Lawmakers reveal gaming bill that will create three casinos and a racino

After many months behind closed doors, Massachusetts’s lawmakers revealed a gaming expansion bill that includes three smoke-free regional casino resorts and one slots parlor. All would be subject to competitive bidding.

The slots facility could be open in as soon as next year. The regional casinos could open by 2014 according to some estimates.

The Joint Committee on Economic Development and Emerging Technologies will consider the 133-page bill. Debate is expected to commence after Labor Day.

Bids for casino licenses would start at $85 million. Developers would have to commit to invest at least $500 million for a resort that would include a hotel. Bidding for the slots facility, which would be limited to 1,250 machines, would start at $25 million. The minimum investment would be $125 million.

The bill would create three gaming zones: Central Massachusetts and Boston (Zone 1), Southeastern (Zone 2) and Western Massachusetts (Zone 3). Zone 2 would be reserved for the Mashpee Wampanoag tribe, although they would have less than a year to negotiate a compact with the state.

House Speaker Robert DeLeo praised the bill. "We produced a real job creation piece of legislation," he said in an interview. He predicted that the bill would create 16,000 fulltime jobs and 6,000 building jobs and 3,000 spin-off jobs in other trades. He added, “I think the biggest tradeoff was to get this bill done. I felt this had to be the year that we spent some time to make sure that we don't throw 16,000 jobs out the window, quite frankly.” Since neither Patrick nor Murray wanted a slots parlor, DeLeo said he felt he was fortunate to get one.

DeLeo joined Senate President Therese Murray in a statement that said,  “We support this bill and believe that it provides a strongly regulated and commercially desirable framework for establishing a gaming industry in Massachusetts. Expanded gaming will create thousands of construction and service jobs and support our on-going efforts to create and retain jobs in the Commonwealth. Further, it will serve as a source of new revenue for Massachusetts and help our economy grow.”

Governor Deval Patrick, who killed last year’s bill, appears to like many parts of this one. He said that it includes open bidding and limits on gaming expansion. "If done right, expanded gaming in Massachusetts can create jobs, generate new revenue, and spur other economic growth in the state," he said in a statement.

Clyde Barrow, a gaming industry expert for the University of Massachusetts at Dartmouth, predicted passage. I'm never going to say anything is 100 percent certain in Massachusetts politics, but I'd say this is as close to 100 percent certain as you could get,” he said.

The casinos would pay 25 percent tax to the state and the slots parlor would pay 40 percent. A quarter of this would be distributed to municipalities, 15 percent to transportation, and 14 percent to education. The remainder would be divided between an emergency reserve fund, problem gambling programs, economic development and debt reduction. Nine percent of the revenues from the slots parlor would go to increase purses for the Suffolk Downs and Plainville racetracks.

The bill would also create a five-member Massachusetts Gaming Commission appointed by the governor, attorney general and treasurer. It would be responsible for interviewing prospective casino operators and keeping unsavory characters from being granted licenses. The bill would also create a separate gaming liquor enforcement unit to enforce alcohol laws inside casinos.

Rep. Joseph Wagner, chairman of the legislative committee on Economic Development and Emerging Technologies called the legislation “a home run for the citizens and taxpayers,” according to the Boston Herald. He predicted it has a much better chance of passing because Patrick, DeLeo and Murray have all signed off on it.

Critics include Kathleen Norbut of United to Stop Slots in Massachusetts, who flayed lawmakers for doing the deal in private and for producing a bill that would remove, “money out of the regional economy that would be going to other goods and services," according to the Boston Herald.

Scott Harshbarger, a former state attorney general, also criticized the end product and the process. “Today’s release of all new casino legislation signals yet another milestone in Beacon Hill’s concerning slide deeper into a closed-door culture marked by little debate, less dissent and an even greater likelihood of improper influence,” he said.

Wagner blasted critics like Norbut and especially Harshbarger. “The problem with them is they chose not to participate in the process. All gambling bills were subject to a public hearing, and Scott Harshbarger wasn’t present for that and he hasn’t been heard from by any committee since then,” said Wagner.

However, it is also true that the bill was produced almost completely in closed-door sessions involving a few top legislative leaders in consultation with the governor. Many legislators said last week they did not see the bill before its release.

The bill is similar to one passed by both houses last year, except that, instead of two racinos, there is now one slots parlor. A racetrack would still be able to bid on the slots parlor license.  DeLeo, who passionately pushed for two racinos, since he has two racetracks in his district, said the compromise was a good one. “"One facility is a good compromise for all of us and something we all can use…This bill was about putting 16,000 people to work," he said.

