Happy Thanksgiving from GGB; Newsletter Returns December 4

First Casino in Massachusetts Breaks Ground on Slots Parlor

Penn National Gaming Inc. wasted no time after being awarded the first casino license by the Massachusetts Gaming Commission, and scheduled its groundbreaking for a week later in Plainville at Plainridge Racetrack (l.). Outside Boston, Steve Wynn renewed his appeal for the same tax rate as the Wampanoag tribe will receive.

Penn National, recently awarded the license for the only slots parlor in Massachusetts, and the beginning of gaming expansion in the Bay State, says it can start building its 5 million 106,000 square foot racino in Plainville, which will have 1,250 slots, live harness racing and simulcasting, right away.

The facility will also have the first-ever Doug Flutie Sports Bar, a food court, banquet room, 26,000 SF grandstand and a 13,000 SF clubhouse.

A groundbreaking was held on March 14, where Penn released construction timelines and employment opportunities. Penn will give a construction plan and schedule to the commission by the end of March.

Penn National said it would have a ground breaking a week after the Massachusetts Gaming Commission’s decision at the Plainridge harness racing track, which will now be dubbed the Plainridge Park Casino. According to Penn, about 1,000 construction workers will be employed in the project. When it’s completed about 500 permanent employees will be on payroll.

To emphasize that point, within minutes of the commission’s decision, Penn Faxed a completed and signed application for a foundation permit to the town of Plainville’s administrator, Joseph Fernandes.

Penn’s CEO Timothy Wilmott pronounced the casino, “a big deal for Penn National.” Plainville residents and employees of the racetrack agreed. Many of them drove their cars through town, honking horns and celebrating throughout the town, which will also be paid $4.5 million the first five years the casino operates, with $3.3 million annually from then on.

Later Eric Schippers, Penn’s national spokesman added, “We are thrilled to begin construction of this new economic engine for the Commonwealth of Massachusetts. We look forward to celebrating this momentous occasion with our employees, members of the community, and local and state leaders who helped make this dream a reality.”

While it may be “happy days are here again” for Plainville, the black crepe paper is out at Penn’s erstwhile rival for the single license, Raynham, 20 miles down the road.

Raynham Board of Selectman Joseph Pacheco reacted bitterly: “My reaction was shock, and tremendous disappointment,” he said. “Those jobs are jobs the people of Raynham wanted, and those are jobs the people of Raynham needed. My hope is that people from here will have a chance to be considered for some of the jobs in Plainville.”

For the past few years Raynham’s residents had first focused on supporting efforts in the legislature to adopt a gaming expansion bill that offered a chance to the state’s struggling racetracks, and then on obtaining one of those licenses.

The state’s voters hit the park a staggering blow several years ago by passing a referendum banning the park’s dog racing. Currently the track offers only simulcasting. Raynham Park owner George Carney says he plans to continue to do that, and not close the facility.

Carney said he and partner Greenwood Racing failed to present a convincing enough application to the commission. This view is supported by the fact that none of the five commissioners supported its application. Their votes were divided between Plainridge and Leominister, 3 to 2.

Carney, 85, has been in the family business most of his life. “There’s always something coming down the road,” he said, according to the Boston Globe. “If we didn’t make it onto this train, we’ll make it onto the next one.” He plans to consult with the city and explore other uses for the property. “My main goal is to create jobs for this community,” he said. “We’ll look at all the options, and we have to have those discussions with the state as well. That’s one of the prime development sites in the state.”

On the other hand, if Plainridge had not won the license, the management had told employees that harness racing would have closed within 60 days at the most. With the license, most key personnel will likely be hired later this year and Penn will start advertising for new employees at the same time.

With the license, harness racing will continue and will be supplemented, retaining jobs for horsemen, trainers, horse farmers and other collateral professions.

The organization that opposes the Plainville casino, No Plainville Racino, announced that it is disbanding in order to join the efforts of Repeal the Casino Deal, which seeks to repeal the 2011 at the ballot box this fall.

At the same time, they also plan to sue to challenge the commission’s decision. They will base their lawsuit on, the financial imbalance between the unlimited resources of gambling interests vying for a casino license and the volunteer citizens groups opposed to casinos in their communities was thrown into high relief in towns that were hit hardest by the recession,” according to Mary Ann Greanier, spokesman for the now disbanded group. She added, “”In Plainville, that was exacerbated by a board of selectmen that promoted and lobbied for slots at the racetrack for more than a decade before the Gaming Act was passed.”

Last September voters in Plainville approved of the casino by a margin of 76 percent.

It is the threat of that November initiative by Repeal the Casino Deal that prompted Penn to announce such an aggressive building schedule so soon after it nailed down the license.

According to Saul Reibstein, chief financial officer for Penn, quoted by the Boston Business Journal, “We made a commitment to the Gaming Commission that we were ready to go immediately upon awarding of the license, and we intend to fulfill that commitment.” Soon Reibstein will be writing the gaming commission $25 million for the license and put 10 percent of the $225 million that the developer is required to spend on the project into escrow.

The ballot initiative might not ever make it to the November election, especially if opponents like Penn have something to say about it. The legality of the initiative will be decided by the state’s Supreme Judicial Court sometime this spring or summer.

