The Massachusetts Gaming Commission last week voted to decide at its next meeting whether to grant a request by MGM Resorts to postpone action issuing a license for the Western Casino zone. MGM is the only applicant.
The commission voted at its April 17 meeting to delay voting on that request at least until the next meeting.
MGM, which has so far spent $40 million to get this far, doesn’t want to be obligated to spend up to $200 million more in fees while the question of whether a ballot measure that could repeal gaming in the Bay State is allowed on the November ballot remains unresolved.
That question is currently before the state’s Supreme Judicial Court, which could decide by July if the referendum is allowed to go forward. The measure is being pushed by Repeal the Casino Deal. Attorney General Martha Coakley initially ruled that the measure is unconstitutional, but Repeal appealed her ruling to the high court.
The process moved forward last week when Coakley filed a 111-page brief with the court supporting her ruling. The other groups involved in the case also met the deadline by the court for filings.
Predictably, the referendum is playing a part in the state’s upcoming elections. Maura Healey, a former assistant attorney general running for Coakley’s job, last week said she opposes casino gaming and supports the ballot measure that her old boss ruled against.
She commented, “I do not believe a modern economy that is focused on creating opportunities for every person can be built on gambling.”
Once its license is issued, MGM will be obligated to pay the state $85 million within 30 days, and a total of $115 million more within a short time.
“I don’t think anyone would expect our company or any publicly traded company to be in a position to write $200 million worth of checks while that cloud of doubt hangs over us,” wrote MGM Springfield President Michael Mathis in a letter to the commission. At last week’s commission hearing he suggested that one way around this would be for the commission to issue a “provisional” license that would not require payment of the fees.
Officials with Repeal celebrated MGM’s request as a sign the group is getting traction.
“The $85 million application fee isn’t much to a company which earned nearly $1 billion off the backs of its customers last year,” John Ribeiro, the group’s chairman, said in a statement. “But it is telling that our grassroots movement has made them blink about this bad bet.”
However, a poll by Western New England University released last week indicated that the Bay State’s voters still support gaming. The poll showed that 59 percent of adults support casinos in the state, with 34 percent opposed.
Should the request be granted by the commission, the state budget would be impacted.
The budget for the fiscal year ending June 30 predicted $195 million in casino-related licensing fees, including $25 million from one slots parlor and $85 million each for two new casino licenses, one in eastern Massachusetts and another in western Massachusetts.
MGM has already persuaded the voters of Springfield to support its proposed $800 million casino resort. Putting that same decision before all of the voters in the state is a riskier proposition.
The resort would include a 250-room hotel and possibly an 80-room boutique hotel that would be built in partnership with Peter Picknelly’s OPAL Real Estate Group. The hotel would be converted from an existing but vacant building on Elm Street. The casino would manage and staff the hotel. The Picknelly family has long supported gaming in Springfield and was involved with one of the plans that was unsuccessful.
Meanwhile, the arbitrators chosen by the gaming commission to put together a deal between MGM and the towns of Longmeadow and West Springfield will have the document ready in about three weeks, according Mathis. The two towns are the only “surrounding” communities that have not reached mitigation agreements with MGM.
Boston Metro zone
As competition heats up between Revere and Everett for the Boston metro casino license, cities that are in that region are generally staying neutral.
The license decision, which was going to be made in May, has been postponed until August to give Boston’s mayor, Martin J. Walsh, a chance to argue the case that his city should be given the status of host community for both casino proposals, although Revere and Everett are outside of the city’s jurisdiction.
Speaker of the House Robert A DeLeo, who shepherded the gaming expansion bill of 2011 through the House, said last week that the law never intended for cities outside of the boundaries of the city hosting a casino to be designated as a “host community.”
“What we foresaw a host city would be is the city in which the casino or facility would be located. So I’m not sure Boston would be considered as such,” said DeLeo. He added, “I’m not sure exactly what that would mean, quite frankly, whether that would mean certain other communities could then go back and say, ‘Well, we should be considered a host community as well.’ ” He said that could open “a whole Pandora’s box.”
The mayors of Revere and Everett, Daniel Rizzo and Carlo DeMaria respectively, are out very publically touting their cities. Other mayors are remaining circumspect as to which proposal is better.
A few are taking sides, such as Jay Ash, city manager of Chelsea City. He supports the Revere proposal of the Mohegan Sun for Suffolk Downs racetrack.
According to Ash, quoted by the Boston Globe, “The Suffolk Downs location is a superior site. It’s closer to the airport and not in the middle of an industrial area. It’s proximate to Revere Beach and the town of Winthrop and other historic locations.”
Locating it at a racetrack is also a plus, he said. He added, “I am convinced the Mohegan Sun people really want to have a positive impact on the entire region, and I get a sense that the Wynn proposal is all about Everett and nothing more than that.”
Chelsea City has negotiated a surrounding community agreement with the Mohegan Sun, while it has no agreement with Wynn.
Melrose Mayor Robert J. Dolan echoes those concerns, and adds that the Mohegans have cooperated with his city more than Wynn.
Salem has similar reasons for supporting Revere, rather than Wynn.
The mayor of Malden, Gary Christenson, is staying neutral while negotiating surrounding community agreements with both bidders. So is Medford Mayor Michael J. McGlynn, who said last week, “My job is to mitigate and I’ve taken a strong stand on that. I’ve had great relationships with both of the negotiating teams.”
