Business As Usual in Massachusetts

The year 2014 may be one of many “firsts” when it comes to Massachusetts gaming, such as the first slots and casino resort licenses being issued and possibly a vote to overturn the casino law. But according to Stephen Crosby (l.), the chairman of the Massachusetts Gaming Commission, it’s all going swimmingly.

At the beginning of 2014 Massachusetts is likely to see the first casino licenses granted, to see the first casino construction begin, and possibly to see the whole applecart knocked over if voters decide in November to overturn the 2011 law that legalized gaming.

According to Stephen Crosby, chairman of the Massachusetts Gaming Commission, the process has gone pretty much the way lawmakers envisioned it, without perhaps the effort by some voters to overturn the law.

“I think the process so far has been everything that the legislature was looking for,” Crosby told the Republican in an interview last week.  The chairman is proud of the extensive background and financial suitability reviews his commission has conducted, and points to the seven community votes that have approved, and in several cases disapproved of casino proposals.

“There have been a number of communities that decided they didn’t want to do this, and a number of communities that decided they do,” he said. “That degree of local input and local control is really unique in the United States.”

The still pending lawsuit that resulted against Crosby by a former license applicant, Caesars Entertainment, claiming unfair meddling by the chairman in favor of another applicant was probably not what he envisioned for the process, however.

All of the applicants who remain active in the process have been declared ethically and financially suitable to operate a casino by the commission, and the  first of the gaming licenses—a slots parlor license—is likely to be issued before the end of the month. It is possible that the first of the three casino resort licenses will be issued for the Western gaming zone to Springfield and MGM Resorts International since all other rivals have been eliminated, which included the Mohegan Sun’s proposal for Palmer, and Hard Rock International’s proposal for West Springfield, which were both removed from play by the voters.

Such a casino will be a “game-changer” for the economically-distressed third largest city in the Bay State, according to Mayor Domenic Sarno, who predicts that something like an economic renaissance will result. 

The MGM casino could even be good news for businesses forced to move to make room for it. They may be offered financial incentives to stay in the city.

A license is also pending for the Boston metro casino zone, where three rivals are still battling for the prize, including Wynn Resorts, which won an overwhelmingly positive vote in Everett and the Mohegan Sun, whose proposal will be voted on by the voters of Revere on February 25.

Revere already voted in favor of a casino in November, but that was for a casino with feet in both East Boston and Revere. East Boston rejected that proposal and so Suffolk Downs racetrack repurposed its proposal for Revere alone through its partner the Mohegan Sun, which will actually lease the property from the racetrack and build and run the casino. Although the first time through Revere approved of the project by 60 percent, most of the anti-casino forces in the state have united behind “Don’t Gamble on Revere,” to try to change those numbers the second time around.

However pro-casino forces supporting “Revere Says Yes,” are also out in force in these last weeks before the election, hitting the streets, handing out tracts and making phone calls.

Foxwoods originally wanted to build in Milford, but was dropped from that city by its voters. It has moved its efforts to the Southeastern zone and, in cooperation with the city of Fall River, announced that it seeks to build a $750 million project there—if a willing landowner or multiple landowners can be found. Between 30-70 acres are needed, enough to accommodate a 140,000 square foot casino, 20 restaurants, a 350-room hotel, a retail mail, convention center and concert arena.

Fall River Mayor Will Flanagan has formed a site selection committee headed by the city’s economic development executive and it has already started to do its work. Committee members concede that finding the right property will be challenging on such short notice.

However, the elephant in the room of the Southeastern zone is the Mashpee Wampanoag tribe, which was promised a license by the legislation as long as it meant certain qualifications, but hasn’t yet been able to meet them all, with the final one being that it put land into trust in Taunton for reservation land. That is the city the tribe has chosen for its $500 million Project First Light casino, but the Bureau of Indian Affairs still has not yet acted on its request.

That caused the gaming commission to open the Southeastern zone to commercial bids last May. So far KG New Bedford has submitted an application, and now Foxwoods is preparing to do the same.

The BIA will act soon on the tribe’s request, according to a tribal spokesman, who last week noted that the “final phase of the environmental review process” for the request has begun.

According to Chairman Cedric Cromwell, “With the comment period for federal and state reviews now over, we are pleased to start the final phase of the environmental impact review process.”

Most of the comments the tribe has received for the project have centered on impacts due to traffic near the Route 24 and Route 140 interchange.

However, an opponent of the tribe, Michelle Littlefield of Preserve Taunton’s Future, said last week, “The bottom line is, they can go through all these steps, the compacts, the trivial meaningless steps, but without land in trust, it means nothing.”

Three applicants are competing for the one slots parlor license: Penn National, which hopes to build in the old but Plainridge harness race track; Raynham Park and its partner Greenwood Racing, which propose a slots casino in the now defunct dog racing track and the Cordish Companies’ proposal for a slots parlor in Leominster.

