The Massachusetts Gaming Commission last week granted MGM Springfield its request for a one-year delay in the opening of its MGM Springfield casino resort, moving the scheduled opening to September of 2018. The vote to grant the request was unanimous.
The developer will now seek a similar approval from the city of Springfield. The city would need to agree to amend its host community agreement with MGM, which currently calls for a February 2018 opening.
The developer asked for the delay because of roadwork on Interstate 91, where the 50-year-old viaduct will be rebuilt. Because of its proximity to the casino, MGM feared that it would cause traffic gridlock and discourage visitors. During the construction the exit next to the casino site will be closed for some time. The action by the commission allows the casino to open one month after the viaduct is completed.
MGM officials are worried about a possible “snowball effect” if the casino has an opening replete with news reports about traffic delays.
MGM Springfield President Michael Mathis told the commission: “We didn’t make this decision easily to push out the date, but it’s the best decision for us and the commonwealth.”
Because of the delay the Bay State will lose $125 million in casino revenues, according to some estimates.
The commission also approved a historic preservation agreement between the developer and the Massachusetts Historical Commission, which will preserve some of part of several landmark buildings from the previous century and renovate others. In some cases the most historically significant parts of the buildings will be preserved or incorporated into the casino’s structure. The pact spells out details of how the buildings will be preserved.
The agreement also establishes a trust fund that will be used to further maintain and preserve historic buildings in the city’s South End.
The delay does not mean that work will stop on the casino project. According the Springfield’s chief development officer, Kevin Kennedy, quoted by the Republican, “We will start to see demolition and construction ramp up as we move into the fall. We had to be patient as we approached the regulatory issues that come with an $800 million development.”
For the next few months MGM will continue to finalize state and city permits.
Meanwhile, MGM is moving forward with its federal lawsuit against the state of Connecticut that seeks to put a crowbar in that state’s plans to allow its two gaming tribes to site a satellite casino aimed at minimizing the MGM Springfield’s economic effect on their gaming operations.
MGM’s lawsuit claims that by granting a monopoly on a third casino to the Mohegan and Pequot tribes that Connecticut is violating the equal protection clause of the U.S. Constitution.
Connecticut Governor Dannel P. Malloy sounded unconcerned. “You can sue anybody for anything. Winning is the hard part.”
MGM’s lawsuit is an admission that the satellite casino that one of its executives once dismissed as “a box of slots” is perceived as being a true threat. In effect MGM worries that Connecticut might undercut its own efforts to take some of Connecticut’s money.
MGM’s lawsuit is partially based on warnings that Connecticut Attorney General George Jepsen made earlier this year when the legislature was considering a law that would allow the tribes to build one or more satellite casinos. At that time he warned that the legislature was flirting with violating the U.S. Constitution.
Jepsen will now be in the peculiar position of having to defend a law that he warned against.
Some have suggested that if MGM prevails in federal court that Connecticut could redraft the law, but allow others to compete for the satellite casino. Odds are, they say, that the tribes would win the competition.
Wynn Everett
Wynn Resorts will spend an estimated total of $850 million in community litigation payments, payments to the city of Everett and road improvements around the area where its $1.7 billion casino will be built. The money will be expended over the next 15 years, the period of its license to operate a casino.
About $200 million of this will be devoted to transportation, including creation of a water shuttle and subsidies for additional Orange Line subway service to the Everett casino, which will be built on the former site of a Monsanto chemical plant overlooking the Mystic River. Wynn also plans to build a bridge across the river for bicycles and pedestrians.
The Wynn organization is waiting for a permit later this month from the Office of Energy and Environmental Affairs. This permit will allow the developer to move forward on other permits as well as allow a purchase of property from the Massachusetts Bay Traffic Authority to proceed.
The state agency forced that sale to be reversed. Currently the sale is in escrow until the agency is satisfied. Satisfying it includes submitting an environmental impact report of more than 10,000 pages.
