The Massachusetts Gaming Commission may award the first license for the state’s three casino resorts before the month is over once the panel has completed four days of meetings. The only remaining applicant for the Western casino zone is MGM International.
The commission last week laid out the timeline for issuing the license for the Western casino zone. It will meet in Springfield, where MGM International is the remaining contender for the license, on June 10, 11 and 13 and in Boston on June 12. It plans to issue the vote on the 13th.
MGM proposes an $800 million casino dubbed the MGM National Harbor Casino and Resort on about 15 acres in Springfield’s South End, in the downtown area, formerly a vital industrial district, which is now run-down. Although MGM is the only remaining proposal, the commissioners have emphasized that they are not required to issue a license. The proposal has the support of the city’s government, as well as of the voters, who approved it last summer. The city has one of the highest unemployment rates in the Bay State.
According to Commissioner James McHugh, “Look, this is a major project for a major section of the city with major implications. We are taking this very seriously, even though there is only one applicant.”
The commission is required by law to consider the following factors in issuing a license: the project’s finances and revenue projections, economic development potential, site design, and impacts to traffic and local services. Each commissioner is charged with presenting an evaluation of each of the major factors.
Among the issues to be resolved is whether the commission honors MGM’s request to delay collecting the $85 million licensing fee until after the fate of the repeal initiative is decided by the Supreme Judicial Court. The court is likely to rule in July on whether the measure can be placed on the November ballot.
Not that MGM isn’t behaving like it’s going to build the casino. It has already started the process of soliciting potential employees for the new facility. It will hold a jobs fair June 19 with the goal of filling thousands of positions. The casino is expected to need about 4,000 employees.
The drawn out process of casino approval that the legislature created for the commission gives Massachusetts the distinction of being the slowest state to open a commercial casino in the U.S. Under current best estimates the first resort casino will open by the end of 2017, six years after the legislature approved the Expanded Gaming Act of 2011. No state has taken more than four years to accomplish the same thing.
The state’s first casino, the $225 million slots parlor in Plainville, is scheduled to open on June 26 of 2015. Groundbreaking was in March and structural steel will start going in this summer.
The much more comprehensive casino resorts are taking much longer.
Boston Metro Zone
At one time the commission expected to issue the Boston Metro license in June also, however when Boston Mayor Marty Walsh insisted that his city be considered a “host community,” with veto power over the proposals for neighboring Revere and Everett, the commission was forced to slow down. Last month the panel rejected Walsh’s contention. He has not ruled out going to court to try to challenge that decision. That pushes the final vote awarding the license to August or September.
The contenders are Steve Wynn, who proposes a $1.2 billion project in Everett, and the Mohegan Sun/Suffolk Downs, which propose a casino resort in Revere.
The issuing of a Boston Metro license has been further complicated by the fact that Chairman Stephen Crosby was forced to recuse himself from deliberations on that license. This is due to his faux pas of attending a reception at the Suffolk Downs racetrack, whose partner the Mohegan Tribe is one of the bidders for the license.
Another problem for Crosby, a lawsuit by Caesars Entertainment accusing him of bias towards the Steve Wynn proposal, was removed last week when a federal court judge dismissed the case.
Caesars Lawsuit
A federal court did not buy Caesars arguments that Crosby had demonstrated bias against Caesars when it was in contention for the license, before voters rejected the joint project of Suffolk Downs and Caesars for Revere in November.
Before that election Caesars was forced to withdraw from the partnership after the commission’s investigators found troubling aspects about Caesars, such as its business relationship with an alleged Russian mobster, and Suffolk Downs feared that it would fail its background check.
The lawsuit noted that Crosby failed to disclose a previous business relationship with a partner in Steve Wynn’s Everett proposal.
Judge Nathaniel Gorton, said that the plaintiff had used “a series of improbable inferences,” “resting on the shaky foundation of a number of naked assertions” in constructing its case against Crosby. He concluded, “Courts must accept well-pled facts as true but need not indulge in improbable conspiracy theories.”
Crosby took a moment after the ruling to quietly crow that Caesars’ claims had been “specious.”
However the gaming giant is not folding up its tent. It plans to appeal to the U.S. Court of Appeals for the First Circuit. Gary Loveman, chief operating officer of Caesars declared, “Throughout his ruling, Judge Gorton acknowledges the merits of the claims made by Caesars in its lawsuit. The opinion states that the court is ‘disturbed by Crosby’s failure to avoid the appearance of impropriety and convinced that public trust in the casino licensing process has suffered as a result.’