Repeal the Casino Law

Hanging over the heads of all of these proposals is the possibility that the voters in November could repeal the 2011 law altogether. Although considered remote, the measure gathered enough signatures to qualify it for the November ballot.

Attorney General Martha Coakley initially ruled that the measure was unconstitutional because it would obviate existing contracts, but allowed the proponents to appeal her ruling to the state’s Supreme Judicial Court, which is likely to rule on it by May.

Opponents question Coakley’s reasoning by pointing out that the voters several years ago were able to vote to dismantle an existing industry, that of dog-racing, without violating the constitution.

The gaming commission took up the issue of a possible repeal last week, at least to the extent of stating that it is monitoring the situation closely.

“We’re all aware of the fact that it’s out there,” said Commissioner James McHugh and added, “We may need help from others, but at the moment this is as far as we can go. We need to keep this process online, moving forward, while other things of which we have no control sort themselves out.”

The Other Tribe

Meanwhile the Wampanoag Tribe of Gay Head (Aquinnah), which is based on Martha’s Vineyard, has not yet decided whether to renovate an unfinished community center and use it for a casino, although it is defending its right to do just that in court.

According to the recently elected chairman of the tribe, Tobias Vanderhoop, who presided over his first tribal council meeting in January, some options for the building were discussed but nothing decided.

Asked about the matter by the Cape Cod Times, Vanderhoop emailed the paper, “The objective of the meeting was to present information to educate our people about the work of the Aquinnah Wampanoag Gaming Corporation. All gaming options remain on the table for the Aquinnah Wampanoag people at this time and we will continue to have informational sessions for our tribal membership to keep them fully informed as our efforts progress.”

Vanderhoop’s predecessor as chairman last year maintained that the tribe had a right to build a casino on its reservation, citing a legal opinion from an attorney of the National Indian Gaming Commission. However, Governor Deval Patrick maintains that the tribe is bound by a 1987 land settlement agreement in which it agreed to obey local and state land use laws. The tribe insists that the 1988 adoption by Congress of the Indian Gaming Regulatory Act supersedes that agreement. To make his point the governor filed suet in state court. The Aquinnah has filed a motion to move the case to federal court. No ruling has resulted yet.

Hardball Debt Collection

As the state gaming commission approaches the day when it will start issuing casino licenses, the Attorney General, Martha Coakley, says she wants to see some guidelines adopted by the commission that will prevent casino companies such as the Mohegan Sun from putting liens on the homes of gambling debtors, such as that company has done in its home state of Connecticut.

In 2006 the Sun won a court judgment to put a lien on a home partially owned by 80-year old Louis H. Cutler, who owed the casino $36,000 and who had tried to get out of paying it by declaring bankruptcy.

It is rare for casinos in general to adopt such aggressive debt collection tactics, although not so rare for the Sun, and its nearby rival, Foxwoods. Both have filed dozen of such liens in the past ten years or so, and for sums as little as a few thousand dollars, according to a report in the Boston Globe.

But what seems more unusual to some industry observers is that the casino granted the elderly man a $66,000 line of credit knowing that his sole income was his monthly Social Security check for $640. However, according to the casino, Cutler at the time had credit lines from other casinos and was a successful business owner.  The casino also notes that it offered to settle the debt for a fraction of what Cutler owed, but that he declined to do so. He died three years after the lien was placed on his house.

In a letter to the commission Coakley said she is concerned about “lending practices” and “aggressive debt collection methods,” used by several casino operators, and cited the Globe’s story on Cutler. She calls for strong consumer protections to be adopted by the commission. She offered to lend her services to write the regulations if the commission would consent.

According to a spokesman for the commission it will put the suggestion on a future agenda.

Thomas Hoye, Jr., mayor of Taunton, where the Mashpee Wampanoag Tribe hopes to build a casino, says he supports such protections. “It’s my hope that no gambling entity is allowed to place liens on people’s homes,” he said, quoted by the Taunton Gazette.

Online Gaming

As if all of these gaming activities weren’t enough to think about, some Bay State lawmakers are discussing the possibility of expanding the state lottery to include the Internet and to add online poker and blackjack from state regulated rooms.

The talk has invited the derision of Les Bernal of the national Stop Predatory Gambling Foundation, who said last week, “The idea that states are turning to internet gambling is an exclamation point on how extreme a failure the state’s experiment in lottery has been.”

Although online gaming is being discussed in many state legislatures, New England gaming expert Clyde W. Barrow of the Center for Policy Analysis at University of Massachusetts Dartmouth doesn’t believe it will be a factor in the success or non-success of the Bay State’s casino industry, since only a small percentage of the state’s population gambles online.