Massachusetts gaming panel hears final casino pitches
The Mohegan Sun and Wynn Resorts January 22 each made their final presentations to the Massachusetts Gaming Commission. Because of the raging snowstorm along the East Coast, MGM Resorts’ presentation was delayed to the following day.
Mohegan Sun and Wynn are competing for the Boston metro license. Wynn proposes a $1.2 billion casino resort in Everett, along the Mystic River. The Mohegan Sun, a late arriver to the game, wants to build a $1.3 billion casino on 42 acres leased from Suffolk Downs racetrack in Revere. The voters in Revere will decide on the host community agreement on February 25. Both Revere and Everett border Boston.
The commission has tentatively said it would award regional licenses in May. It will award licenses based on “the most competitive projects that meet the expectations provided in the final application, have a positive impact on the Massachusetts economy and enhance the state’s revenues.” Or as Chairman Stephen Crosby said recently, “Most of all what people will appreciate is the facility itself. What does it look like? What are the surrounding amenities in terms of hotels, spas, restaurants and retail stores?”
Mitchell Etess, chief executive of the Mohegan Tribal Gaming Authority during the 90-minute presentation offered charts, videos and architectural models and talked about his company possessing “the wow that this market wants and what Massachusetts deserves.” He talked about his company’s “New England know-how and New England values.” The casino, he said, would be accessible to major highways, Logan Airport and public transportation.
In a swipe at Wynn, and the industrial waste cleanup that would be required for the former Monsanto chemical plant Everett, he said the project was “clean” and could be up in running six months earlier than Wynn’s proposal. His casino would draw on a database of customers that includes one out of every six Massachusetts residents who already gamble in Connecticut, he said.
Wynn, working without a script for less than an hour mocked his rival’s Revere proposal as a “three-star resort,” compared to the five-star resort he proposes. “I’m being hard-nosed today because today is not about theater, today is about how we get a destination resort up and running in Massachusetts,” he said.
He called his casino proposal on 25 acres in Everett the “worst nightmare,” for Mohegan Sun’s existing casino in Connecticut, which it would take profits away from. He declared, “If Wynn Resorts is selected, we have only one interest, this casino in Massachusetts. We don’t give a damn about Connecticut.”
Reacting to Etess’ claim to be able to be operating before his casino, Wynn said, “It’s not about six months, it’s about forever. Does it become a tourist destination? Does it deliver for the local economy? Six months means nothing.”
He claimed that his proposal would be almost twice the size of the competition and much more luxurious, a 19-story signature Wynn casino compared to the Sun’s “horizontal” design. He noted that he has $2.7 billion cash on hand, 30 times what the tribe can access.
The Mohegan’s plan was cobbled together only after the original project that had been proposed by the partnership of Suffolk Downs and Caesars Entertainment fell apart by Caesars’ withdrawal under pressure from the project, and voters in Boston rejected the Revere/East Boston plan on the same day that Revere’s voters approved it: November 5.
This led to the hastily assembled partnership with the Mohegans, who had been rejected by voters in Palmer. The tribe would lease 42 acres in Revere. That partnership would preserve racing at Suffolk Downs racetrack—whose property is in East Boston, across the border from Revere—by providing it with lease money from the casino, although the two entities would operate independently of each other.
Opponents of the Revere proposal claim that the hasty partnership led to the developer using much the same environmental documents when it filed its application with the commission on December 31. In fact, Mohegan Sun used an environmental form that was entitled “Caesars Resort at Suffolk Downs.”
Everett Mayor Carlo DeMaria declared last week, “This raises yet another instance where Mohegan Sun and Suffolk Downs are attempting to undermine the spirit and the letter of the gaming law. By submitting another project’s development documents in their application, Mohegan Sun has clearly shown that their project does not conform to the gaming commission’s requirements and lacks merit.”
The new mayor of Boston, Martin J. Walsh last week sent a letter to the commission questioning the use of the old environmental documents.
Mohegan Sun issued a statement defending its use of the same documentation, saying that it “speaks directly to regional impacts that must be addressed under the Massachusetts Environmental Policy Act” and added, “The Massachusetts Gaming Commission is aware that we will be filing a notice of project change by Jan. 31, and they have indicated to us that is completely acceptable.”
The commission’s spokesman, Elaine Driscoll, said in a statement that the commission is reviewing the documents to see if they meet requirements. “But as a policy, the commission has tried to get to the substance of matters and not just technicalities,” she said.
Meanwhile the Mohegans continue to face questions from the community where they once wanted to build a casino, Palmer. Some of its business leaders want to know when and if the tribe plans to do something with the big chunk of land it has an option on—for the next 99 years.
22News asked Etess about the issue, forwarding a question by a Palmer resident: “Another month has gone by and we still don’t have anything in writing as to what their intentions are with that land.”