Wynn executives, including Wynn Everett President Robert DeSalvio, gave a progress report to the commission at last week’s meeting.
Meanwhile the verbal sparring between Steve Wynn and Boston Mayor Martin J. Walsh continued on the airwaves and in print.
The mayor admitted to the possibility that he might have misunderstood Wynn when they talked on the phone a few weeks ago, and the mayor later claimed that Wynn had offered several hundred million dollars to the city to make its lawsuit challenging the Everett casino license go away.
Walsh said “Maybe I misheard him. I don’t think I’d mishear something like that. But if I did, I said to Mr. Wynn on the phone, ‘If I misunderstood I apologize for that.’ ”
The mayor made that claim during an interview with WGBH radio. Wynn immediately denied that he made such an offer.
Walsh has sued the gaming commission to try to reverse the awarding of the license. During the course of that action, information has been released that implies that Wynn improperly received information from state and federal prosecutors about an investigation of a convicted felon, Charles Lightbody, who was a secret owner of the land that Wynn purchased for the casino. Wynn’s attorneys have threatened to sue Walsh for defamation over those allegations.
Noting that the Bay State does not have a shield law to prevent journalists from being hauled into court to testify in lawsuits, Wynn vowed to find out who leaked details of the investigation to reporters.
The fact that Lightbody was a secret partner in the land deal was discovered when investigators heard his phone conversation.
Wynn described that conversation: “this moron Lightbody called some hoodlum in jail. . . . These two idiots had a conversation.” In that conversation Lightbody mentioned that he had not sold his interest in the casino property. This led to other owners of the land trying to hide Lightbody’s interest. “Should we be punished for that?” asked Wynn.
Last week Wynn pronounced himself to be frustrated with the process. He declared, “I’ve had enough of Mayor Walsh. I can’t negotiate with him. The man is obviously irresponsible. The mayor has to get off his butt.”
When Walsh heard of that comment, he turned it around on Wynn. I don’t know what he means by he’s had enough of me,’’ he. “But I interpret that as he’s had enough of the people of Boston, because I represent the people of Boston. And if he has a problem with the people of Boston, he better rethink as far as how he negotiates.”
Walsh insists that the Boston neighborhood of Charlestown should be allowed to vote on the casino, although the casino is located in the neighboring town of Everett.
Last week he told the Boston Globe, “There’s going to be a large impact on the people of Charlestown with Sullivan Square and traffic and Rutherford Ave. People are going to be cutting through the community of Charlestown to try to beat Sullivan Square because of the problem that it is today. And they do it right now, without a casino.”
Wynn has said that Walsh wants him to pay for improvements to solve problems that have existed for many years.
Walsh later made comments that suggested the high-octane rhetoric is a negotiating tactic. “I think that at some point, maybe, we can have a conversation,’’ Walsh said. “My phone is always on. I have disagreements with family members. You don’t take it personally. You move on.”
Wynn’s position is that when Walsh refused to negotiate a surrounding city agreement with Wynn that the commission imposed one—and that Wynn is not required to negotiate another one.
Meanwhile, Wynn says he’s not going to buckle under the pressure and pull out. “The chances of us leaving are zero,” he said.
Southeastern Casino zone
The commission unanimously decided to move forward with the licensing process for the southeastern casino zone (aka Region C), despite the fact that there is only one contender, Rush Street Gaming, which proposes to build on the Brockton Fairgrounds as Mass Gaming & Entertainment.
Representing Rush and the fairground’s owner, George Carney, Joe Baerlein told commissioners that the $650 million casino resort could open by the spring of 2018. Mass Gaming & Entertainment Chairman Neil Bluhm and Brockton Mayor Bill Carpenter also spoke, serving to allay possible fears about the company’s ability to proceed.
“We believe if we could get a license by the end of this year, we could be up and running by either the late spring or early summer of 2018. We are shovel-ready to go,” said Bluhm. He added, “We’re convinced that a Brockton project will be successful. This market is basically under-penetrated.”
