sun Las Vegas opened to the public on March 25, 2021.

The impact of COVID-19 on our operations has been significant, though the full extent of its impact will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of COVID-19 or the extent of any resurgence of COVID-19, the manner in which our guests, suppliers and other third parties respond to COVID-19, including the perception of safety and health measures taken by us, new information which may emerge concerning the severity of COVID-19 and the actions to contain or treat it, as well as general economic conditions and consumer confidence. Accordingly, we cannot reasonably estimate the extent to which COVID-19 will further impact our future financial condition, results of operations and cash flows.

We could experience other potential adverse impacts as a result of COVID-19, including, but not limited to, charges from further adjustments to the carrying value of our intangible assets, as well as other long-lived asset impairment charges. Actual results may differ materially from our current estimates as the scope of COVID-19 evolves, depending largely, but not exclusively, on the duration and extent of our business disruptions.

In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the accompanying condensed consolidated financial statements are issued. As further discussed within “Liquidity and Capital Resources”, on January 26, 2021, we (i) entered into a new credit agreement which, among other things, provided for an approximately $262.9 million senior secured revolving credit facility, removed the financial covenants (other than a minimum liquidity covenant) applicable for the fiscal quarter ended December

22

31, 2020, modified the financial covenants applicable for the fiscal quarters ending March 31, 2021 and thereafter and extended the maturity date of the new senior secured revolving credit facility to April 14, 2023 and (ii) issued approximately $1.2 billion of new senior secured notes due February 1, 2026. The proceeds from these transactions were used to refinance certain of our existing indebtedness. Based on the aforementioned and our existing resources, there are no current indicators of substantial doubt as previously disclosed in our Annual Report filed on Form 10-K for the fiscal year ended September 30, 2020, and we expect to have sufficient resources to meet our existing obligations for the next twelve months and to remain in compliance with our financial covenants.

Results of Operations

Summary Operating Results

The following table summarizes our results on a segment basis (in thousands):

	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2021		2020		2021		2020
Net revenues:
Mohegan Sun	$	220,061	$	78,239	$	574,974	$	503,860
Mohegan Sun Pocono	62,931		10,512		153,392		125,568
MGE Niagara Resorts	14,380		11,346		41,193		167,602
Management, development and other	21,782		6,546		53,691		24,012
All other	8,362		—		10,077		—
Corporate	162		210		2,949		438
Inter-segment	511		346		1,322		(528)
Total	$	328,189	$	107,199	$	837,598	$	820,952
Income (loss) from operations:
Mohegan Sun	$	65,183	$	1,692	$	144,195	$	65,951
Mohegan Sun Pocono	12,319		(8,888)		20,116		(122,635)
MGE Niagara Resorts	(11,755)		(9,778)		(35,553)		(10,163)
Management, development and other	5,711		2,200		12,711		1,871
All other	(1,045)		—		(499)		—
Corporate	(6,374)		(5,749)		(21,459)		(18,360)
Inter-segment	2		(14)		(4)		(31)
Total	$	64,041	$	(20,537)	$	119,507	$	(83,367)
Net income (loss) attributable to Mohegan Tribal Gaming Authority	$	25,367	$	(50,045)	$	(17,243)	$	(180,745)

The most significant factors and trends that impacted our operating and financial performance were as follows:

•full periods of operations at most of our properties during the three months and nine months ended June 30, 2021 compared to the same periods in the prior year;

•COVID-19 related capacity restrictions at our properties;

•cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19;

•higher management fees earned;

•higher interest expense;

•an approximately $24 million non-operating loss on modification and early extinguishment of debt principally related to our January 2021 refinancing transactions; and

•a $126.6 million impairment charge related to Mohegan Sun Pocono's intangible assets during the nine months ended June 30, 2020.