“The ruling further acknowledges Crosby’s ‘ethical lapses.’ The company emphatically disagrees with the court’s assertion that it is not empowered to rule on these ‘lapses.’ ”
Southeastern Casino Zone
KG Urban has long wanted to build a casino resort in the historic whaling town of New Bedford along the waterfront; wanted it so badly that it sued the state in federal court to challenge the provision in the state law that gave a special preference to a federally recognized Indian tribe.
Although KG has finally dropped its federal lawsuit, the playing field has changed somewhat since the state gaming commission opened up the zone to commercial bids last year. Now KG appears ready to partner with Foxwoods.
The Standard-Times of New Bedford broke the news last week that KG and Foxwoods are in talks since. Apparently, Foxwoods has decided to abandon its proposed $750 million casino in Fall River. It is apparently not talking about a waterfront casino, but is interested in the Whaling City Golf Course as a site.
The $500 million KG proposal doesn’t have the support yet of Mayor Jon Mitchell, who doesn’t think a waterfront casino would be viable in the town, although the casino would replace an abandoned power plant and revive the district. Mitchell has previously supported the golf course as a casino site and is credited with being the moving force behind this new proposal.
KG conceded the possibility of working with Foxwoods. A spokesman told South Coast Today, “They’re a qualified operator and capital partner and we would be interested in working with any qualified operator and capital partner.” So far Foxwoods has declined to say whether it is interested in such a partnership. Foxwoods previously sought to build a casino in Milford, but that town’s voters overwhelmingly defeated the proposal.
Most business leaders and politicians in New Bedford appear to like the idea of such a joint venture. According to Tony Sapienza, who runs the local Joseph Abboud franchise, “The city needs the tax revenue,” he told South Coast Today.
City Council President Joseph Lopes added, “It would be an economic development engine. It’s a catalyst for additional tourism. It would be a solid contributor to the tax base and relieve some of the tax burden on homeowners.”
“I always thought that location was ideal,” commented City Councilmember Brian Gomes. “I always thought it was the best location.”
Another city councilmember, Kerry Winterson, said that the golf course, which the city owns, was, “the ultimate compromise location.” The property is worth an estimated $15 million. The city would have to sell the land to the tribe for it to legally develop the property.
The waterfront does have its supporters, such as city councilmember Debora Coelho, who said, “I think it’s in the best interest of New Bedford to go with KG because that would bring more tourism to downtown and the waterfront and, the big factor, they’re going to clean up an environmental disaster.”
To make the proposal happen, Mayor Mitchell has asked the commission to extend the July 23 deadline to submit an application by 60 days. New Bedford has also asked for a waiver of the requirement that a town wide host community vote be held prior to filing an application.
Fall River Mayor Will Flanagan said he intends to fight New Bedford for the rights to a casino, and to oppose the extension. “I commend Jon Mitchell for asking for an extension of the July 23 deadline. If our roles were reversed, that’s what I would do,” he told South Coast Today. “However, I can’t sit on the sidelines idly as New Bedford enters the game.”
He added, “It’s very important they be held to the deadline, because Fall River will meet the deadline and be the only community with an application in Region C (the Southeastern zone).”
That doesn’t include the application by the Mashpee Wampanoag, who want to build an Indian casino in Taunton.
A proposal by the Department of the Interior to make it easier for tribes to take land into trust could remove a question mark that has hung over the tribal application. The new proposed rules would allow tribes that have been under federal recognition since 1934 to put land into trust. This addresses a 2009 U.S. Supreme Court decision, the “Carcieri” decision that says that tribes recognized after 1934 cannot put land into trust. The Mashpees were recognized in 2007, but maintain that they have had a relationship with the state and federal governments since 1789 and before that with the British Crown.
Flanagan maintains that all of these roadblocks create an impossible hurdle for the tribe to climb.
That means that the state has lost momentum that could place it at a disadvantage as neighboring states add casinos, leading to some industry experts to speculate that the New England market could soon become saturated.
Not all agree, however. According to Boston College economics professor Richard McGowan, quoted by South Coast Today, “Since Massachusetts is the last big market in the northeast, it does not hurt that much except it does allow the two Connecticut casinos to try to build loyalty.”