Etess sidestepped the question: “Look, honestly, today we’re not here to talk about Palmer. We just spent the last 90 minutes talking about how we’re going to do a great job in Revere,” he said. Under further questioning he added, “In the next few months we’ll probably make some determination. We have to get through this, I really can’t give you a timeline, honestly, in the scope of everything we’re talking about right now, I’ll be glad to talk to you later, why don’t we do that?”
But later in a meeting with the reporter, Etess said that his company had never expected the community to reject the casino and they didn’t have a back-up plan for the land. So now they are working on one.
“I can promise everyone in Palmer, everyone in Western Massachusetts, that we have nothing more in our hearts than to win that vote and being the destination to Palmer. Instead of competing with Wynn today, we’d be competing with MGM but its not the way it came out,” Etess said.
Western Gaming Zone
MGM is the only remaining applicant standing for the Western Massachusetts casino license. Commission Chairman Stephen Crosby earlier in the week acknowledged in an interview that MGM was likely to be awarded the license to operate in Springfield, the second largest city in the state.
MGM proposes an $800 million casino resort in Springfield’s South End. It won the support of the city’s voters by 58 percent to 42 percent in June.
In an interview with CBS 3, Crosby was asked if there was anything that could prevent Springfield from being awarded the license. He noted that MGM has passed its suitability review and was scheduled to make its final presentation.
“To be honest, I think it’s not very likely that they would be stopped,” said the chairman, but added, “We have the ability to negotiate with them.”
He said, “Probably we will go forward with them. Although, that’s not certain. I’m only one commissioner; there are five of us. But you can be sure it will be done with an eye to maximized it all with the criteria we are looking for.” The commission can require enforceable conditions, he said.
Gaming Commission Under Fire
The gaming commission’s work is somewhat overshadowed by criticism that its overly intensive scrutiny of casino applicants drove away what most industry experts consider one of its best, Caesars Entertainment. So much so that Caesars has sued commission Chairman Crosby, alleging that he could not be impartial in his judgments because he has a business and personal relationship with a stockholder in the Everett property and that he personally asked Wynn to remain in the competition after it looked as though the gaming giant was going to withdraw. Wynn denies that happened.
Surrounding Communities Petitions
Eight municipalities have filed petitions with the Massachusetts Gaming Commission seeking to be named “surrounding communities” to the two casino resorts proposed by Steve Wynn in Everett and by the Mohegan Sun and Suffolk Downs in Revere.
While the expanded gaming law of 2011 does allow casino developers to designate towns as “surrounding communities,” it also provides an avenue for towns that developers turn down to appeal to the commission. The applications range in size from one page to 165 pages (from Everett, seeking mitigation from the Mohegan Sun).
Everett, Lynn, Malden, Medford, Melrose, Saugus, and Somerville have filed in connection with the Revere proposal.
Chelsea, Lynn, Melrose, Saugus, and Somerville seek the designation for Wynn’s Everett proposal.
The developers have a few days to respond to the applications.
Chip Tuttle, chief operating officer for Suffolk Downs, which is leasing the land to the casino applicant the Mohegan Sun, said it considers its impact on some of the towns that applied “negligible.”
However the Sun has reached agreements with the following cities Boston, Chelsea, and Winthrop. In the case of Chelsea it proposes to pay $2.5 million annually and spend $2.5 million with area merchants and commit to hiring 5 percent of its workforce from the town. It has proposed that several cities be lumped together: Malden, Medford, Lynn, Salem and Saugus.
Wynn said through a spokesman that the only cities it wants to negotiate with are Boston, Malden and Medford and doesn’t believe the others fit the criteria. Wynn’s spokesman went so far as to say that Chelsea not only would not be harmed by the proposal, “We believe Chelsea will be positively impacted economically by our resort.”
The commission has tried to encourage developers and towns to reach mutually agreeable arrangements, but for those who fail at that, it is prepared to step in and arbitrate.
The petitioners will be asked to make presentations at the commission’s January 28 meeting.
Big bucks can be at stake for towns that do reach agreements with developers. For instance, Wynn Resorts reached an agreement with Malden last fall to pay $1 million each year and commit to hiring preferences for area residents.
For most of these towns traffic remains the main issue.
A lesser-known provision of the law allows non-profit entertainment venues to request mitigation for the effect a casino resort will have on them. The one non-profit that took advantage of this provision was the Massachusetts Performing Arts Coalition seeking mitigation from both casinos for Lynn Auditorium.
One of the neighboring towns of Springfield, Southwick, missed the deadline to file with MGM to be a “surrounding community,” but has decided to petition the state. Board of Selectmen Chairman Russell Fox, quoted by the Westfield News, said last week, “I’d like to send a letter to the state and cc: MGM about our concerns and whether or not we could enter into an agreement.” The town has traffic concerns. The town was late in filing because it was under the impression that only towns abutting Springfield could apply.
However, several towns that don’t share borders with Springfield have signed agreements giving them $100,000 a year if MGM is granted a license.
