The Massachusetts Gaming Commission may make its most important decision this week or next when it chooses which of two bidders to issue the Boston metro casino license to: the Revere project championed by the Mohegan tribe or Steve Wynn’s proposal for a casino resort along the Mystic River in Everett.
Both potential operators say they could open a casino resort by late 2017.
The commission has been evaluating the two proposals for several weeks. Commission Chairman Stephen Crosby has recused himself for any decision-making regarding the Boston metro license due to accusations that he might favor the Wynn proposal.
The commission started off the process last week by imposing some conditions on each applicant and asking for their response. It asked Wynn to consider a redesign of the exterior of the casino and to pay an additional $200 million in traffic mitigation in Boston.
The commission then said it might require the Mohegan Sun to secure another $100 million in equity. It postponed any further action until next week.
The Mohegan Sun proposes to build a $1.3 billion casino resort adjacent to Suffolk Downs racetrack while Wynn’s $1.6 billion project would utilize property once occupied by a Monsanto chemical plant. Guests would have a choice between a boutique hotel and a casino hotel, with a total of 550 rooms. It would have 4,200 machines and 120 gaming tables.
Wynn’s resort would be built on a 30-acre former chemical plant. Of the $1.6 billion, $1 billion would be spent on construction, including a 365-foot glass tower with 500 rooms. The casino itself would have 3,242 slots and 168 gaming tables.
The commission is expected to make a final decision by or around September 17. Each of the four commissioners participating was tasked with reporting on a different aspect of the projects. These include finances, economic development potential, site design, and mitigation agreements with area communities and traffic impacts.
“This is the big one,” Clyde Barrow, an expert on New England casinos told the Boston Globe. “It’s going to be the most capital investment, has the ability to generate the most tax revenues. So, I think this is the single most important decision the Commission will make on license.”
Acting Commission Chairman James McHugh, would seem to agree. “We need to show that this has been a transparent, thoughtful process” he said last week. “We want to get this right.”
Either project could have a considerable impact upon the region’s tourism and air traffic at Boston’s Logan Airport. Both are less than five miles from Logan, where 31 million passengers pass through each year.
Keith Foley, a financial analyst for Moody’s, who specializes in the gaming industry, says Boston’s position as an international destination gives it special value. He told the Globe, “The one advantage a place like Boston may have is it is a relatively international city like Las Vegas, and it may have more traffic, or may be able to have a lot of people during the week go there.” He added, “One of the problems with the Connecticut casinos and Atlantic City is, while they may be very busy on the weekend, they don’t have the convention space, or the people coming during the week. They were never able to get that like Las Vegas gets. The real issue is, can Boston get that?”
The license probably means more to the tribe than it does to Wynn. If it doesn’t get it, it will face competition to its existing Connecticut casino, said Foley. He added, “Connecticut is losing gaming revenue, similar to Atlantic City in a way, to other Northeast gaming regions that are more convenient to where the gaming population is.”
Even so, the casino remains “the highest grossing casino in the Western Hemisphere,” at least according to the tribe.
The tribe’s strategy so far has been to develop properties in Pennsylvania and New Jersey. It is also partnering with a gaming tribe in Washington State to develop a casino and has proposed a casino in the Catskills in New York. The tribe is also diversifying in non-gaming industries. At the same time, however, the tribe has had to defend itself from accusations that its main motivation in proposing a casino in Massachusetts is to funnel as much business to its Connecticut flagship as possible, since its tax rate is much lower there.
Steve Wynn referenced that temptation recently when he told the commission “What do you think they’re going to do with a big customer?”
However the press recently obtained a copy of the agreement the Mohegans have with their financial partner, Brigade Capital Management, in which they are prevented from offering better marketing incentives to Connecticut customers than it offers to Revere customers. The agreement also requires the tribe to share detailed player information about its Connecticut customers with its Massachusetts property.
According to Mitchell Etess, chief executive officer of the tribe’s gaming authority, the agreement, “assures we will not market in excess of what is appropriate to any customers in that zone, to over-market to them to send them to Connecticut.” He added, “We’re going to be providing not just our brand, which is meaningful to people in Massachusetts, but this database to get things up and running.”
Complicating matters is a lawsuit the tribe is defending against. It is accused by its former allies in Palmer of negotiating with Suffolk Downs when it was supposed to be fully committed to a casino in the western part of the state.
