Boston’s Mayor Martin J. Walsh, calling negotiations with Steve Wynn’s organization over its proposed casino resort for Everett, has pulled out of arbitration, calling it a “no win situation.” This punts the decision over how much to award the city to the Massachusetts Gaming Commission.
The two had been negotiating a “surrounding community agreement,” but Walsh withdraw, claiming Wynn wasn’t offering enough. Withdrawing from arbitration is a tactic foreseen by the 2011 gaming expansion law, but it is risky for the city due to the mayor’s belligerent stance to the commission earlier in the year when he insisted that Boston was a host community whether or not the commission agreed. Walsh alluded to the panel’s denial, repeating his disappointment in the decision.
“They’ve made all the decisions along the way for Boston up to this point. I am going to let them make the decision on what benefits Boston should get if they choose Wynn,” said Walsh.
If the commission decided to take Walsh’s tactics personally that might effect how much money the commission is willing to require that Wynn pay. However, the up side, according to Walsh, is that the commission will be able to require information from Wynn that Walsh claims he has unsuccessfully tried to obtain.
The commission held a meeting a few days after Walsh’s announcement to work out how to respond to it. It asked its staff to review other agreements between cities and towns and casino operators in other states. It also asked for information on how the proposed casino might impact the city.
The commission concluded that it needed to ask Wynn to speak to find out what he has actually offered the city and then ask independent consultants to make a recommendation. The commission will also ask for comments from Charlestown residents and groups.
Commissioner Enrique Zuniga declared, “I am disappointed that the parties, at least as of now, were not able to reach a negotiated agreement.” Acting Commission Chairman James McHugh added, “You can get things in a surrounding community agreement by agreement that you can’t get as a result of either arbitration or a commission order.”
Commission spokesman Elaine Driscoll issued a statement that said, in part, “The commission has always said that a negotiated agreement is the best course of action and therefore hopes that the parties will continue to negotiate,” Driscoll said in a statement. “Failing that, the commission has a number of alternatives and will expeditiously consider which of them to follow.”
A spokesman for Wynn responded that it had submitted its “best and final offer,” to the city, as required. “We understand that Boston refuses to participate in the arbitration and the regulations address this situation. We will await the commission’s determination on how they wish to proceed.”
Last week Walsh and the Mohegans reached a deal for the city and the tribe’s proposed $1.3 billion resort casino. Mitchell Etess, chief executive officer for the tribe’s development arm, basked in the goodwill and declared, “Just another example of the Mohegan Sun way, the way we work with the communities and we’re good neighbors,”
Walsh, who pointedly did not appear in public with Etess said, “I don’t think they can tout me as a supporter of their project. They can certainly say we sat down and came to an understanding. … They were certainly easier to deal with than Wynn in this process.” Wynn, he claims, has only offered $600,000 a year to the city.
The agreement between Boston and the Mohegan’s is unique for surrounding community agreements in the Bay State. The city will get at least $18 million a year in payments, which can increase depending on how much the casino makes, with another $30 million paid out in installments over the next decade. In addition, the tribe commits to spend $50 million with local businesses, especially in East Boston. The tribe also commits to spend $45 million in improvements to roads and streets, and on other transportation such as trains and water shuttle. The tribe will also contribute $500,000 annually to a trust fund to help first time homebuyers who are also casino employees.
Moreover, Suffolk Downs has pledged to continue offering horse racing for the next 15 years as long as the tribe is awarded the license for the Boston metro zone.
Surrounding community agreements are designed to mitigate a city for the impact of the casino to its roads and services, even though the casino may not be in the city limits.
The Mohegans have reason to be more accommodating than Wynn. They have more to lose if they don’t win the license. The Mohegan Gaming Authority, which operates the Mohegan Sun, one of the largest gaming properties on the continent, is moving to expand outside of Connecticut as both Indian casinos in that state start to see gaming revenues slide. They are also trying to react proactively as casinos are developed near what was for many years a tribal monopoly.
Mitchell Etess, the authority’s chief executive officer, told Bloomberg recently, “There’s going to be casinos in these places. The key for us is to grow in a way we can manage successfully.” He added, “Keeping focused on the Northeast makes the most sense for us. It’s where our brand is most known.”
The commission is expected to award the license for the Boston metro zone in September.
Slots Parlor
A committee of the Massachusetts House has voted to support a bill that would allow Plainridge racetrack to offer fewer harness races while the racetrack is being converted into the state’ first slots parlor. The bill would allow 80 racing dates, instead of the 100 currently mandated. The full House and then the Senate would be required to concur for the bill to become law.
Repeal the Casino
Meanwhile, Governor Deval Patrick says the fact that the budget includes $73 million from casino fees that may go away if the voters reject gaming in November doesn’t overly concern him, given that the state budget the legislature adopted is $36.5 billion.
Last week he told reporters, “Nothing is certain. I do think that at the end of the day the voters will affirm and decide to keep the existing casino law cause I think its a very modest expansion of gaming and it gives local communities an opportunity to make a decision that’s right for them.” He added, “But it’s not such a big number that we can’t cope with it if things go in the opposite direction, but I think we’ll be OK.”
The voters are being asked to reject the 2011 Expanded Gaming Act of 2011, which authorizes three casino resorts in three different gaming zones, and one slots parlor, which has already started to build in Plainville.
The just adopted budget factored in casino licensing fees for the upcoming fiscal year.
The governor was in Springfield, where the Massachusetts Gaming Commission issued a license for MGM to build a casino resort. In his remarks Patrick said, “This community here in Springfield has said yes and other communities said no, and that’s what you want to respect.”
If the voters repeal the law, then the only ones left who could open casinos in the state would be federally recognized tribes, including the Mashpee Wampanoag Tribe and the Wampanoag Tribe of Gay Head (Aquinnah).
Attorney General Martha Coakley, who is also a candidate for governor, last week offered some suggestions to the commission as it writes regulations relating to casino’s offering “markers” to patrons.
The attorney general warned against allowing casinos to use aggressive collection techniques, such as putting liens on property to col
lecting on gambling debts. It also suggested that employees conduct credit checks on patrons away from the casino floor to give them a chance to reflect on the consequences of their actions. She also urged that such employees not be given incentives to bring in more credit business.
Coakley offered her expertise to the commission as it draws up casino regulations.
Two bidders seeking a license in the Bay State, the Mohegan tribe and rival Foxwoods, have used this tactic in Connecticut. As part of the credit evaluation process, Coakley advises doing the vetting off of the casino floor to give the customer time to reconsider. She also advocates not allowing casinos to give employees incentives for signing up new customers and to be given responsible lending training.