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Mohegan Sun

Revenues

Net revenues increased by $141.9 million, or 181.5%, to $220.1 million for the three months ended June 30, 2021 compared to $78.2 million in the same period in the prior year. Net revenues increased by $71.1 million, or 14.1%, to $575.0 million for the nine months ended June 30, 2021 compared to $503.9 million in the same period in the prior year. The overall increases in net revenues reflected full periods of operations at Mohegan Sun during the three months and nine months ended June 30, 2021 compared to the same periods in the prior year. Mohegan Sun temporarily closed, effective March 18, 2020, following the outbreak of COVID-19, and certain portions reopened to the public on June 1, 2020. Net revenues for the three months and nine months ended June 30, 2021 were negatively impacted by COVID-19 related capacity restrictions at Mohegan Sun, which were fully removed on May 19, 2021.

Operating Costs and Expenses

Operating costs and expenses increased by $78.4 million, or 102.5%, to $154.9 million for the three months ended June 30, 2021 compared to $76.5 million in the same period in the prior year. This increase primarily reflected higher overall operating costs and expenses commensurate with the increase in net revenues, partially offset by various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19. Operating costs and expenses decreased by $7.1 million, or 1.6%, to $430.8 million for the nine months ended June 30, 2021 compared to $437.9 million in the same period in the prior year. This decline was primarily driven by COVID-19 related capacity restrictions at Mohegan Sun, which were fully removed on May 19, 2021, combined with various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19.

Mohegan Sun Pocono

Revenues

Net revenues increased by $52.4 million, or 499.0%, to $62.9 million for the three months ended June 30, 2021 compared to $10.5 million in the same period in the prior year. Net revenues increased by $27.8 million, or 22.1%, to $153.4 million for the nine months ended June 30, 2021 compared to $125.6 million in the same period in the prior year. The increases in net revenues were primarily driven by higher overall gaming revenues which benefited from relatively full periods of operations at Mohegan Sun Pocono during the three months and nine months ended June 30, 2021 compared to the same periods in the prior year. Mohegan Sun Pocono temporarily closed, effective March 18, 2020, following the outbreak of COVID-19, and certain portions reopened to the public on June 22, 2020. The increases in gaming revenues also reflected strong interactive gaming business. Net revenues for the three months and nine months ended June 30, 2021 were negatively impacted by COVID-19 related capacity restrictions at Mohegan Sun Pocono, which were fully removed on May 31, 2021.

Operating Costs and Expenses

Operating costs and expenses increased by $31.2 million, or 160.8%, to $50.6 million for the three months ended June 30, 2021 compared to $19.4 million in the same period in the prior year. This increase primarily reflected higher overall operating costs and expenses commensurate with the increase in net revenues, partially offset by various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19. Operating costs and expenses decreased by $114.9 million, or 46.3%, to $133.3 million for the nine months ended June 30, 2021 compared to $248.2 million in the same period in the prior year. This reduction primarily reflected the impact of a $126.6 million impairment charge related to Mohegan Sun Pocono’s various gaming licenses that was recorded in the same period in the prior year, combined with COVID-19 related capacity restrictions at Mohegan Sun Pocono, which were fully removed on May 31, 2021, and various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19.

MGE Niagara Resorts

Revenues

Net revenues totaled $14.4 million for the three months ended June 30, 2021 compared to $11.3 million in the same period in the prior year. Net revenues totaled $41.2 million for the nine months ended June 30, 2021 compared to $167.6 million in the same period in the prior year. These results reflect the temporary closure of the MGE Niagara Resorts, effective March 18, 2020, following the outbreak of COVID-19. The MGE Niagara Resorts recently reopened to the public on July 23, 2021. Net revenues for the three months and nine months ended June 30, 2021 primarily reflect fixed service provider fees pursuant to the terms of our Casino Operating and Services Agreement with the Ontario Lottery and Gaming Corporation.

Operating Costs and Expenses

Operating costs and expenses totaled $26.1 million for the three months ended June 30, 2021 compared to $21.1 million in the same period in the prior year. Operating costs and expenses totaled $76.7 million for the nine months ended June

24

30, 2021 compared to $177.8 million in the same period in the prior year. These results reflect reduced overall operating costs and expenses due to the temporary closure of the MGE Niagara Resorts.

Management, Development and Other

Revenues

Net revenues increased by $15.3 million, or 235.4%, to $21.8 million for the three months ended June 30, 2021 compared to $6.5 million in the same period in the prior year. Net revenues increased by $29.7 million, or 123.8%, to $53.7 million for the nine months ended June 30, 2021 compared to $24.0 million in the same period in the prior year. The increases in net revenues were due to higher management fees from ilani Casino Resort driven by strong performance at the property, combined with management fees earned in connection with our prior management agreement with Paragon Casino Resort.

