Happy Thanksgiving from GGB; Newsletter Returns December 4

Boston Mayor Applies Casino Pressure

The mayor of Boston, Martin Walsh (l.), is upping the ante in his war of words against the Massachusetts Gaming Commission, which, he claims, does not have the authority to prevent him from declaring Boston a host city to two casino proposals in the neighboring cities of Revere and Everett.

Boston Mayor Martin Walsh continues to apply the pressure to the Massachusetts Gaming Commission to have more influence on the siting process for a casino in the Boston Metro gaming zone, although both casino proposals are in different cities. The mayor may have acquired a new weapon with the new requirement by a state environmental agency that the Revere casino needs a new environmental review.

As the Boston Globe put it last week, “Marty Walsh has turned the casino licensing process into the biggest poker game in town.” Walsh took office in January, and since that time has requested more time of the commission to study the impact that the Everett and Revere casino resort proposals would have on Boston. Both proposed casinos are next to, but not inside, the boundaries of the city.

The mayor has ratcheted up the process by asserting that Boston, rather than the commission, has the authority to determine whether it is a “host community” as defined by the 2011 gaming expansion law. If it were a host city, it would have a veto power on both casinos.

Moreover, Walsh’s declaration said, in effect, that the commission has no authority to rule otherwise. Tom Frongillo, an attorney representing the city, wrote to the commission, there is a significant preliminary legal question concerning whether the commission has jurisdiction to decide the issue of Boston’s host community status.”

He added, “Although the commission has apparently determined that it has jurisdiction, it cites no authority to the effect that the legislature has specifically so empowered it.”

The city also claims that the 2011 law doesn’t provide for ways to resolve such disputes, which strongly implies that the city intends to resort to the courts. And just in case the commission didn’t get the message, the declaration said it considers any commission rulings to the contrary, “to be invalid.”

The commission was quick to issue a rebuttal and cited the section of the law that pertains to its authority: “The power and authority granted to the commission shall be construed as broadly as necessary for the implementation, administration, and enforcement” of the law.”

It scheduled a public hearing on May 1 to consider Boston’s assertion that it should be designated a host community for both casino proposals. That pushes the decision on awarding a license to August, said Chairman Stephen Crosby.

However, Crosby gave some indication as to the likely decision the board will reach at that time. “A host community is defined as wherever ‘the gaming establishment’ goes, and we determine what ‘the gaming establishment’ is,” he said. “We’ll walk through the steps. We’ll give him every benefit of the doubt and chance to be heard, and then we will make our decision.”

Regional casino expert Clyde Barrow of the University of Massachusetts Dartmouth, quoted by the Boston Globe, agrees that the legislature did not specifically address disagreements over host city status, possibly because lawmakers never imagined that anyone would challenge the authority of the commission. It was, he said, “left completely unresolved in the legislation.”

The law defines a host community as “a municipality in which a gaming establishment is located.” Walsh argues that because the Everett and Revere casinos depend on Boston’s airport and other municipal services, that the casino would not exist without the city.

While Walsh may not have much legal foundation for his battle, it is good politics. Boston stands to lose much if either Revere or Everett win a license, and won’t get large annual payments from the casino developer, as they will. It will, however, have to deal with the collateral traffic and other effects of a casino on its border.

As Frongillo told the commission, “Today if a casino were open in Everett, the only door to that house is through the city of Boston. And a house without a door is not a casino. Nobody can get in; nobody can get out.”

As a “surrounding community,” Boston would have some rights, and will probably be able to negotiate hefty payments, just not as large as it would if it had the primary designation.

However, if Walsh does win on this issue, host community elections would have to be held in his city, which could kill one or both proposals. East Boston voted last November to defeat the Suffolk Downs proposal when it was split between Revere and Boston. Charlestown, which would probably vote on the Everett proposal, does not fit the demographic of communities that have voted to support casinos in the Bay State.

Ironically, Walsh, when he served in the legislature, voted for the gaming expansion bill, and as head of Boston’s building trades union, also supported a casino for the area.

The commission’s decision to push the awarding of the license past June 30 will deprive the state of the $85 million license fee for this year.

Although the commission insists that it alone has the authority to designate  “host community” status, it is also trying to be as solicitous as possible to the city, possibly to try to avoid the courtroom battle that Walsh is implying rather strongly in his statements that the commission doesn’t have that authority.

Commission Chairman Stephen Crosby has allowed some annoyance to creep into his statements regarding the issue, declaring last week, “I don’t think that emotion ought to rule the day. And the right thing to do is to ignore some of the obnoxious rhetoric.”

Another delay, this time for the Suffolk Downs casino alone, was created by the ruling last week by Massachusetts Secretary of Environmental Affairs Richard K. Sullivan, that the environmental document created for the Revere/East Boston site won’t do for the Revere site. A completely new EIR will be required, he said.

Issues that will need to be addressed include traffic, wastewater and storm water impacts, air pollution, greenhouse gas emissions and impacts on jets approach Logan International Airport, among many others.

Delays imposed by the EIR wouldn’t delay the actual license approval process, but could impose delays on when the casino could begin building, according to a spokesman for the commission.

The Mohegan tribe says these additional requirements are not that onerous and that the work has already been done for much of it—it just needs to be reworked for the new location.

