Pressure is mounting on Massachusetts to change the way it taxes gambling winnings if it wants to attract business to the state’s three-casino resorts and slots parlor, when they are built.
Both MGM Resorts, which wants to build in Springfield, and Steve Wynn, who has a proposal for Everett, argue that the current provision that requires collecting 5 percent withholding from winnings greater than $600 is counterproductive. This threshold is much lower than just about any other state that allows gaming, they say, which all use the federal withholding standards.
To do otherwise will discourage casual visitors as well as regular players, they say. Both call the current rule, “wholly impractical,” “functionally impossible, and an administrative burden that will force play to stop and the winner fill out a tax form every time he wins more than $600.
Federal requirements are that gamblers fill out tax forms and pay 25 percent of winnings over $1,200 in slots winnings and $5,000 for poker tournaments. It requires the paperwork for winnings of $600 or more where the payout is 300 percent or more of the amount wagered. The Bay State’s rules do not include the latter provision, which, critics say, leaves it open to creating an administrative nightmare.
However, the Mohegan Sun, which is competing with Wynn for the Boston metro license, and which hopes to build in Revere, says it can live with the rule. Mitchell Etess, chief executive officer of the tribal gaming authority, said in a statement, “The rules were established long before any operator submitted license applications. Steve Wynn apparently wants his own set of rules.”
The gaming commission has said previously that such complaints have “considerable merit,” and commissioners have been discussing the issue. Commission Chairman Stephen Crosby, quoted by the Republican, said, “It’s a major competitive problem. It’s a major administrative problem. It seems pretty clear that the best practice would be to adopt the federal standard.”
Bay state gamblers who bet on the horses and dog racing also feel that the current rule is onerous. Ed Lynch, a customer visiting the Suffolk Downs racetrack last week, told the Boston Herald, “You’ve got to make it right not just for the companies, but also for the customers. If you don’t, they’ll catch on.”
Some gamblers say they wouldn’t mind the current rule as long as they are able to write off gambling losses as well. Paying up front means not being hit by a large bill later, they say.
Meanwhile the Massachusetts Department of Revenue and a spokesman says it is in discussions with stakeholders and anticipates following the practice of other states that have gaming.
Bay State Attorney General Martha Coakley, who is running for governor, is being forced to defend her association with a key campaign adviser because of his ties to one of the developers bidding for a casino license. The attorney general is currently arguing before the state’s top court that a referendum that could repeal the state’s gaming expansion law is unconstitutional. She will argue before the Supreme Judicial Court on May 5.
One of Coakley’s campaign advisers is Northwind Strategies, owed by Democratic strategist Doug Rubin, which also represents the Mohegan Sun, which is in the running for a license for a casino resort at Suffolk Downs, in Revere.
Coakley last week told the Boston Herald, “I think people are more interested in the issues. The decision we make on every ballot question is related to the facts of the law, as it was in this case. We made that decision a while ago. We looked at all the questions that had to go on the petition that were potentially on the ballot this fall, and we used the process in the office that we always use.”
A spokesman for the AG issued this statement last week: “The attorney general’s office conducted an independent and strictly legal review of the ballot initiative. The attorney general believes the most important thing is that we get the right result, and her office is working cooperatively with all parties to put the issue before the court to get a final ruling.”
However, Erin O’Brien of the University of Massachusetts Boston is not so sure that Coakley will be able to sell that argument. “As a Democratic or Republican candidate, all it takes is a darkly backlit ad. ‘Martha Coakley doesn’t trust you to vote, and she’s being advised by the same people that want a casino in your neighborhood,’” she told the Herald, “It’s unseemly. It feels icky, that slimy politics that people don’t like. It plants that seed of doubt.”
Coakley is the likely Democratic nominee for the November election, although she has two rivals for the nomination. Her support for casinos could hurt her since the support for gaming in recent surveys has been trending downward, with 50.5 percent supporting casinos in a February poll conducted by the Boston Herald and Suffolk University. If she wins the nomination, it could cause progressives to stay home in November when she faces Republican Charlie Baker, say some political observers.
