Massachusetts Town Continues Legal Challenge to Wynn Casino

With MGM Springfield planning too break ground in a few months, the town of Revere continues to try to prevent Wynn Resorts from doing the same in Everett, doubling down on its legal challenge to the gaming giant, based on reports that it is being investigated for money laundering.

The town of Revere, which lost its bid to host the Boston Metro casino, is continuing its legal challenge against the winner, Wynn Resorts, which plans to build a .75 billion casino resort in Everett.

Last month attorneys for the city submitted a memorandum to the Massachusetts Gaming Commission that accuses Wynn of failing to disclose that it was being investigated by the IRS for money laundering. They claim Wynn should have immediately notified the commission when it became aware of the investigation, rather than waiting until it became subject to a investigative article by the Wall Street Journal.

Meanwhile, Wynn has tossed out his initial blueprints for a Wynn tower casino, which regulators hated, in favor of a tower that looks similar to the Wynn tower in Las Vegas. Wynn has also amended his initial proposal to add more hotel rooms and more entertainment, which could bump the amount he intends to spend to $1.75 billion, up from $1.6 billion.

MGM Springfield

The Bay State commission responsible for preserving the integrity of historical buildings in Springfield is concerned about several buildings that could fall victim to the $800 million casino resort that MGM Springfield plans to build in the city’s center.

The 14.5-acre footprint of the casino resort includes a number of buildings that the commission is trying to save. MGM Springfield is still in negotiations with the Massachusetts Historical Commission about several such structures.

The commission has never failed to strike an agreement with a developer to preserve historical buildings. It has the backing of state law that strongly encourages developers to preserve historical resources.

MGM has offered to preserve or replicate historical facades, but that may not be enough to mollify the commission. The commission doesn’t have the teeth to enforce its wishes, but the Massachusetts Gaming Commission does.

MGM has already agreed to preserve and repurpose parts of the old state armory but hasn’t satisfied the commission over parts of the building that it would like to demolish but which the commission insists should be preserved.

Another building that the commission wants to preserve is the First Spiritualist Church of Springfield, which is more than 130 years old. MGM proposes to move the building, which no longer has a congregation attached to it, to a new location with a new use.

MGM has also committed to preserve marble decorated lobby of the former offices of the United Electric Building, built more than a century ago, although it originally wanted to do no more than preserve its facade. 

In a related development MGM has announced the purchase of the 3.2 acres former Orr Cadillac dealership on Mill Street to house the Springfield Rescue Mission, which has had to relocate to make way for the casino. MGM purchased the property for $2.3 million. MGM has agreed to pay for renovating the former dealership to repurpose it for the rescue mission and allow it to expand from 40 to 60 beds.

The casino is expected to begin construction early this year.

Southeastern Casino

The big question remaining for the Massachusetts Gaming Commission is whether a casino will eventually be built in the southeastern casino zone, and whether it will be an Indian casino by the 2,600-member Mashpee Wampanoag tribe.

The tribe hopes to build its “First Light” $500 million casino resort in Taunton.

The tribe continues to wait for a key decision by the Bureau of Indian Affairs, to approve of its application to put 150 acres in Taunton into trust, which would allow a casino there. What complicates that request is that several years ago the U.S. Supreme Court ruled that Indian tribes recognized by the federal government after 1934 cannot put land into trust. The Mashpees were recognized in 2007, but, pointing to its history as the tribe that greeted the Pilgrims when they stepped off the Mayflower, says it has had dealings with first the British crown, including a quasi treaty with King George III, and then the U.S. government for centuries.

Recently a spokesman for the BIA noted that the agency is still reviewing the Mashpees request, which is now more than two years old and said, “There is no specific time frame for a decision at this time.”

With no official decision to point to, the tribe is looking a recent court decision as boding well for its request. On December 12 a U.S. District Court ruled in favor of the Cowlitz Tribe of Washington, which Mashpee Chairman Cedric says, “gives hope to tribes throughout all Indian country.”

The court decision held that land could be put into trust for a tribe recognized after 1934 that was “under federal jurisdiction” prior to that date. The judge ruled that although IGRA in general prohibits casinos being put on land acquired by tribes after 1988 that there are some exceptions. Whether the U.S. Supreme Court will support that interpretation of its 2009 “Carcieri” decision remains to be seen.

The Obama administration has been consistently more helpful to tribes seeking to put land into trust than any previous administration. Among the many questions that the BIA must take into consideration is whether the tribe has both ancestral and current ties to the Taunton property. Most of the tribal members hale from the Fall River-New Bedford part of the state.

Although the legislature set aside a license for the tribe in the southeastern zone, it came with a requirement that the tribe meet certain conditions, among them putting land into trust. Since that has not yet happened the Massachusetts Gaming Commission opened bidding for the zone to commercial developers.

After delaying the deadline for submissions several times, the commission now is asking for submissions by the end of January.

