The Massachusetts Gaming Commission will decide next week whether to allow a 7 million commercial casino to be built in Brockton to compete with the 5 million First Light Resort & Casino the Mashpee Wampanoag Tribe plans to build in Taunton.
The tribe just released a study, conducted by Spectrum Gaming Group, that predicts that the state will lose $28 million annually if both casinos are allowed to operate. Spectrum has conducted casino marketing studies for the Bay State legislature and the MGC.
According to the Herald News, which obtained a copy of the study, it concludes that a tribal casino operating alone would “provide needed certainty in the market that has long been roiled by uncertainty.” The study examined the possible revenues that would be generated by each casino. Although the total revenues would increase with both casinos, it said, the taxes collected would go down because the tribal casino would pay no taxes since its tribal state gaming compact gives it a monopoly. Without the monopoly the tribe pays nothing although the commercial casino will pay 25 percent. With a monopoly the tribe pays 17 percent.
The study concluded, “The presence of two casinos operating under vastly different tax schemes—one at 25 percent and the other at 0 percent—would lead to a competitive imbalance, with one property having far greater ability to market to its customers and reinvest in its property.” It adds, “Two casinos in Region C would result in a crowded and highly competitive marketplace, with much of any increase in revenue gravitating toward the tax-free Taunton casino.”
The two casino locations are less than 20 miles from each other.
A study commissioned by Neil Bluhm of Mass Gaming & Entertainment, which proposes the Brockton casino, came to a different conclusion. That study advised that the state would benefit more from two casinos.
The commission held its final public hearing on the Brockton casino last week. Commission Chairman Stephen Crosby told the Brockton Enterprise: “This is particularly complicated.” He reiterated that the commission is not legally required to grant a license for the southeastern zone
The tribe plans to hold its groundbreaking April 5. It expects the casino to open a little more than a year later, earlier than either the MGM Springfield or the Wynn Boston Harbor. The first phase will include a gaming floor, dining, entertainment and retail shops. Additional phases will include a water park and hotel.
Officials at the groundbreaking will include Chairman Cedric Cromwell and Taunton Mayor Thomas Hoye as well as representatives of the Genting Group, the tribe’s partner, which has said it will manage and partially finance the casino.
The Mashpee and Neil Bluhm are not what you would call friendly rivals. Bluhm, whose worth has been estimated to be nearly $3 billion, is financing a federal lawsuit by Taunton opponents of the casino who are challenging the legality of the action by the Bureau of Indian Affairs that put the 151 acres in Taunton into trust.
Bluhm has warned that the lawsuit could tie the tribe up in a legal tangle for years, thus effectively denying the region the economic benefits of its own casino for that time.
For its part the tribe has threatened its own federal lawsuit if the commission grants the license to the Brockton proposal.
MGM Springfield
Although probably the biggest and most obvious engine of economic development in the city of Springfield, Massachusetts will be the $950 million MGM Springfield, the city’s Chief Development Officer Kevin Kennedy says he expects 2016 to be a strong one, with the casino only one of several projects.
These include the Union State redevelopment, the CRRC rail car factory, the Downtown Innovation District and the North Main Street reconstruction and North End master plan.
Kennedy told the Republican: “We haven’t seen any slowdown. We have also seen the projects that we thought would happen are happening – Union Station, the casino, the Innovation District, they really are happening.” He added that the public would be “pretty pleased when we see actual progress and more pleased when we start to reap the benefits.”
MGM and the city held a groundbreaking for the casino one year ago in March on the 14.5-acre site.
Mayor Domenic Sarno concurred, predicting a “very strong” year ahead. The casino will aid the city’s economy through the creation of vendor opportunities and spin-offs said the mayor.
Before MGM can begin to demolish old buildings in its way and begin construction the city needs to complete its site plan review. It has already torn down the old Alfred G. Zanetti School and will soon begin building a 3,400-space parking garage and relocating the Spiritualist Church.
The sudden renewal of energy for the casino project comes after a year of setbacks.
As Kennedy described it to the New Haven Register, It’s had a serious number of twists and turns, but those are finally behind us,” adding, “We’re pleased we’re on course for a September 2018 opening.”
This included a lengthy review and delay by the city’s historic preservation authority, which objected to the destruction of several buildings that it considered historical. However the main blow came when MGM asked permission to delay the opening of the casino by a year because of the chaos expected to be caused by a massive state highway project near the casino, and then by MGM’s announcement that it was downsizing the casino by about 10 percent.
This resulted in replacing the 25-story casino tower with a six-story hotel with the same number of rooms.
The cuts in the casino’s size didn’t prevent the bottom line from growing from $800 million to $950 million brought about by increased costs of material and labor.
Those changes were endorsed by the city council in February, with only City Council President Michael Fenton voting no.