Clyde Barrow, formerly of the Center for Policy Analysis at UMass Dartmouth, agrees that the delays were built into the process by the legislature, but that Governor Deval Patrick and other state officials added to the problem by appointing commissioners with little knowledge of gaming. As a result they had to spend much time getting up to speed.
“One of my main concerns from the very beginning is that the governor was so preoccupied with notions of ethics and conflicts of interest, that he appointed commissioners, other than Gayle Cameron, who knew absolutely nothing about the industry. They spent a year and a half just trying to learn the terminology,” said Barrow.
Elaine Driscoll, the commission’s spokesman, points out that many municipalities impacted by the proposed casinos have wished repeatedly that the process were much slower. “We are frequently asked by municipalities to slow down or to extend deadlines so that they can complete impact studies, further negotiations, etc.,” she said.
Possibly the main factor that has stretched out the approval process is Massachusetts’s almost unique requirement that host communities vote on the proposed casinos. It also requires that casino developers reach agreements with surrounding communities on mitigation. These factors add time to the process.
All that could be rendered moot if the voters approve a referendum repealing the 2011 law.
Meanwhile, the gaming commission has requested that the legislature do a little fine-tuning on the 2011 law before it goes into summer recess. It is asking lawmakers to alter a provision of the law that requires that players fill out tax forms and have money deducted from winnings every time they cross a $600 threshold, a threshold that is about $1,200 in most other states.
Wynn has said that the law as written could prevent it from operating the $1.6 billion casino it proposes in Everett.
The commission also asked for some flexibility in the rules forbidding hiring of employees with criminal records, even if the crimes occurred many years ago. Strict rules would still apply to dealers and other who handle money, but not to those working in hotels and restaurants.
The commission would like the law amended before Penn National Gaming begins hiring workers in January for its Plainridge slots parlor in Plainville.
The commission has also recommended that the legislature include a provision that would refund the $85 million licensing fee as well as a variety of other upfront fees to casino operators if the voters repeal the casino law in November.
Repeal the Casino
In a separate but related development, the Massachusetts Council on Compulsive Gambling last week found itself backpedaling furiously after sending out a mass email urging gambling opponents to work to repeal the Bay State’s 2011 casino law, the same law that promises to pay the council $5 million annually to help treat compulsive gamblers.
The email had urged supporters of a referendum that would repeal the law to gather signatures to help qualify it for the November ballot and provided contact information for the measure’s sponsor, Repeal the Casino Deal.
The following day the council’s director, Marlene Warner, sent a follow-up email apologizing for not being clear that the email had been from a third party. She stated, “The subject line and content do not reflect the position, mission, or vision of the Council. We don’t advocate for or against legalized gambling. But we do unapologetically act as a conduit for information, whether it is scientific, popular, advocacy, or programmatic in nature, to be passed on to those who need it, however they approach it.”
This prompted Repeal the Casino Deal’s Chairman John Ribeiro to suggest that Warner had been pressured to issue the correction. He told the Boston Herald, “It makes no sense to reasonable people that a group dedicated to helping compulsive gamblers — and its funders at the Department of Public Health — wouldn’t be opposed to casinos.”
Meanwhile more than 100 proponents of the repeal initiative continue to gather signatures, calling their struggle a “David vs. Goliath” battle, with the gaming developers cast in the role of the big guy. The “repeal” people are still gathering names, although if the Supreme Judicial Court rules their measure unconstitutional, it will all be for nothing.
A total of 11,485 signatures must be turned in to the attorney general by June 18. They would join more than 72,000 that had already been collected when their efforts were halted by an adverse ruling of Attorney General Martha Coakley.
The court is considering the appeal of Repeal the Casino Deal, which has appealed the original ruling by Coakley that the initiative violates the U.S. Constitution by taking away property (the licenses) without compensation and would impair contracts between the gaming developers and the state.
Whatever the court decrees, the two Republican gubernatorial candidates, Charlie Baker and Mark Fisher, have come out in favor of allowing the ballot question in November. During a candidates forum held in Boston last week Fisher said he would also vote for the repeal, while Baker remains undecided. One of the two men could possibly face Coakley in the fall; she is the leading Democratic contender at the moment.
“I haven’t made my decision on that one yet,” said Baker during the forum. “I’m still chewing on that. But I do think it belongs before the voters.” He favors one casino over the four total casinos that are now authorized by the law.
Fisher said, “I don’t think casinos are a good thing.”