Outgoing Governor Deval Patrick, who supported the gaming expansion act of 2011 and insisted on it including a section setting aside a license for the Mashpees, said in an interview shortly before leaving office that the commission should put off making a decision to accommodate the tribe.

“We’re done,” he said, adding, ““It was never anticipated that there would be more than three destination resorts.” The implication is that if the commission awards a license to an entity other than the tribe nothing prevents the Mashpees from later offering gaming as a sovereign tribe since it already has a gaming compact with the state.

Patrick said the federal government is dragging its feet on the Mashpee request. “I wish the federal government would make the call on the land in trust for the tribe. That uncertainty is problematic. They’ve given us all kinds of windows. At one point, they were saying by the end of this calendar year. I have bitten my lip more than once, in terms of trying to second-guess some of their decisions in this region. But I’m going to continue to bite my lip.”

Incoming Governor Charlie Baker has already indicated that he doesn’t want to rush in issuing another license. However, the gaming commission operates independently of the governor’s office. That doesn’t mean that it operates in a vacuum and Commission Chairman Stephen Crosby told an interviewer last week that the panel doesn’t want to encourage too many casinos.

“Absolutely not. It’s not in anybody’s interest. It’s not in the tribe’s interest. It’s not in the commercial casino’s interest,” he said. “It’s oversaturation.”

However, he added that it would be unfair to make the communities of that part of the state who want a casino to wait indefinitely.

At this point, the only commercial developer to submit an application and pay the fee is KG Urban, which wants to build in New Bedford. Others fear competing with the tribe, which under federal law would not have to pay the 25 percent share of the revenues required of a commercial casino.

New Bedford’s mayor, Jon Mitchell, who has never been a big fan of the KG Urban proposal, commented, “The market here in the Southeast is clearly weaker than it is in the other two regions. We’re not holding our breath, but we’re also open for a good proposal still.”

The commission has awarded a license for the slots parlor to the Plainridge harness racing track in Plainville, which is currently under construction. It has also issued licenses to Wynn Resorts for a casino in Everett and to MGM for a casino in Springfield.

Meanwhile, Crosby addressed the fears of those who say that the three casinos approved for New York state in December will over saturate the market, hurting the debut of the Bay State casinos. He said the commission has taken such developments into account.

The chairman told the Boston Herald last week, “The Springfield facility is going to take a backseat to nobody. I think we are going to have by far the most compelling, most competitively well-positioned facilities out there.”

Michael Paladino of Fitch Ratings is not convinced. He told the Herald, “We do think the market in the Northeast is saturated, particularly with the competition coming online in New York and Massachusetts. It means that, generally, new competition has limited ability to grow the market, and essentially cannibalizes existing properties to a great degree.”

Richard McGowan, an expert on gaming based at Boston College, worries that Massachusetts faces the same fate as Atlantic City. “In the long run … you’re going to see a repeat of Atlantic City, eventually. There’s going to be too many.”

ATMs at Station

In a related development, on December 24 Bay State lawmakers voted to allow ATMs in the state’s casinos.

Some lawmakers were very critical of this move. State Senator James Eldriidge fears predatory practices among casinos and making it easy for gamblers to access their money.

“We know they are already very predatory in casinos,” said Eldridge. “And the ability of some of these banks or financial services to data mine in that information is particularly troubling.”

The gaming commission also is worried about lifting the ban, and issued a statement: “If the Commission is asked for an opinion, it would support a ban on ATMs from the gaming area, yet do not believe in that it is reasonable to ban ATMs from the whole entire destination-resort.”

The change to the law keeps the ban of ATMs from being located in the same area as slots and tables, but allows them to be located on the premises. This does not prevent federally chartered banks from negotiating with the casinos to locate ATMs in the gaming area.

Senator Majority Leader Stanley Rosenberg said that the purpose of the law is to keep ATMs off the gaming floor. “There’s a subtlety here that people are missing. The intention of the amendment is actually the reverse. No ATMs on the gaming floor.”

Les Bernal, executive director of the Stop Predatory Gambling Foundation, says that if that is the intent, the just adopted law won’t accomplish it.

Bernal told the Republican, “If the intent is to prohibit ATMs on the premises of casinos, then they’re way off the mark because this allows ATMs to be on the premises now and the biggest vendor of casino ATMs doesn’t meet the criteria that they’re prohibiting.” He added, “Why do it on Christmas Eve morning when no one is watching. This is a huge issue with tens of millions of dollars to casinos at stake and if there are good intentions then why not ban Global Cash Access and don’t narrow the definition to the casino floor.”

Rosenberg countered, “A lot of people will go to these facilities and they’ll be there for entertainment and meals and stuff like that, and shopping. Not fair to keep them from getting access to ATMs. People in the heat of the battle with your slot machine may run out because they’re convinced that the next play is going to do it. No. Don’t want that dynamic in our casino.”