The commission is under competing pressures. From one direction it is under pressure to award the license to keep Suffolk Downs alive. From the other side it is being pressured to award the license to the casino that looks likely to make the most money.
The Everett proposal is the most popular among host communities. Last year 86 percent of its voters supported Wynn’s proposal. The economic opportunities that could accrue to this city with a falling tax base are vast. The proposal would also jibe with other goals of the commission. It would clean up the arsenic and lead that the chemical plant left behind. This would lower pollution in the Mystic River. It would reopen large sections of the waterfront to public use.
Wynn recently told the commission that he intended to make the Boston-area casino into an international draw.
Given the promises that each developer is making, the commission will also weigh the ability of each to deliver. Wynn is known for vast financial reserves, with $3.2 billion in the bank, dwarfing the Mohegan Sun. His casinos are known for profitability. He has a knack for attracting “whales” as rich players are known in the industry. This addresses one of the main objections of casino opponents: that it’s purpose is to separate poor people from their money.
Wynn’s proposal has its critics, however, who point to increased traffic congestion. But the Suffolk Downs proposal has a similar problem. Also of concern is the possibility that a convicted felon might possibly profit from the land purchase that will make the casino possible.
Clyde Barrow, a gaming expert whose specialty was formerly New England, says it is hard to create a gaming Mecca without several casinos. “Unless a sole casino is something spectacular, people aren’t just going to come there for a casino,” he said. “If they’re there on a vacation, they may choose to stay an extra day or two to visit the facility, but other than that, it’s going to draw primarily from New England and the Northeast.”
The commission last week addressed the relative aesthetic merits of Wynn’s proposal. Acting Chairman James McHugh called Wynn’s hotel tower, “too generic,” and doesn’t fit in with existing development, while saying that the Mohegans’ design is “suggestive of the resort legacy” of the beach community. “The design approach fits well with the site and adjacent neighborhoods, is attractively styled, and demonstrates its compatibility with surroundings,” he wrote.
He liked the Mohegan project better, saying that Wynn’s vision was “boring.” However, he gave kudos to Wynn’s creativity in cleaning up the site, including using oysters to filter the river water.
Commissioner Zuniga gave Wynn the highest marks for financing, noting that he will probably be able to spend more on his project than the tribe. He gave Wynn a “very good/outstanding” rating and the tribe a “sufficient” rating.
Commissioner Gayle Cameron said that Wynn’s proposed improvements to Sullivan Square in the Charlestown neighborhood of Boston were not good enough, and asked for another $200 million. Even Wynn concedes that 60 percent of the traffic to his casino will pass through this bottleneck.
The Wynn team has not shown the same level of grace in negotiating with locals that the Mohegan team has done, to the point where Boston’s mayor, Martin J. Walsh, refuses to talk to Wynn’s people.
Wynn recently acquired the final piece of the pie for the project, with the final agreement to purchase two acres divided into three parcels from the Massachusetts Bay Transit Authority for access roads, for a price of $ 6 million. It won’t be truly final until October 3, since the MBTA is required by state law to advertise for bids for the land.
The Mohegans not only won over Walsh with a generous mitigation agreement, they also scored points with neighboring communities in their “surrounding community agreements.”
Commissioner Enrique Zuniga’s review of both project’s finances led to the panel’s insistence that the Mohegans needs to obtain more funding. So far the tribe has secured $45 million in equity and is seeking the other $732 million.
The tribe’s proposal for Suffolk Down is also weak because it was cobbled together at the last minute when the original proposal in partnership with Caesars Entertainment for Revere AND East Boston was shot down by Boston’s voters. Nevertheless, the goal of preserving the state’s remaining racetracks was one of the driving forces in the 2011 gaming expansion law. House Speaker Robert DeLeo, who represents Suffolk Downs, championed the law.
Revere’s voters have endorsed a casino at Suffolk Downs twice, but not at levels comparable to the 87 percent yes votes cast by Everett.
The track’s best days seem behind it. It hasn’t hosted large concerts or filled its racing stands in years. The track’s management has said that without the casino it will be forced to end racing operations.
In a related development, the commission voted to weaken its requirement that subcontractors to casino vendors must submit to criminal background checks. Critics of the old policy said it created unnecessary red tape while supporters said it was necessary to transparency. John Ribeiro of Repeal the Casino Deal said the change would encourage vendors to hire subcontractors with shady backgrounds.
