The gaming states and soon-to-be gaming states of New England have declared war—-on each other.
Having concluded that there is only so much gaming revenue to go around, the existing states that have long enjoyed a near monopoly on casino gaming have drawn a line on the craps table and vowed to defend their turf to the last chip and last job.
At the same time states that haven’t had casinos before have determined to reclaim as much of the revenue and employment that have up to now bled across their borders into the hands of other state governments.
Moody’s Investors Service Senior Vice President Keith Foley told the Star Tribune last week, “It could get nasty in New England.” He added, “You’ve got a Cold War going on. Everybody is trying to protect their border.”
The latest state to make a combined defensive and offensive move was Connecticut, where the Senate last week held hearings on a bill that would authorize a partnership between arch-rival casino operators the Mohegan Sun and Foxwoods to jointly operate up to three border casinos. These casinos would not be on the scale of those casinos, but would be smaller, satellite casinos without hotels or other amenities such as dining. They could be sited in existing facilities or brand new buildings. Each would employ about 2,000.
At the same time the governor, Dannel P. Malloy, who is not sold on building more casinos, warned lawmakers not to expect to see extra revenues if those casinos are built. He told reporters, “I do understand that the argument they’re making is about jobs. I’ll listen to their arguments.”
Senate Majority Leader Robert Duff threw down the gauntlet, when he said, “Massachusetts has declared economic war on us. And we’re going to fight back.”
“This threat is serious,” declared Mohegan Tribal Chairman Kevin Brown. “Why wouldn’t Connecticut fight to be competitive and successful?” He later added, “Our tribes have a history of being fiercely competitive.” Rodney Butler, chairman of the Mashantucket Pequot Tribal Nation, joined Brown in talking to the lawmakers.
Norwich Mayor Deb Hinchey added, “Our region would have been devastated without the thousands of good-paying jobs provided by the casinos.” She added, “The debate about gambling in our state was settled long ago. I ask you to help our area.” The mayor of Montville and executives of local chambers of commerce joined her.
The state’s gaming market has fallen from $3.2 billion a year to about $2 billion. The tribes pay 25 percent of casino revenue to the state. This amount has been falling steadily since 2007, when the state collected $430 million. It is projected that the state will collect $191 million by 2018.
Foxwoods opened in 1991 and the Mohegan Sun followed in 1996. For nearly two decades they enjoyed a near monopoly on gaming in New England.
Business, labor and local town and city leaders are lining up to support the bill, although a recent poll indicated that 75 percent of the state’s residents oppose more casinos in the state. Many spoke in favor of the bill at hearings of the Public Safety and Security Committee last week.
They included David Roche, president of the state’s Building Trades association and Julie Kushner of the United Auto Workers, which represents 1,500 casino dealers. She told lawmakers, “We know this is about protecting jobs and growing jobs in Connecticut.”
Also favoring the proposal are the state’s 15 off-track betting parlors that operate in towns such as Windsor Locks. They say one or more new tribal casinos would fit well with what they do.
Rep. Tim Larson disagrees with the governor about more casinos not generating more money. Last week he told the Connecticut Mirror, “the state of Connecticut would surely have to realize some additional revenue,” if more casinos were added.
Support for more casinos is not universal. Senator Tony Hwang commented last week, “We have not measured the truly escalating cost” due to social ills created by gambling.”
Senator Michael McLachlan, who represents Danbury, asked that his city not be considered for a casino, saying it was “not a good fit for our economy.”
The issue has brought out one of the state’s oldest political warriors, former Governor Lowell P. Weicker Jr., 83, who in 1991 tried to make gaming illegal in his state—but failed.
He told the Connecticut Mirror last week, “The hell with that. We need other kinds of jobs. If you take a look at the dynamics of the state in terms of its personnel and its needs, I just think we need to adjust our priorities, so it doesn’t include more gambling.”
Weicker never thought about the effects of other states building casinos when he opposed gaming in his state. “Speaking for myself, I really didn’t care. I didn’t have one eye on Springfield or Massachusetts and one eye on New York and Rhode Island.”
