Boston, Mohegan Reach $18 Million Casino Agreement

Not a “host” city, Boston is trying to outline deals with the two developers of casinos in the region, neither of them located in the city. Last week, the Mohegan Sun in Revere (l.) agreed to pay the city $1.3 million annually as a result of the adjacent site to Boston. A deal with Wynn Resorts was not reached, meaning the state gaming commission will decide.

The city of Boston this week announced an million a year deal with the Mohegan Sun for its .3 billion, a deal so lucrative that for all practical purposes it is a “host city” agreement that Mayor Kevin Martin J. Walsh has insisted his city was entitled to have with the two casino resorts proposed on his doorstep.

Negotiations with Wynn Resorts broke down, however, for its proposed casino in Everett. Walsh said that Wynn offered an annual payment of $600,000, along with some other incentives like a “harbor walk.” But it wasn’t enough for Walsh.

“There are so many unanswered questions around the Wynn application,” he said.

The Mohegan deal is certainly the largest of any of the “surrounding community” agreements so far reached. By signing the deal the mayor agrees to drop that demand. But it does not mean that he is required to support the casino proposal.

“I don’t think they can tout me as a supporter of their project,” Walsh said. “They can certainly say we sat down and came to an understanding. They were certainly easier to deal with (than Wynn) in this process.”

The agreement was announced July 10. Besides the $18 million annually, which could go as high as $22 million, and lead to up to $300 million in economic development in the next 15 years. In a separate development, Boston reached an agreement with Suffolk Downs to keep the racetrack in operation during the terms of the license.

Walsh’s predecessor, Thomas Menino, signed a $32 million deal with Caesars Entertainment, which was Suffolk Downs’s first partner in the racetrack casino proposal. That proposal included Revere and East Boston. The current proposal, by the Mohegan Tribe on Suffolk Downs’s property, is for Revere only.

Mohegan CEO Mitchell Etess said the agreement was emblematic of the kinds of agreement his company supports. “We’re good neighbors,” he said on the steps of City Hall.

Besides the $18 million, the casino developer agreed to fund $30 million in capital projects over a period of ten years, and give local residents a hiring preference. The developer had already agreed to pay $45 million in traffic improvements for East Boston and Revere.

At first Walsh insisted that the city be treated as a “host community,” whether or not the gaming commission agreed. The commission dismissed Walsh’s thrust with a very quick and unanimous “no.” The commission also quickly rejected Walsh’s request to delay awarding the license until after voters decide the fate of the repeal initiative on the November ballot. The mayor then considered suing, but apparently decided that his best option was to negotiate for as much money as possible.

The main difference between a “host community” and “surrounding community” agreement is that Walsh’s constituents won’t get a chance to vote on this agreement.

As a comparison, MGM will pay Springfield $25 million a year for its host community agreement. Steve Wynn will pay Everett $25.2 million in their host community agreement.

The process between Wynn and Boston was different than that of the Mohegan negotiation. Each side made their “final and best offer,” and an arbitrator—the state gaming commission—will choose the one it considers the fairest. Negotiations can continue during the period when the arbitration panel considers the offer and the two parties can forge an agreement anytime before it reaches a decision. Arbitration is considered risky for both parties, although Wynn seems good at it. So far his proposals have been chosen in two arbitration cases with surrounding communities.

A spokesman for Walsh accused Wynn of refusing to submit a serious offer.  Wynn’s organization responded: “We have offered Boston a total package worth millions of dollars per year. In accordance with the gaming commission’s schedule, our best and final offer will be delivered on Thursday.”

John Ribiero, head of Repeal the Casino Deal, which is fighting to repeal the 2011 gaming expansion law, criticized the mayor’s move. “It should come as little surprise that the City of Boston is cutting another deal with the casino industry that is based on dollars and cents, not what is in the clear interests of our capital city, its people, and its long-term economic future,” he said.

He added, “We hoped for more from Mayor Walsh, who knows well the damage addiction has on people, families and communities. The city’s zest for phantom revenue wrapped in cronyism, conflict and corruption in both Revere and Everett, offers daily evidence for why we need to vote yes in November to stop this casino mess.”

Matt Cameron, attorney for the repeal group, was a little less hard on the mayor. “We appreciate he has been fighting for the city,” Cameron told the Boston Globe. “He’s in a tough position.”

So far the Mohegan Sun, which hopes to build in Revere, has yet to sign up a general contractor. The fact came to light when the tribe answered a question from the commission about its workforce diversity late in June.