Ever since the New Bedford proposal fell off the map, there had been speculation that the commission might delay issuing a license or even reboot the entire process to encourage more competition.
Following the vote Mayor Carpenter was enthusiastic. “It’s great news for the city,” he said. “I’m very pleased with the Commission restating their commitment to stay on course with the schedule they previously established with the licensing process for Region C.” His city will collect $12 million a year if the casino is built. This will enable it to rehire teachers the city has been forced to lay off.
The mayor lobbied energetically with the commission prior to the vote. “And to punish them because the other applicants fell short of the mark is just grossly unfair, and it’s punitive to not just Brockton, but the metro south region,” he said before the vote. “If I’m them, and there’s any type of delay in the process, I’m suing, and I’m going to get a lot of money.”
Allowing the process to go forward with one applicant is not the same thing as guaranteeing that a license will be granted to that applicant. The commission has stated several times that it retains the option of not issuing a license for Region C.
Commission Chairman Stephen Crosby reiterated that last week. “We should stick with the process that we’re on. But we are under no obligation to issue a license in Region C unless it is beneficial to the Commonwealth,” he said.
He added that the commission wants to see more details on the proposal from the developer, who has until September 30 to submit them. The commission is interested mainly in how the developer plans to raise the minimum $500 million needed to go forward.
Crosby said, “When they finish their application, we’ll know what they’re really doing, what kind of a deal is this, have they really hit the $500 million minimum, are their financial projections plausible, is their financial backing sufficient, all that sort of stuff.” He added, “We want to know what we can get from the commercial markets before we make the final decision on whether to proceed or not.”
Possibly the biggest hindrance to the New Bedford casino was that KG Urban was unable to get financing for it, due to concerns about the possibility that the Mashpee Wampanoag tribe will eventually be able to put land in Taunton into trust and build an Indian casino.
Bluhm said he doesn’t fear that. “We’re convinced that the Brockton project will be successful if we do it and we’re the only casino, and it will be successful if there is an Indian casino in town,” he told commissioners. He called his project, “shovel ready.”
He argued that the Brockton site would attract a market pool four times what New Bedford would have and what Taunton will be able to tap. “You’ve got to have people to be successful,” he said, adding that New Bedford didn’t have the demographics for success.
As for the Mashpee Wampanoag threat? “The tribal casino is very uncertain,” he said.
Brockton’s voters in May approved of the project, although by a narrow margin.
Meantime, some critics of the process in Massachusetts wonder aloud why that four years after the legislature passed the Expanded Gaming Act, that none of the three casino resorts authorized have opened.
According to New England gaming expert Clyde Barrow, interviewed by WGBH, “Massachusetts is already four years into this process. It will be six before a resort casino opens. That’s longer than any state in the United States has ever taken between the time legislation passed and a casino opened.” This causes the state to lose $400 million a year in casino taxes, he said.
It also means that the creation of 10,000 jobs, cited as a main reason for the legislation, is being delayed.
Barrow attributes some of the delay to the leisurely licensing process, in large part because state officials went out of their way to appoint commissioners who had no prior experience in gaming.
Delays were also caused by the fact that the law required casino developers to get host community agreements with the towns where they wanted to build, and to persuade voters to approve them.
Boston College professor Rich McGowan says the end result will be much better than if the casinos had been rushed. He told WBGH, “This industry depends on legitimacy,” McGowan said. “And so it has to move slowly. It can’t move too quickly. People would be upset if they didn’t get a chance to say one way or another how they want these casinos to be operating. And if the casino got rushed through, I think people would have all kinds of problems.”
Another delay has been caused by disgruntled cities whose favored projects didn’t get a license for the Boston metro market suing to stop Wynn Everett from going forward. The litigants include the city of Boston, plus Revere and Somerville.