Later, in 1993, Weicker announced a deal with the Pequots, in which they were allowed to build a full-fledged casino in return for paying the state 25 percent. Later, when the Mohegans gained federal recognition, they made the same agreement with the state.
The Mashantucket Pequots and Mohegans are more concerned about the $600 million casino that MGM Resorts plans for Springfield than the Wynn Everett.
The Connecticut gaming tribes are also protecting themselves by diversifying. Foxwoods will open the Tanger Outlets shopping complex at its original casino this spring. The Mohegans plan to open a new hotel tower at their original location next year.
The Connecticut casinos have been reliable job generators, but that too has declined, although one town, Montville, sends about ten percent of its population to work at the Mohegan Sun. In 2007 the Mohegan Sun had 11,000 employees and now has 7,000. Foxwoods went from a peak of 12,000 in 2007 to the current 7,000.
Recently appointed Mohegan Tribal Gaming Authority President Bobby Soper, who is expected to replace retiring President Mitchell Etess in the fall, says he is prepared to compete in a crowded marketplace.
He told Wicked Local: “It’s important to note the organization is in a very strong financial position at this point. We certainly have anticipated and prepared for competition that already exists today and is going to exist in the future. We will continue to make improvements at our existing properties to distinguish ourselves from existing and future competition, and look for opportunities to grow outside of our existing assets. For example, one in the pipeline is the development and management of a project in Washington State with the Cowlitz tribe. That is a lucrative opportunity for this tribe as well as the Cowlitz tribe.”
He added, “We’re anticipating Massachusetts as new competition and we feel confident we’re going to succeed and thrive.”
The Schaghticoke Indian Tribe is miffed that no one is suggesting that it open a casino. The tribe, which is seeking federal recognition, says it may open a small bingo hall anyway on the Appalachian Trail at its reservation.
Tribal Chairman Alan Russell last week said, “This is war now. It surely is.” Russell said he has the investors lined up to make his words a reality.
Malloy has long opposed more tribes achieving federal recognition, and has traveled to Washington to lobby Vice President Joe Biden to try to prevent the Bureau of Indian Affairs from changing its regulations to make it easier to grant recognition.
Allowing more tribes in the state to offer gaming is also against the best interests of the Mohegan and Pequots, who currently have exclusive rights to offer gaming.
New Hampshire
Meanwhile, in New Hampshire, the legislature is once more considering a proposal to allow two casinos in the Granite State. Such a proposal came one vote shy of passing the House last year after easily passing the Senate.
Last week the Senate by a vote of 13-11 sent the bill to the Finance Committee. The House remains the key battleground for this proposal. Governor Maggie Hassan supports a single casino, but hasn’t expressed support for more than that.
The bill would allow two casinos. Supporters say it would immediately bring in $120 million in licensing fees. Senator Lou D’Allesandro, who has introduced similar bills just about every year that he has been in the Senate, argues that the state would get more revenue and jobs.
“This is a real game changer in terms of economic recovery and it’s a real game changer in terms of jobs,” said the senator last week. The bill would also provide $25 million in property tax relief to municipalities.
Senate Finance Committee chairman Jeanie Forrester warns not to hope for too much. “If you want to bring in gambling for entertainment that’s OK; don’t do it as a revenue source,” she said last week, according to the Boston Globe.
Perennial opponents, such as Casino Free New Hampshire, say they are confident of defeating the bill in the House. They are cheered by the fact that this year the Senate only moved the bill with a one-vote margin.
D’Allesandro said, “I think we’ve got to work it hard and hope for the best. We’ve got a good shot.”
Gaming is a bipartisan issue in the state.
Maine
For those residents in Maine who were hoping to play keno, it looks like you’ll be waiting a little longer. Maine Governor Paul LePage told reporters during a maple syrup season ceremony he doesn’t like gambling and was in favor of the keno proposal due to thinking Democrats wanted the lottery expansion.