If the court allows the initiative to go forward, Penn will reevaluate its options, said Reibstein. “We’ll have to evaluate where we are at that point and make a decision,” he said. The company expects that if the initiative were to pass that the commission would refund the $25 million fee for the license and escrow account. However, Penn would probably be stuck with the purchase of the racetrack.


Boston Metro

Now that the first casino license has been issued, the largest task facing the gaming commission is to choose between the casino resort proposed in Everett by Steve Wynn and the $1.3 billion Revere project of the Mohegan tribe on land owned by Suffolk Downs.

Supporters of the rival gaming proposals are now starting to employ invective in their campaigns to win a license, with Everett’s supporters calling the Revere proposal a “casino next to a decrepit race track,” while the Mohegans and Suffolk Downs contend that their proposal will be the most lucrative for the state.

The Mohegans would build a resort with two hotels that have a total of 500 rooms, compared to a 550-room hotel and casino Wynn wants to build on a former chemical site next to the Mystic River.

The Mohegans claim that their project will produce more taxes for the state, is shovel ready, and gleefully point out that they don’t need to change the gaming law to be successful.

That is a reference to Wynn’s very public exhortations of the legislature to lower the tax rate for casinos. Wynn has called for paying the same taxation rate as the Mashpee Wampanoag tribe, if its application for a casino resort in Taunton is approved. The tribe would pay about 17 percent under the terms of its gaming compact with the state. He said that paying 25 percent would be “folly” and implied that he wouldn’t operate a casino in the state under those circumstances.

At the recent forum sponsored by the gaming commission Senator Rosenberg, who is also the Senate Majority Leader, said that he has no interest in revisiting the gaming expansion law in order to make Wynn happy.

 “In most states, when you reopen gaming legislation, there’s a flood of changes requested,” he said.  “It’s really hard to contain the appetite of those who didn’t get what they wanted the first time around, or those who want to try to make things difficult for those who are advancing in the process. So my personal opinion is we shouldn’t be opening the bill except in the most extraordinary circumstances, and they haven’t arisen yet.”

Because the competition between the Revere and Everett proposals seems so close, some observers say that one or the other could get a leg up by striking a mitigation agreement with the city of Boston, and thus avoid arbitration.

That might make an ally of Boston Mayor Martin J. Walsh, who is still fighting to get his city accorded the status of a host city, something he has threatened to pursue in court.

According to Boston College professor Richard McGowan, an advisor to former Mayor Thomas M. Menino quoted by the Boston Herald, “They could put all kinds of lawsuits about improvements to the roads,” said McGowan. “I would imagine, especially in the Suffolk Downs case, when they move the horse stables over the Boston line, it might zone it out and say you can’t put stables on that site.”

The commission will vote on March 20 whether to designate Boston as a surrounding community to both casino proposals, which would then start the clock on negotiations, with each side having 30 days to reach an agreement before arbitration by the commission is forced.

That threat should be enough to move the disputants, Crosby predicts. “We’ve had some pretty rough surrounding-community-to-applicant dealings in different communities, and they’ve all figured out a way to work together because they don’t want to go to arbitration,” he said recently to the Globe. “You never know what you’re going to get into. That’s why the baseball players go to arbitration, because they all end up deciding, you know what, we better be reasonable here.”

The rivals both say they are talking to Boston, which wants access to sensitive confidential documents concerning the proposals, so that it can make informed demands.

Speaking of confidential documents, the Mohegan tribe may be forced to produce some documents or trade secrets that it would like to avoid divulging as part of the newly filed lawsuit by the tribe’s former landlord in Palmer. Last November the tribe’s attempt to build a casino there was killed by the voters, but a razor slim margin.

Northeast Realty of Palmer is among critics of the tribe who claim that it deliberately didn’t fight hard enough to win that vote because it knew it was going to switch its allegiance to Revere. Northeast recently sued the tribal gaming authority, which doesn’t have sovereign immunity, and demanded to depose all of the members of that authority, plus officials at Suffolk Downs.

The object is to obtain proof of dealings with Suffolk Downs before the results of the election were known.

The Mohegans insist that it did not breach its contract with Northeast and did its best to win the Palmer referendum.

Normally a tribal budget isn’t released to the public, however a tribal member gave a copy of the budget to a reporter for Cape Cod Online.

About 150 Boston-are businesses are indicating that they think the Mohegans will be the winner in the struggle with Wynn. They recently joined the Mohegan’s points program, which encourages visitors to the casino to shop at merchants in the area.

Casino-goers rack up points for playing that can be used in businesses that participate in the program.

The positive results in the referendum in February appear to have opened the floodgates for those betting on the Mohegans. The tribe has also loosed its sales reps to call businesses to recruit them.

Certainly the tribe is expected to use this program as a point in its favor as it tries to persuade the commission to award it the license. 

It will also tout the fact that its money will help keep alive the venerable Suffolk Downs racetrack and its 800 jobs.

Wynn has a similar program that gives $50,000 annually in gift vouchers redeemable in Everett and has indicated he is open to similar arrangements with other communities.


Southeastern Gaming Zone

The Mashpee Wampanoag tribe, which wants to build a casino resort in Taunton, proposes to spend $12.7 million on that goal, according to its 2014 budget. At the same time the tribe will spend twice as much on salaries than it spent in 2013. The great majority of the money for the tribe’s budget comes from its casino backers, Arkana Ltd., a subsidiary of the Genting Group.