Slots Parlor
Three rival companies are competing for the single slots parlor license that will be issued by the commission.
Ever since the voters outlawed greyhound racing in 2010, the Raynham-Taunton Greyhound Park’s one allowed activity is simulcast parimutuel wagering. It went from producing $800,000 annually in revenue in taxes for the town to $150,000. That would change to $1.1 million if the racetrack is allowed to convert to a slots parlor.
If it were to win the slots license, the well-maintained clubhouse, restaurant (now closed) and track would be enlivened again. Owner George Carney, 82, who has been in the business since he was 14, has partnered with Greenwood Racing out of Philadelphia. They say they could open a temporary slots casino in the existing facilities within six months.
It would open a permanent facility for 1,250 slots after demolishing the grandstand and converting the old track. This would create 1,400 construction jobs and bring 1,780 permanent jobs to Raynham.
Carney and his family are so well known and loved in the town that its voters endorsed the proposal by a vote of 86 percent last August.
He is also owner of the Brockton Fairgrounds, and has promised to bring back racing there if he wins the casino license. He also promises to spend as much as $7 million on restoring the facility and to use his marketing expertise to attract high-quality horses.
Of course, Taunton is why the Mashpee Wampanoag tribe would like to build one of the state’s three casino resorts.
The commission is expected to make its decision between Raynham, Plainville and Leominster in March. It is holding community hearings in all three towns this month.
Governor Deval Patrick, who will leave office next year, last week submitted a budget that takes anticipate revenue from the slots parlor into account. His $36.4 billion proposed budget includes $20 million in revenue from the casino, which could be operational by the end of this year.
In different but related development, some gaming experts anticipate that one aspect of the Bay State’s gaming law may drive away high money players. Under one reading of the law, gaming tables might have to stop in the middle of play every time a player wins $600 or more in order to fill out tax documents.
Slot machines would also be required to stop functioning when a player wins a jackpot larger than $600.
The state law requires that 5 percent of winnings over $600 be withheld, even if the player later loses the money.
According to David Schippers, spokesman for Penn National Gaming, whose company is in the running for a gaming license in the state, “The machine will literally lock up and the customer will have to fill out paperwork.”
The federal government requires that tax papers be filled out after winnings of more than $1,200 or when a gambler wins a long-shot bet, such as a 300-to-1 bet. Normally table games are not affected by such rules.
Gaming Commissioner Enrique Zuniga says that this nightmare scenario is a possibility. “There is a possibility, an interpretation, that any payment of $600 or more could trigger a taxable event in Massachusetts,” he said recently. He wants the law changed.
Since $600 jackpots happen many more times than wins of twice that amount, the paperwork involved would be substantial and could cause a loss of business to casinos, according to Joe Weinberg of the Cordish Cos., which is an applicant for the state’s single slots parlor license. “You have exponentially more jackpots at $600 than at $1,200. You’d end up with real customer experience issues,” he said last week.
While the tax forms are being filled out, the state is also losing revenue, he said.
Steve Wynn has also raised this issue with the gaming commission. So has the New England Horsemen’s Benevolent and Protective Association, which has written to the commission that the rule is already creating problems at the state’s racetracks and parimutuel betting centers, where the number of winning tickets requiring tax filing rose 60 percent last year.
So far, other than Zuniga, no other commissioner has taken a position on the issue, although the chairman, Crosby, wants the commission to take it up at an upcoming meeting.
Repeal the Law
Meanwhile, several prominent business and civic leaders in the Bay State have lent their support to efforts to repeal the gaming expansion law because they feel it will hurt small business and lead to more crime. A key to their opposition is that they feel state voters should have had a say in the law to begin with.
David D’Alessandro, former chief executive officer of John Hancock, told the Boston Herald, “A number of us felt that the legislature rushed it through, that the leadership had an agenda to only allow, for example, East Boston, to vote, and it looked like a classic, wired bag job. “It’s a bit like the Legislature deciding where toxic waste is going to go.”
He donated $10,000 to Repeal the Casino Deal, which so far has raised $175,476.
Another donor, Fenway developer John Resenthal, said, “I just think casino gambling has never, ever proven anything but being bad for small business and for the economy.”
Looking around at other business leaders, one of who donated $1,000,another who gave $70,000 and another $15,000, Jerry Belair of Meredith Management commented, “These people are business people that understand that casinos are neon lights that sell you something that’s not real. Some people have economic reasons. Some people have moral reasons. Some people have both. … There will be people stepping up. They already have.”
D’Allesandro wonders why there has been opposition to putting their measure on the ballot. “The thing I don’t understand — why anyone thinks it’s a bad idea to allow us to vote. We’re going to change the fabric of some of our communities and our revenue streams and how we’re viewed by other people. Why wouldn’t we be able to vote on that?”
The Massachusetts Supreme Court will decide whether the initiative is constitutional sometime soon. If it passes muster it will be put on the November ballot.