“If they don’t want it, then we’ll kill it,” he said. “In fact, I told them to go kill it now.” One concern was that the initiative could blur the lines with traditional gambling and turn convenience stores and restaurants into mini-casinos.
In a written statement, LePage said, “Democrats have expanded gambling in our state, and the people of Maine have said they want casinos. But now is not the time to have another debate over gambling. We are focused on cutting the tax burden for Maine people by $300 million and bringing prosperity to the future of our state.
The state’s Bureau of Alcoholic Beverage and Lottery Operations estimated a keno expansion would bring in $8.7 million in revenue for the General Fund in the first year. The Christian Civic League of Maine claimed the initiative would “lead to more compulsive gamblers.”
Rhode Island
Few New England leaders appear to think that so many casinos are a good idea, but no one is willing to be the one to say that they won’t build, or that they will tear down existing casinos. The result appears to be a saturated market that nobody wants.
Probably the most keenly anticipated new casino is Steve Wynn’s $1.7 billion (at last estimate) Wynn Everett that is projected to open in 2017 near Boston. It will certainly challenge the two casinos that have been the big boys on the block for nearly twenty years, Foxwoods and the Mohegan Sun, which are about two hours by car from Beantown.
Twin River Casino in Rhode Island, a slots parlor on a much more modest scale than the Indian casinos, is about an hour away from Boston. Rhode Island is in the process of making itself more competitive with the purchase by Twin River of its underperforming rival, the Newport Grand.
Twin River’s parent company announced earlier this month that it was purchasing the smaller casino. It is also seeking permission from the state and local governments to add a 150-250-room hotel. This would require an act of the legislature and a zoning change by the city.
The House of Representatives voted last week to support a hotel at Twin River.
The legislature’s approval is necessary before Twin River can add this amenity that the casino’s customers have asked for consistently for years, according to President and CEO of Twin River Management Group George Papanier.
The legislature would need to repeal a ban on a hotel that was passed in 2005 to prevent the casino from competing against local businesses.
The main reason for the request, however, is to make the Twin River more competitive when the new slots parlor opens in Plainville, Massachusetts in June. That casino is about a dozen miles away.
Twin River proposes to add a four-story, $35 million, 200-room hotel. Local building trades unions support the proposal and told members of the committee last week. Papanier said the project would create 200 building jobs and 100 full-time jobs.
A similar bill has been introduced in the Senate. The Twin River and the Newport Grand are the third largest source of funding for state government. Some estimates predict that outside competition could cut the state’s revenue by $100 million each year.
Vermont
Vermont is also looking at gaming. Last week a legislator filed a bill that would have the purpose of helping the state with its budget deficit. Governor Peter Shumlin opposes such a proposal.
Massachusetts
The first of the Bay State casinos to open will be Plainridge Park Casino, the state’s only slots parlor. It will open in Plainville in June with 1,250 slots at its existing harness racing track.
The Massachusetts Gaming Commission has just begun the process for awarding the license for the southeastern gaming zone.
The question now is not how much these existing casinos will draw business from Massachusetts, but how much Massachusetts will draw away from them.
Experts are not trying to predict who will emerge the victor, or there will in fact be any winners. The best that existing casinos may be able to do is to limit their losses. In this instance, for a change, the house doesn’t always win. The one thing that everyone agrees is that more competitors will be fighting over a finite pie.
As Foley told the Star Tribune, “It’s very simple math: the more supply you have with the same amount of people, you’re going to share it.” He added, “These things will cannibalize each other, but what they are hoping is they will cannibalize from the other jurisdictions to keep the money in state.”
All of these operators are painfully aware of New Jersey’s example. One third of its 12 casinos closed in 2014 and others may follow because of competition from neighboring Pennsylvania and New York.
Not all analysts subscribe to the theory that the New England market is saturated. Some say there is room for growth.
According to American Gaming Association spokesman Christopher Moyer: “This is a competition among states right now to put into place policies that will allow the casinos in their state to best compete.”