Operating Costs and Expenses

Operating costs and expenses increased by $11.8 million, or 274.4%, to $16.1 million for the three months ended June 30, 2021 compared to $4.3 million in the same period in the prior year. Operating costs and expenses increased by $18.9 million, or 85.5%, to $41.0 million for the nine months ended June 30, 2021 compared to $22.1 million in the same period in the prior year. The increases in operating costs and expenses were primarily driven by higher pre-opening costs and expenses related to Project Inspire, combined with higher payroll costs.

All Other

Revenues

Net revenues totaled $8.4 million for the three months ended June 30, 2021 and $10.1 million for the nine months ended June 30, 2021. These results represent revenues generated by Mohegan Sun Las Vegas, which opened to the public on March 25, 2021.

Operating Costs and Expenses

Operating costs and expenses totaled $9.4 million for the three months ended June 30, 2021 and $10.6 million for the nine months ended June 30, 2021. These results represent operating costs and expenses associated with Mohegan Sun Las Vegas.

Corporate

Revenues

Net revenues totaled $0.2 million for each of the three months ended June 30, 2021 and 2020. Net revenues totaled $2.9 million for the nine months ended June 30, 2021 compared to $0.4 million in the same period in the prior year. The increase in net revenues for the nine months ended June 30, 2021 was primarily driven by additional revenues generated by our construction group, which managed a construction project at Mohegan Sun on behalf of a third-party.

Operating Costs and Expenses

Operating costs and expenses increased by $0.5 million, or 8.3%, to $6.5 million for the three months ended June 30, 2021 compared to $6.0 million in the same period in the prior year. This increase was primarily driven by higher general and administrative costs and expenses. Operating costs and expenses increased by $5.6 million, or 29.8%, to $24.4 million for the nine months ended June 30, 2021 compared to $18.8 million in the same period in the prior year. This increase primarily reflected additional construction related expenses and higher payroll costs.

Other Expenses

Other expenses increased by $9.4 million, or 29.3%, to $41.5 million for the three months ended June 30, 2021 compared to $32.1 million in the same period in the prior year. This increase was primarily driven by higher interest expense, net of capitalized interest. Other expenses increased by $46.2 million, or 46.1%, to $146.4 million for the nine months ended June 30, 2021 compared to $100.2 million in the same period in the prior year. This increase was primarily driven by higher interest expense, net of capitalized interest, combined with a loss on modification and early extinguishment of debt in connection with our January 2021 refinancing transactions.

On January 26, 2021, we completed a series of refinancing transactions, including (i) entering into a new senior secured credit facility, (ii) issuing new senior secured notes, (iii) prepaying our prior senior secured credit facilities, (iv) prepaying our Main Street term loan facility and (v) repaying our Mohegan Tribe subordinated loan. We incurred $24.0 million in costs in connection with these refinancing transactions. Previously deferred debt issuance costs and debt discounts totaling $23.7 million, as well as $0.1 million in new transaction costs were expensed and recorded as a loss on modification and early

25

extinguishment of debt. New debt issuance costs totaling $4.5 million were capitalized as an asset and will be amortized over the term of the related debt. The remaining $19.4 million in new debt issuance costs was reflected as debt discount and will be amortized over the term of the related debt.

Interest expense, net of capitalized interest increased by $11.4 million, or 35.1%, to $43.9 million for the three months ended June 30, 2021 compared to $32.5 million in the same period in the prior year. Interest expense, net of capitalized interest increased by $29.5 million, or 29.9%, to $128.3 million for the nine months ended June 30, 2021 compared to $98.8 million in the same period in the prior year. The increases in interest expense, net of capitalized interest were due to higher weighted average interest rate and weighted average outstanding debt, combined with the impact of the capitalization of interest related to Project Inspire in the same periods in the prior year. Weighted average interest rate was 8.1% for each of the three months and nine months ended June 30, 2021 compared to 6.4% and 6.9% for the three months and nine months ended June 30, 2020, respectively. Weighted average outstanding debt was $2.16 billion and $2.12 billion for the three months and nine months ended June 30, 2021, respectively, compared to $2.12 billion and $2.07 billion for the three months and nine months ended June 30, 2020, respectively.