According to a statement from Gary Luderitz, vice president of development for the Mohegan Sun, “Friday’s decisions by the MEPA office keeps the Mohegan Sun project on track to meet or exceed the permitting and construction timetable detailed in our submissions with the Massachusetts Gaming Commission. The Certificate lays out a scope of further review that is finite, easily understood and complete.  It acknowledges that the transportation aspects of the project largely mirror the prior project and looks for future details already largely completed by our development team. As importantly, the MEPA decision relating to the barn relocation project by our landlord Suffolk Downs is now officially complete.”

The commission last week held hearings on the Mohegan Sun’s proposal for a casino resort in Revere, the first hearing that asked for public input on the proposal.

Revere Mayor Dan Rizzo led off the speakers in favor. Speakers opposed to the project included Winthrop’s town manager and religious leaders from Revere who were unable to convince that town’s voters to disapprove of the project, as well as anti-casino groups.

Slots Parlor

The state last week received its first ever large payment from a casino developer: $25 million from Penn National Gaming for the Plainridge Park slots parlor that it broke ground on March 14 in Plainville. The commission awarded the license in February.

The casino will have as many as 1,250 slots, but will not have table games. The 2011 gaming expansion law authorizes a single slots parlor in the Bay State.

According to Penn’s national spokesman Eric Schippers,  “With preparation for the construction of our $ 225 million Plainridge Park Casino getting underway, our project alone will create 1,500 new jobs and generate significant revenue for the Commonwealth, our local communities, and Massachusetts’ small businesses. Coupled with the eventual Category 1 licensees, the gaming industry will be a leading revenue generator, job creator, and economic engine for the Commonwealth for years to come.”

The company is touting the fact that it has reached out to minority and woman owned and reached cross-marketing agreements with almost 50 locally owned merchants.

Western Casino Zone

The disagreement between MGM Springfield and the town of Longmeadow’s Board of Selectmen about surrounding community mitigation funds will now go to arbitration. Both parties have submitted their “best and final offers,” to the three-member arbitration panel, which will make a binding decision on which plan to support.

Longmeadow is requesting that the casino developer pay $850,000 up front and annual payments of $275,000 in mitigation for its $800 million casino. MGM has previously reached mitigation agreements with six other towns. It has also failed to reach an agreement with West Springfield.

Meanwhile the Greater Springfield Convention & Visitors Bureau and MGM Springfield have announced a marketing partnership—an agreement that would take effect one year before the casino opens. The agreement would include cross promotion of local attractions, additional circulation of the Bureau’s Visitor Guide and funds that MGM would commit to spend to promote the city and region. 

On April 3 the commission held the last public hearing scheduled before it makes the decision to award a license to MGM, which is the only remaining applicant for the license. The meeting, at the MassMutual Center in Springfield, near the casino site, heard comments and questions from members of the community.

Southeastern Casino Zone

Thomas Hoye Jr. mayor of Taunton, where the Mashpee Wampanoag Tribe hopes to build a casino, traveled to Washington D.C. two weeks ago to consult with members of Congress and officials of the Department of the Interior about the tribe’s proposal, which he supports, and other issues of interest to the town.

He met with Bureau of Indian Affairs director Kevin Washburn about the tribe’s proposal to put land in the city into trust for its $500 million casino resort proposal.

Hoye told the Taunton Gazette that the BIA is processing the tribe’s environmental impact statement and will publish its findings sometime this year, “They let us know the process is moving forward, although slowly. But they also said this process is moving much more rapidly than other tribes in recent history. The tribe is on track. They essentially let us know they are working on it and it is a priority for them. They would like to see the Mashpees successful. Hopefully, they will make a final determination in the near future on land in trust.”

Meanwhile, competing interests are asking the commission to slow down and speed up the process for issuing a license for the Southeastern zone.

Recently developers interested in building in New Bedford asked the commission to push back its July 23 deadline for applying.

A latecomer to the Southeastern zone is Rush Street Gaming, which went underground for eight months after abandoning its proposed slots parlor in Millbury. On March 14 Rush Street affiliate Mass Gaming & Entertainment LLC asked that the way that the minimum $500 million investment required be calculated using a different formula that would include land and off-site infrastructure costs, which the commission has so far excluded. It also asked for an extension of the deadline to file from July 23 to December 31.

Rush Street says its needs the variance on the minimum investment calculation in order to get financial backing for its $700 million proposal. The developer has not announced a potential site for its proposal.

However, Fall River Mayor Will Flanagan, whose city has partnered with Foxwoods to push a casino resort proposal, is asking just the opposite.

In a letter to the panel, Flanagan wrote, “To delay the submission deadline and therefore the anticipated award date would be greatly detrimental to the project and to this economic development initiative.” Flanagan and Foxwoods unveiled their $750 million casino resort project in January.

He also wrote, “From November 2013 to present the City and Foxwoods have worked diligently towards meeting the July 23, 2014, deadline,” and added that it would be a “severe detriment” if the deadline was extended. 

However, New Bedford Mayor Jon Mitchell, who has been on the fence and occasionally actively hostile about a possible casino in his city, has written that an extension was needed. “It is vitally important for New Bedford to maximize its opportunity to conduct a thoughtful, full assessment of various proposals,” he wrote. Some members of that town’s city council also want a delay. But they blame the mayor for refusing to work with casino developers up to this point.

K.G. Urban Enterprises, the most prominent of casino developers interested in New Bedford, also supports an extension.