Meanwhile one of the landowners where Wynn proposes to build is creating problems by declining to sign a promise that no “secret” owners will make money when Wynn purchases the land. This revives questions thought settled last year about a man, Charles Lightbody, who spent time in prison for assault with a dangerous weapon profiting from the sale.
Anthony Gattineri’s refusal to sign the pledge imperils the deal since the gaming commission has said it will not approve of the Wynn casino unless it can be guaranteed that no felons will benefit from it.
Gattineri and his partners in the property did their best to hide the fact that Lightbody had an interest in the property. Meanwhile state and federal investigators are trying to who actually owns the property. Lightbody was recorded telling a friend he was visiting in prison that he would make millions of dollars off of the deal. Moreover Gattineri has admitted to owing Lightbody approximately $1 million.
Lightbody’s attorney Timothy Flaherty, claims that his client doesn’t have a hidden interest in the property.
At Wynn’s insistence the price of the property was cut from $75 million to $35 million in order to prevent the landowners from making a significant profit from the sale.
A spokesman for Wynn last week said, “We are confident that we will resolve the matter to the satisfaction of the commission prior to them making a decision and that it will not jeopardize our license approval.”
If Wynn’s project is approved under these circumstances, critics of the gaming commission say that its credibility will be further compromised. A former suitor for the license, Caesars Entertainment, has sued the commission and its chairman, Crosby for supposedly favoring the Wynn proposal. This suspicion was further fueled when the commission last December voted to allow the sale to go forward, despite Lightbody’s possible involvement. Conditional on that ruling was that all owners sign the pledge that Gattineri is refusing to sign.
Everett Mayor Carlo DeMaria has floated a possible solution to this conundrum, acquiring the 58 acres by eminent domain and then selling the land to Wynn. His “urban renewal plan” calls for the city to buy and several other parcels for about $41 million and sell them at no profit to Wynn.
DeMaria last week called the area “critical to the future success of the entire city,” however some city council member think the idea smacks too much of favoritism to Wynn.
Even if Wynn doesn’t win the license, DeMaria says the land could be part of a redevelopment plan to replace crumbling buildings and land impregnated with hazardous wastes. That includes the former Monsanto plant that Wynn hopes to acquire.
The mayor declared, “This entire process represents the reclaiming of Everett’s future from decades of underutilization and contamination. We will continue to ensure that this process proceeds for the benefit of every resident and business in that area and in the entire city of Everett.”
Southeastern Gaming Zone
The commission voted last week to grant the request of Rush Street Gaming to change the methodology used for calculating the $500 million minimum investment required for a gaming development, which reportedly is working with the town of Bridgewater to put together a casino proposal. The waiver would allow the developer to count some and off site infrastructure as part of the minimum.
The commission took into account a presentation by one of its members, Enrique Zuniga, that showed that the zone has less market potential than the other two zones. Factors that play into that are demographics, geography and possibility that the Mashpee Wampanoag tribe will eventually be able to build a casino in Taunton.
At its April 17 meeting the commission voted to reconsider the timeline for the zone’s licensing process at its May 1 meeting, the same meeting where it will consider Boston’s request for host city status.
KG Urban and the city of New Bedford have both requested an extension of the deadline for an application to give them more time to develop a fully realized plan.
“I think we’re stuck with extending it some because we’d get no proposals with the current deadline,” commented Chairman Stephen Crosby last week. The original deadline was July. Only Foxwoods Resort Casino and its partner Crossroads were seen as likely to meet the current deadline.
Foxwoods/Crossroads proposes a $750 million project with ten restaurants, a 300-room hotel, retail shopping mall and arena in Fall River. Fall River’s mayor, Will Flanagan opposed the time extension as well as changing the $500 million requirement.
The 2011 law originally set aside a license for a recognized federal tribe, but because the Mashpees encountered delays in meeting the bill’s requirements, the commission opened up the southeastern zone to commercial bids, without precluding the possibility that the tribe would ultimately be awarded the license.
The commission will likely made a judgment as to whether the tribe is ever likely to put land into trust in Taunton before awarding a commercial license.
Impact of Casinos
Last week two members of the Massachusetts Gaming Commission met with researchers at the University of Massachusetts who will conduct a story on how the advent of three new casinos and one slots parlor will affect the economy and social mores of the state.
The $3.5 million study may be groundbreaking because the researchers have begun collecting data before the casinos are built. The team comes from the university’s School of Public Health, who dean, Marjorie Aleion, said “This so forward thinking. We need to have real data. All we have is opinion.”
According to Chairman Stephen Crosby, “It’s not just going to be…you’re Aunt Mary says ‘hey there’s more crime in Springfield.’ We are going to know whether there’s more crime in Springfield and what the crime is and why it’s coming about and then we’ll design intervention strategies.”
The research team’s leader, Rachel Volberg, quoted by ABC 40, commented, ”The purpose of the research is to investigate as many as possible the social and economic impacts of the introduction of casino gambling in Massachusetts as those roll out over a number of years.” The plan is to interview 10,000 people chosen at random. In later years this process will be repeated as the casinos come on line. The research study is a requirement of the 2011 law that authorized casino in the state.
Unfortunately for the industry, Volberg is seen as a outlier in the study of gaming impact, always emphasizing the worst impacts and minimizing the positive impacts.