The tribe wrote, “Although Mohegan Sun Massachusetts (MSM) has not at this time hired a construction manager or a general contractor for the project, it has undertaken extensive efforts to ensure not only that its construction workforce will be diverse but that minority, women and veteran owned businesses will play an extensive role in the construction of the project.” The tribe says it does not think the delay will create an issue with the commission since the law does not require that a contractor be hired at this stage in the process.

The tribe’s competitor for the Boston Metro license, Steve Wynn, has hired a contractor, Gilbane Inc.

Southeastern Casino Zone

The Massachusetts Gaming Commission last week opened up the southeastern casino zone to more competition for its license by both extending the deadline for applications and allowing new applicants. This is the second time the panel has extended the deadline for the southeastern zone.

The 2011 gaming expansion act created three casino zones, in the Boston metro area, the West part of the state and the southeast. It also authorized one slots parlor.

James McHugh, one of the five commissioners, commented, “If we don’t extend the deadline, then we really are facing the possibility where we’re facing one application.”

Applicants are required to pay a $400,000 non-refundable fee and undergo an extensive background check.

This is the first time that the commission has allowed any new players into the process since it established a procedure for vetting applicants. Before the policy change, only those who had met the previous deadline, such as KG Urban and Foxwoods, were allowed to participate.

The commission voted 5-0 to move the application deadline from September 30 to December 1 and to move the second phase deadline back to March 27 of next year.

The vote should please the Claremont Companies and the Clarivest Group, who had requested allowing new applicants in the process. The towns of Bridgewater, Fall River and New Bedford had also requested an extension. Taunton, where the Mashpee Wampanoag tribe hopes to build a $500 million casino resort, opposed an extension. KG Urban also opposed the extension.

An attorney for Clarivest had written to the commission, “The Group wants to compete for the resort-casino license, as it has the resources and what it believes to be the best location to make the development a success.” The company had previously worked with an applicant that passed the vetting process, but then the partne
rship was dissolved.

The southeastern zone is behind the two other zones in the licensing process. The commission has already granted a license to the western zone, to the city of Springfield. It is expected to aware a license in the Boston metro zone in September. Initially the zone was set aside for a federally recognized tribe, which was assumed to be the Mashpees and closed to commercial bids.  However, due to delays that the tribe encountered in meeting requirements of the law, the commission voted to allow commercial bids.

Repeal the Law

If the voters approve of the repeal of the 2011 gaming expansion law, it is uncertain how or if that vote will affect the tribal proposals of the Mashpee Wampanoags and the Aquinnah Wampanoags.

The Mashpees propose a $500-million casino resort in Taunton, while the Aquinnah want to convert an unfinished community center into a small Class II bingo parlor on Martha’s Vineyard.

Repeal the Casino Deal says it believes its initiative would prevent either from happening. It points to language in the 2011 law that states that federally recognized tribes’ right to offer gaming would revert if the law were ever repealed. It also supports the state’s view that the Aquinnah gave up their right to gaming when they signed the 1983 land acquisition agreement.

However, federal law generally does not allow state law to trump tribes’ right to offer gaming.

The Aquinnah say that the initiative has no bearing on their plans.  Attorney General Martha Coakley is also not yet taking a position on whether the repeal would affect tribal gaming.

Taunton Mayor Thomas Hoye cited federal law when he opined last week that the tribe will be able to offer some kind of gaming, no matter what the repeal does since tribes may offer Class II games no matter what state law says. Such games often have the look and feel of Las Vegas style slots. They are often just as profitable for the tribes that offer them. For example, the Seminole Tribe of Florida created a $2 billion gaming enterprise starting with Class II.

Mayor Domenic Sarno of Springfield, where MGM has won the license to build an $800 million casino, declined to write the summary opposing. Instead, said the mayor, a pro casino coalition will craft an opposition statement. Opponents and proponents will have 150 words to make their arguments.

Sarno told the Republican that the pro-casino coalition would adopt many of the arguments that worked with his city’s voters. “Many across the state and country have seen in Springfield how we’ve run this process very professionally, very transparent and open, and very grassroots, reaching out to all segments of the population,” he said. “It’s got to be based on facts, not rumor, innuendo, fear mongering.”

Repeal supporters say they know from the get-go that the other side has more money. According to Steven Abdow, they will rely on education to persuade. “We’re going to try to create a network where people can come and learn more about the impact casinos can have on the state, the region, the communities,” he said last week.

A new anti-casino political committee formed last week to oppose the repeal initiative: The Committee to Preserve Jobs Associated with Casino Gaming Law. It says its goal is to save the 10,000 jobs it says will be created by the building and operation of the four casinos.

The forming of such PACs ensures that a lot of money will be spent in the upcoming election since the state does not limit the amount of money that can be spent on a ballot measure.