Seasonality

The gaming markets in the Northeastern United States and Niagara Falls, Canada, are seasonal in nature, with peak gaming activities often occurring during the months of May through August. Accordingly, our operating results for the three months and nine months ended June 30, 2021 are not necessarily indicative of operating results for other interim periods or an entire fiscal year.

Liquidity and Capital Resources

Liquidity

As of June 30, 2021 and September 30, 2020, we held cash and cash equivalents of $158.4 million and $112.7 million, respectively, of which the MGE Niagara Resorts held $13.3 million and $15.1 million, respectively. Inclusive of letters of credit, which reduce borrowing availability, we had $215.7 million of borrowing capacity under our New Senior Secured Credit Facility and line of credit as of June 30, 2021. As a result of the cash based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and amortization and impairment charges.

Cash provided by operating activities totaled $145.1 million for the nine months ended June 30, 2021 compared to cash used in operating activities of $33.6 million in the same period in the prior year. The increase in cash provided by operating activities was driven by a significant reduction in working capital requirements, including lower working capital requirements associated with the MGE Niagara Resorts resulting from the continued closure of these facilities due to COVID-19. Cash provided by operating activities also reflect increased net income after factoring in non-cash items.

Cash used in investing activities declined by $85.8 million, or 72.7%, to $32.2 million for the nine months ended June 30, 2021 compared to $118.0 million in the same period in the prior year. The decline in cash used in investing activities primarily reflected lower capital expenditures, combined with the impact of an investment in Mohegan Hotel Holding, LLC, in the same period in the prior year.

    Cash used in financing activities totaled $81.1 million for the nine months ended June 30, 2021 compared to cash provided by financing activities of $84.6 million in the same period in the prior year. These results reflect the impact of higher borrowings in the same period in the prior year to ensure maximum financial flexibility in response to COVID-19, combined with the payment of transaction costs associated with our January 2021 refinancing transactions.

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New Senior Secured Credit Facility Financial Covenants

On January 26, 2021, we entered into our New Senior Secured Credit Facility, which, among other things, established the financial covenants described in the tables below.

We shall not permit the Fixed Charge Coverage Ratio (as defined under the New Senior Secured Credit Facility) to be less than:

Fiscal Quarters Ending:
June 30, 2021 through December 31, 2021	1.00:1.00
March 31, 2022 and each fiscal quarter ending thereafter	1.15:1.00

We shall not permit the Total Leverage Ratio (as defined under the New Senior Secured Credit Facility) to be greater than:

Fiscal Quarters Ending:
June 30, 2021	7.75:1.00
September 30, 2021	8.00:1.00
December 31, 2021	7.25:1.00
March 31, 2022	6.75:1.00
June 30, 2022 and each fiscal quarter ending thereafter	6.50:1.00

We shall not permit the Senior Secured Leverage Ratio (as defined under the New Senior Secured Credit Facility) to be greater than:

Fiscal Quarters Ending:
June 30, 2021	5.50:1.00
September 30, 2021	5.75:1.00
December 31, 2021	5.25:1.00
March 31, 2022	4.75:1.00
June 30, 2022 and each fiscal quarter ending thereafter	4.50:1.00

Sufficiency of Resources

We believe that existing cash balances, financing arrangements and operating cash flows will provide us with sufficient resources to meet our existing debt obligations, distributions to the Mohegan Tribe, capital expenditures and working capital requirements for the next twelve months; however, we can provide no assurance in this regard.

Contractual Obligations

The following table presents estimated future payment obligations related to our debt and the timing of those payments as of June 30, 2021 (in thousands):

			Payments due by Fiscal Year
Contractual Obligations	Total		Less than 1 (1)		1-3		3-5		More than 5
Long-term debt, including current portions (excludes unamortized debt issuance costs and discounts)	$	1,979,954	$	8,063	$	133,240	$	630,277	$	1,208,374
Interest payments on long-term debt	677,300		51,015		287,760		253,038		85,487
Total	$	2,657,254	$	59,078	$	421,000	$	883,315	$	1,293,861

 ________

(1)Represents payment obligations from July 1, 2021 to September 30, 2021.