Crosby, who had no experience in gaming when he was appointed as chairman of the commission, defends his organization’s deliberate pace. “Given that we were a brand new agency, given that we had this complicated law, given that we had made integrity and competition the highest priorities, given that the legislature granted such extensive local control to the communities involved here, taking all of that together, I think we have taken the time that we should appropriately have taken. And yes, we would love to have jobs and revenue sooner, but not at the cost of getting the very very best deals.”
While U.S. District Court Judge Dennis Saylor considers arguments in the case of the state of Massachusetts’s et al lawsuit to stop a Class II gaming casino on Martha’s Vineyard from being built by the Aquinnah Wampanoag tribe, members of the tribe themselves will vote this week on whether to pull the plug on the project.
The lawsuit was filed nearly two years ago at the time that the tribe first claimed that it had a right to build a casino, despite having signed a land settlement in the 1980s in which it promised to abide by local and state regulations.
But it didn’t really become active until last month, when the tribe started actual construction activities. At that time the town of Aquinnah, the state, and others trying to stop the casino asked for and got a temporary injunction.
The tribe wants to convert an unfinished 6,500 square foot community center into a gaming hall with high stakes bingo. It would not be a Las Vegas style casino with table games or poker.
Although the judge in federal court in Boston is hearing the arguments this week, he won’t actually issue a ruling until later in the year.
Because the tribe was ignoring the town of Aquinnah’s blandishments that it couldn’t proceed without building and health permits, the judge issued a temporary restraining order until after he makes his ruling.
Meanwhile the tribe’s 1,200 members will vote on the casino. The referendum occurred because many tribal members, many of whom live on the island, object to the casino. They gathered 70 signatures, enough to force a vote. They are working with handicap, however, since they must muster a two-thirds majority to overturn the previous decision to build.
During the tourist season the island’s population increases by six fold. That often includes the president of the United States and his retinue. The rich and family often mingle with the island’s population, frequently keeping a low profile.
Supporters of the casino argue that a modest facility would generate about $4.5 million, enabling care for the elderly and uplifting the generally poor tribal population.
In court testimony tribal Chairman Tobias Vanderhoop said the additional money was “sorely needed,” and that the casino would hire local people to work.
Cheryl Andrews-Maltais, chairman of the corporation that would run the casino, notes that currently the tribe gets nothing from the tourism that bloats the island’s population each summer. “We hope to be another entertainment venue for folks to visit so we, too, can capitalize on the industry that keeps the island economy going.”
The battle is a fight between the tribal members who live on the island, about 300, and the rest of the tribe, who live on the mainland.
One major problem that the town of Aquinnah has with this project is that it feels that the tribe is not equipped to operate such an operation. Felicia Ellsworth, attorney for the Aquinnah/Gay Head Community Association, one of the litigants, told the judge “The police force, the fire and ambulance service are all provided by the town, not the tribe,” adding, “The tribe doesn’t have a school system, there’s no taxing system, no health board, no criminal code, no prosecutor, no jail.”
The tribe countered that it employs two tribal rangers and a harbormaster and provides housing and health services for its members. Its attorney, John Duffy, argued “What you have here is a thriving tribal government that is looking to do more but is already doing far more than what’s required.”
Although the tribe did sign an agreement that it would abide by state and local land use laws, it argues that the Indian Gaming Regulatory Act of 1988, which came about a year later, takes precedence.
Assistant Attorney General Juliana deHaan Rice argued that the tribe is still bound by its land settlement agreement, whether or not it is normally allowed to operate an Indian casino. Under that agreement, which was passed by Congress, 500 acres of disputed land the tribe had claimed for centuries was transferred to it and put into trust. According to Rice it is unlikely that Congress would have passed an ordinance and then adopted another ordinance within a year that mooted it.
The tribe unsuccessfully tried to negotiate a tribal state gaming compact with former Governor Deval Patrick, who based his refusal on the tribe’s land settlement agreement.
According to the tribe, the governor acted in “bad faith” by refusing to negotiate, which means the state has “turned its back on the very opportunity to have a voice,” in what the tribe does on that land.