The bill also sets aside one of the three licenses for a recognized Indian tribe, which currently would be the Mashpee Wampanoag Tribe. It would be given until 2012 to negotiate a compact with the state. If no deal were forthcoming, the license would be available for bidding by private developers.

Patrick last week had insisted that the Mashpees be guaranteed one of the three regional casinos, something he originally said when he proposed three casinos in 2007, during his first term. The governor previously said he wants to limit the number of casinos, which is why he wants to give a preference to the tribe.

He was replying to five representatives from the southeastern part of the state who sent a letter to him and the House Speaker and Senate President opposing a special role for the tribe because it would be unfair to their section of the state.

A member of Patrick’s administration replied to the five lawmakers, saying that if the tribe’s application to put land into trust for a reservation is approved that it would be entitled to have a casino.

"We believe it is important that any gaming legislation account for and address this tribal gaming reality," wrote Gregory Bialecki, secretary of Housing and Economic Development, according to Cape Cod Online. He added that the three-regional casino model is the best way “to maintain valuable market capacity and maximize short- and long-term job creation and economic development opportunities for the entire Commonwealth,"

The tribe’s application is by no means assured, since it seems to violate a 2009 U.S. Supreme Court ruling (the Carcieri decision) that said that tribes recognized by the federal government after 1934 cannot put land into trust. The tribe achieved recognition four years ago.

It was this problem that prompted Rep. Antonio Cabral to join the other four lawmakers in writing the letter. Since the tribe’s application remains highly uncertain, Cabral says he doesn’t want his region’s casino tied to that process. "Providing a Native American preference for obtaining a casino license would incur significant risk for the commonwealth,” says the letter. “This decision would likely entangle that process in years of litigation."

However, the state can decide to enter into a compact with a tribe whether or not it has an official reservation.

Mashpee Tribal Chairman Cedric Cromwell joined into the fray with a statement reiterating the tribe’s “inevitable right,” to have a casino in the southeastern part of the state.

One Bay State representative, William “Smitty” Pignatelli, wants the state to protect its art community from possible harm by casinos. He has been meeting with representatives of theaters and other performing arts venues, and the Massachusetts Cultural Council.

Pignatelli worries that there is only so much discretionary income and that the danger is that gambling will siphon it off from performing arts venues, which can’t compete in the same arena. Gambling profits allow casinos to offer lower cost tickets to show than groups who are not subsidized.

Last year a task force that studied the issue found that casinos can elbow non-private venues out of the way when it comes to booking performing artists.

Pignatelli says he may offer amendments to any gaming legislation to offer protection for non-profit art venues.

The Massachusetts Performing Arts Center Coalition has said it wants an amendment that would limit casinos to either less than 500 seats or more than 5,000 seats.  Restricting seating to less than 500 would make it less likely that casinos might book acts that could go to a local symphony hall, for instance.

The new bill offers some protection by limiting casino entertainment venue seating to keep casinos from competing with local and mid-sized theaters.

Gaming interests spent $1.14 on lobbyists the first six months of this year in Massachusetts, according to Secretary of State William F. Galvin’s office. The lobbyists represented interests that include Wynn Resorts, Las Vegas Sands Corp. and Penn National Gaming. However, the biggest spender was Suffolk Downs, at $190,000. The racetrack wants get a license to build a casino and hotel resort in East Boston.

Beneficiaries of campaign contributions from gaming interests included DeLeo and Murray. Patrick has pointedly refused to take donations from gaming interests.

A spokesman for DeLeo, David N. Martin, denied that the Speaker is influenced by such donations. “Lobbyists carry no special sway or access as a result of their political contributions to the DeLeo Committee. Speaker DeLeo makes policy decisions based on the best interests of the Commonwealth and only the Commonwealth,’’ said Martin. Other DeLeo associates say he makes a point not to meeting with gaming lobbyists.

Senate President Murray insists that the money spent by gaming lobbyists, “will have no bearing on how we approach gaming legislation.’’ She also has a policy of not meeting with gaming lobbyists. She leaves that to the Senate’s point man on gaming legislation, Senator Stanley C. Rosenberg.

Galvin expects the dollars spent on lobbyists and campaign donations to skyrocket now that there is a bill. “At the end of the day, this is all about money,’’ he said, according to the Boston Globe. “One thing neither side will deny is there are individual private entities that will make a lot of money off of this.”