There has been no material change to the other contractual obligations previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

Critical Accounting Policies and Estimates

There has been no material change from the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. As of June 30, 2021, our primary exposure to market risk was interest rate risk associated with our credit facilities which accrued interest on the basis of base rate or Eurodollar rate formulas, plus applicable rates, as defined under the credit facilities.

We attempt to manage our interest rate risk through a controlled combination of long-term fixed rate borrowings and variable rate borrowings in accordance with established policies and procedures. We do not hold or issue financial instruments for speculative or trading purposes.

The following table presents information about our debt obligations as of June 30, 2021 that were sensitive to changes in interest rates. The table presents principal payments and related weighted average interest rates by expected maturity dates. Weighted average variable interest rates were based on implied forward rates in respective yield curves, which should not be considered to be precise indicators of actual future interest rates. Fair values for our debt obligations were based on quoted market prices or prices of similar instruments as of June 30, 2021.

	Expected Maturity Date by Fiscal Year
	2021 (1)			2022			2023			2024			2025			Thereafter			Total			Fair Value
Liabilities (in thousands)
Long-term debt obligations, including current portions (2):
Fixed rate	$	5,774		$	25,878		$	23,135		$	15,970		$	500,025		$	1,176,110		$	1,746,892		$	1,800,465
Average interest rate	0.1		%	0.1		%	—			—			7.9		%	8.0		%	7.6		%
Variable rate	$	2,289		$	32,569		$	51,658		$	114,282		$	—		$	32,264		$	233,062		$	232,443
Average interest rate (3)	4.3		%	4.1		%	4.5		%	5.3		%	—			8.0		%	5.1		%

 __________

(1)Represents payment obligations from July 1, 2021 to September 30, 2021.

(2)Excludes unamortized debt issuance costs and discounts.

(3)A 100 basis point change in average interest rate would impact annual interest expense by approximately $2.3 million.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on an evaluation of our disclosure controls and procedures as of June 30, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

    There has been no material change from the legal proceedings previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

Item 1A. Risk Factors

    There has been no material change from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

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Item 6.    Exhibits

Exhibit No.	Description
4.1	First Supplemental Indenture, dated as of July 23, 2021, among Mohegan Digital, LLC and Mohegan Digital Services, LLC, the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and U.S. Bank National Association, as trustee, relating to the 8.000% Second Priority Senior Secured Notes due 2026 (filed herewith).
4.2	First Supplemental Indenture, dated as of July 23, 2021, among Mohegan Digital, LLC and Mohegan Digital Services, LLC, the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and U.S. Bank National Association, as trustee, relating to the 7.875% Senior Notes due 2024 (filed herewith).
10.1	Amended and Restated Credit Agreement, dated as of July 14, 2021, among MGE Niagara Entertainment Inc., the lenders named therein, Bank of Montreal, as Administrative Agent, and the other parties thereto (filed as Exhibit 10.1 to the Company’s Form 8-K, filed with the SEC on July 20, 2021 and incorporated by reference herein).*
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
32.1	Section 1350 Certification of Chief Executive Officer (furnished herewith).
32.2	Section 1350 Certification of Chief Financial Officer (furnished herewith).
101.SCH	Inline XBRL Taxonomy Extension Schema (filed herewith).
101.CAL	Inline XBRL Taxonomy Calculation Linkbase (filed herewith).
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith).
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase (filed herewith).
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith).
104	Cover Page Interactive Data File (formatted as Inline XBRL).

_____________

*    Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon its request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Mohegan Tribal Gaming Authority has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

		MOHEGAN TRIBAL GAMING AUTHORITY
Date:	August 12, 2021	By:	/S/    RAYMOND PINEAULT
			Raymond Pineault Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive Officer)
Date:	August 12, 2021	By:	/S/    CAROL K. ANDERSON
			Carol K. Anderson Chief Financial Officer, Mohegan Tribal Gaming Authority (Principal Financial and Accounting Officer)

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