Repeal Casinos
With less than two months until voters will render their judgment on Bay State casinos, several polls show that most voters favor going forward with plans to build three casino resorts and a slots parlor. Question 3 would repeal the 2011 law that authorized those casinos.
A UMass Lowell/7 News poll last week indicated that 59 percent of likely voters support the existing law, with 36 percent supporting the repeal. Only 5 percent were undecided in this poll.
Joshua Dyck, co-director of the Center for Public Opinion, which put together the poll, is predicting a defeat for the Repeal campaign. “Casino gambling will likely be staying for good in the Commonwealth. With the campaign just ready to ramp up, the well-financed ‘no’ side is likely to vastly outspend proponents of the repeal, further decreasing the odds of a successful repeal effort,” he said.
Repeal spokesman Stephen Eisele said it’s too early to make that call. He told the Republican, “As polling in statewide races has demonstrated, many voters are just now tuning into this November’s elections. The casino industry is oversaturated in the Northeast, with revenues down in Connecticut and casinos closing weekly in Atlantic City, leading many to question casino promises.”
So far, pro-casino forces, the Coalition to Protect Mass Jobs, have collected more than $1.78 million to fight the measure. By far the largest share of that comes from MGM Resorts and Penn National Gaming, which have both gotten the nod for licenses from the commission. They have already spent $40,000 on TV and radio spots and $27,000 on signs and brochures.
This information comes from campaign disclosures made for the first part of the year.
MGM has been approved for an $800 million casino in Springfield while Penn has already started construction on a slots parlor in Plainville and has spent an estimated $100 million. So far, neither the Mohegan Sun nor Wynn has spent money in the election.
This compares to Repeal the Casino Deal, which has raised $247,222 so far this year. However, Repeal does have some large donors, such as Alan Lewis, CEO of Grand Circle Travel, who donated $70,000 and philanthropist Swanee Hunt, who gave $15,000. Despite this, the Repeal organization ended 2013 with $411,300 in debts. Much of that accrued from the organization’s legal costs with defending the measure in the courts.
However, a spokesman for Repeal emphasizes that the group is depending on developing a strong ground game using volunteers and growing support from the grassroots. David Guarino said in a statement, “The out-of-state casino bosses can write big personal checks but they can’t buy facts, they can’t hide the mess they’ve already created here and the job losses, closed business and disappearing revenues we see in Atlantic City, Connecticut and beyond.”
Justine Griffin, a spokesman for the pro-casino group, countered, “A broad cross-section of civic leaders, labor unions and business leaders—including casino operators—have made no secret about their desire to make sure we keep the casino law and protect the 10,000 jobs at stake. We plan to run a vigorous campaign to keep those jobs and recoup the hundreds of millions in revenue that now flows to out of state casinos.”
The gubernatorial primary election last week, and the winner, Charlie Baker, says he will vote against it. Baker takes it a step further: If the measure passes, he will ask the legislature to carve out an exception for the city of Springfield, whose voters have already said that they want the $800 million casino proposed by MGM.
Martha Coakley, who last week won the Democratic nomination, defended the law against the Repeal group, but says she is “perfectly satisfied” that the state’s Supreme Judicial Court overruled her.
Like Baker, she says she would consider asking lawmakers to allow a casino in Springfield. During a recent debate she said, “Let’s keep an open mind. That’s nuanced looking at the issues, not saying yes or no in a knee-jerk way.”
Some political observers wonder why Baker and Coakley would give an exception to Springfield, but not to Plainville, Everett or Revere, whose votes also approved casinos.
That sentiment was expressed by Joe Fernandes, Plainville’s town administrator, who commented last week, “There is nothing unique about Springfield,” He added, “Their people voted for it, our people voted it. Revere or Everett — they are all in the same boat. I don’t see why anyone should be treated differently.”
Independent candidate for governor Jeff McCormick is the only candidate to call for the gaming commission to hold off on further actions until after the election. Last week he said, “With the ballot issue pending, the overall landscape of gaming changing quickly, and the current issues surrounding some of the players involved, I once again call on the gaming commission to wait until after the November election before awarding any additional licenses. There is too much at stake to push this through because of some arbitrary time line.”