Some money is being spent opposing gaming. David F. D’Alessandro, former CEO of John Hancock Financial Services, gave about $50,000 to an anti-gaming group. He wants a more open debate about gaming having had family members threatened by loan sharks over gambling debts.

Meanwhile a group of business people in Palmer, where the Mohegan Sun wants to build a casino, has begun a petition drive to put an initiative on the ballot so that residents can register their support for the project 90 days after the legislature legalizes the gaming expansion.

The group, Palmer Businesses for a Palmer Casino, is also pressing for a “comprehensive agreement” between the town and the Mohegan Tribal Gaming Authority, the development arm of the Mohegan tribe.

Recently Mitchell Etess, CEO for the authority, commented on the proposed casino with 3,000 slots, a 600-room hotel and retail, “We are going to create a great destination resort, and we know we have the best site in western Massachusetts. We know we are proven operators and among the best brands in gaming in the Northeast.’’

Vincent P. Juliano, who owns land next to the Massachusetts Turnpike that he would like to partner with someone like Penn National Gaming to develop, is unhappy that the bill divides the state into zones.  “It's going to be very difficult to compete with Boston. They're going to want their people to get the jobs,” he said, according to the Telegram.

Former casino executive Steve Norton says the open bidding process could lead to delays in the casinos being built. “Open bidding could lead to years of waiting, as experienced in other states, like Pennsylvania, Maryland, Kansas and Illinois. It has taken Illinois 10 years of an open-bidding process to issue their final license, for a casino just opened (July 2011) in Des Plaines,” he said. The state could offset this, he said, by encouraging temporary casinos to open and by issuing temporary licenses.

Some experts believe that Suffolk Downs racetrack has the closest thing to a guaranteed license for its East Boston facility, which is in the eastern zone, while the Mohegans may have an edge in the west zone, which includes Palmer.

However, according to Barrow, "The southeast is really so wide open.”

Raynham Taunton Park owner George Carney, who has looked into the idea of a racino, has also talked to the Mashpees about a joint venture. "Right now we don't have an agreement, but we've had a lot of friendly talks,'' Carney said recently, according to the Brockton Enterprise/Taunton Daily Gazette. He also said  “I have several suitors. The ones I have, have plenty of money.’’

Gary Piontkowski, CEO of Plainridge Racecourse, a harness racing operation, says there is a lot of interest in his operation, but nothing concrete. “Everybody wants to come around and kick the tires,’’ he said, but “no one’s made an offer in writing, he said.

Anthony Cignoli of Paper City Development Co., commented, “It does define who can compete. The bill does dictate that you’ve got to bring in a major player. This not for the faint of heart or a small player, to come to Massachusetts.’’

In addition, two companies are working on plans for the old whaling town of New Bedford. One of them, KG Urban Enterprises and its partner Las Vegas Sands Corps., proposes to build in a former power plant. The project would include 3,500 slots, gaming tables, and eventually two hotels. The partnership claims it could open in two years.

Two sites in Fall River are also being explored.

Penn National Gaming, one of mid-America’s most active casino developers, says it is very interested in the Bay State. “What is being proposed in Massachusetts is in the sweet spot of what our company does, and so we are very interested,’’ said Eric Schippers, the company’s spokesman.

Developer David Nunes, who has plans for an $850 million casino with a hotel, and shops in Milford, predicts a competitive field. “If this is a straight-up competition about which location will produce the highest returns for the commonwealth, there is no doubt in my mind that our site will deliver,’’ he said, according to the Boston Globe.

Analysts among Nevada slot machine manufacturers believe that assuming three regional casinos with 3,000 slots and one slots parlor with 1,250 machines that over 10,000 new machines could be shipped in the next few years. This is considered a “positive but modest development.”

“While the ball has just started rolling again, we believe gaming expansion this year has a solid chance of passing, as it appears both the governor and legislative leaders are on board. We believe the license fees and minimum investment requirements, as well as the tax rates, are attractive and in line with those of other regional jurisdictions." JP Morgan gaming analyst Joe Greff commented, according to the Las Vegas Review-Journal.

On the other hand, some analysts predict that the development could spell bad news for the Mohegan Sun and Foxwoods in neighboring Connecticut, who get more than a third of their customers from the Bay State. A positive for those casinos is the fact that the Massachusetts casinos would not allow smoking.

By Staff