As MGM Springfield President Michael Mathis told the Register, “Things happen on a complex project. It isn’t unique. It was less active than we planned. But it’s such a sprawling site that we were able to do some work all along the way.”
He told the Republican, “I think we ran into a couple of obstacles, which is pretty common in complex, large construction projects like this. We’re really excited about coming through it and getting the construction going in earnest. Given some of those challenges, I’m proud of the year we’ve had. We were very productive.”
They have been able to do work on underground utilities and to partially demolish some buildings in advance of final permits by the city. Although currently about 700 construction workers are employed, that number is expected to increase to 2,000 once the project is fully underway. About 3,000 permanent workers will be employed when the casino opens.
The Zanetti School, which was largely destroyed by a freak tornado in 2011, has now been completely demolished to make way for the casino. Mathis told the Republican, “Beyond that, the site changes daily. If you don’t go out there often enough it’ll change right in front of your eyes. It’s like watching your kids grow up.”
Mathis expects no more changes to the design. “We don’t expect any major changes at this point. There comes a point where you tell your designers, your architects, pencils down,” he told the Republican. “By the nature of the construction schedule we’re going to run out of the flexibility to make major changes, which is a good thing.”
The benefits to the city are not confined to economic development and jobs. MGM is also required to pay the city $16 million upfront and $25 million each year after it opens.
One consistent skeptic of the casino’s benefits to the city is Fenton, who said last week that he didn’t want the project “further watered down” without the city being compensated. He is particularly concerned about the location of the apartment complex of 50 units that is part of the development, but which MGM wants to locate outside of the casino footprint.
The state will collect 25 percent of casino revenues and surrounding communities will get upfront payments and annual payments as well.
Last week MGM announced that it also wants to take a hand in the city’s non-gaming economic development. It announced that it is bidding for the five-year contract to operate MassMutual Center, also located in the downtown area about a block from where the casino will be built. The casino proposes to jointly operate the venue as management company while Spectra, the current operator, continues to provide food and beverage services.
Mathis promised to bring “high quality entertainment” to the venue, which is owned by the Convention Center Authority.
Several months from now, or about a year from the opening, MGM will begin a major marketing campaign for the project, said Mathis. They plan to postpone the announcement of restaurants and entertainment options until then, with announcements about actual programming to wait until late 2017, he said.
Mathis was asked about MGM’s efforts to prevent neighboring Connecticut’s two gaming tribes from opening a third, satellite casino in that state to compete with the MGM Springfield.
MGM challenged the Connecticut law that authorizes the Pequots and Mohegan tribes to begin the process of identifying a host community for that casino. It sued the state in federal court last August, claiming the law violates the U.S. constitution’s equal protection clause because MGM is not allowed to compete for the license to locate a casino in the state.
It is also funding a companion lawsuit by the Schaghticoke Tribal Nation, which is suing for the right to build a casino in the state.
Commenting about the lawsuits Mathis said, “We’re not focused on Connecticut. As we get close to our opening it might affect the way we market, but in terms of the physical building and what we’re doing here it doesn’t affect us at all.” He added, “We’re building a really compelling program that highlights downtown Springfield, and nothing any competitor does is going to change our view that this is the best way to build our project.”
Plainridge Park
Plainridge Park Casino, the first casino to open in the Bay State, and the only slots parlor authorized, ventured into potentially hazardous territory recently when it began offering online digital slot machines. Although the games are free as part of social media, they are drawing criticism.
Players don’t play with actual money, but can win credits on the game. Critics say that the games due to their high virtual jackpots give the false expectation that they could duplicate those results at Plainridge’s brick and mortar casino.
The National Council on Problem Gambling also warns that such online pretend gambling promotes compulsive playing. Keith Whyte, executive director of the group said last week, “It is the action of gambling that is addictive, not the prizes.”
The Massachusetts Gaming Commission has asked Plainridge to make a presentation on the games, probably in May.
“I think everyone is well served by us starting out on what is the social gaming phenomenon and what are the range of issues,” said Chairman Crosby.
Commissioner Lloyd Macdonald added, “If we find people are being lured into casinos by being misled, that ought to be of concern to us.”
Commissioner Gayle Cameron said, “We will make better decisions with timely and accurate information,”
And the Massachusetts Gaming Commission (MGC) last week announced the release of Diversity Goal and Business Technical Assistance Grants that assists businesses in the vicinity of casinos to succeed in those markets by providing goods and services.
The grants will also promote diversity in hiring and contracting by casino developers. They will provide technical support for small businesses and contractors seeking to do business with casinos and help with strategic and operational planning, financial analysis and compliance for those businesses.
Jill Griffin, the commission’s director of workforce, supplier and diversity development said in a statement: “MGC will continue to identify strategies that will maximize the economic benefits from a casino for all Massachusetts residents.”
The 2011 gaming expansion act required casino developers to set goals for diversity in the hiring and contracting of minorities, women and veterans.