Coakley isn’t the only political candidate who is being tainted by connections to gaming. Warren Tolman, a candidate for the Democratic nomination to succeed Coakley as attorney general, is having to defend having worked for two years as director of business at Fast Strike Games, which designs interactive games for social media and mobile platforms, and which would like to run lottery-based fantasy sports games.
Tolman owns 40 percent of the firm, but has never drawn pay from it, he says. “This is very much in my rearview mirror,” Tolman told reporters last week.
Boston Metro
On May 1 the Massachusetts Gaming Commission granted a request by the city of Boston and casino opponents, and more importantly, Governor Deval Patrick, to delay a week before voting on Boston’s contention that it is a “host community” for the casino proposals in Revere and Everett.
The city’s attorney, Elizabeth Della Russo, said that the city has been in negotiations with the two casino proponents and wanted more time to review information from them before the commission holds its meeting. It may be that the parties are close to an agreement that would avoid the problem of the commission having to go head to head with the city, possibly in a court challenge that could delay or derail a casino in the Boston metro area. The governor felt that an amicable solution was possible.
The commission chairman said this is the first time that the governor has communicated with him since he appointed him to his position.
Before the vote to delay, Commissioner Bruce Stebbins said, “This might be an opportunity to further those relationships between the community and the two applicants.”
Opponents of casino gaming in East Boston are supporting Boston Mayor Martin J. Walsh in his contention that Boston should be given a veto over whether casino resorts are built in Revere and Everett, which are outside of the city’s boundaries, but whose infrastructure would be impacted by either proposal.
No Eastie Casino, which defeated the Suffolk Downs proposal for Revere/East Boston last November, and would like to do the same for the Revere-only proposal, last week filed a document with the gaming commission supporting the mayor’s assertion that the city of Boston qualifies as a host city whether or not the commission chooses to designate it as such.
The group asserts that either casino proposal will rely on the city’s reputation as, “a world-class city of international renown.”
A host city, by law, would have the ability to prevent a casino from being built, and would be able to negotiate a much more lucrative host community agreement with the casino developer than a mere “surrounding community,”
Wynn Resorts, the Mohegan Sun, and the anti-casino group have all submitted briefs to the commission. The mayor had declined to participate, calling the process “biased,” and “prejudicial,” however the letter from Russo would indicate that perhaps he was ready to take part in the process. No Eastie Casino also objected to the hearing.
The Mohegan Sun and Wynn Resorts, rivals for the Boston Metro license, both oppose granting Boston host community status, which would force both of them into host city votes that they are likely to lose.
Meanwhile, the city council of Everett voted to bolster Steve Wynn’s $1.6 billion proposal to build in its town by approving acquiring land by eminent domain that the gaming commission has said Wynn cannot buy from potentially shady owners. The city voted to take the land along the Mystic River for $35 million for “urban renewal,” and then sell the land to Wynn, making possible his $1.6 billion casino. According to city officials, the urban renewal plan was actually in the works before Wynn came into the picture.
One of the 10 councilmembers voted against the plan, calling it a risk to the taxpayers if the casino doesn’t happen. The actual vote was for the urban renewal plan, which includes seven properties total. The vote to purchase the land will come later, after the land is appraised.
Wynn’s original deal with the landowners for $35 million had hit the shoals due the commission’s requirement that a felon be excluded from the purchase. Not all of the landowners have been willing to sign a document stipulating that the felon, Charles Lightbody, is not a participant in the sale. Lightbody served several years in state prison for assault with a deadly weapon. One of the owners, Anthony Gattineri has refused to sign a pledge that there are no secret partners in the deal. The ownership of the land is under investigation by state and federal officers, according to the Boston Globe.
Although the voters of Everett voted several months ago to support Wynn’s casino proposal, this is the first time the city has proposed putting up tax dollars to make it happen. Wynn’s proposal is for a 100,000 square foot casino, with a 551-room hotel.
According to a statement by Everett Mayor Carlo DeMaria, “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.”
Meanwhile Wynn Resorts has signed “surrounding community” agreements with four more towns, including Cambridge, Medford, Lynn and Melrose. The agreements include annual payments and commitments to hire and buy locally. Wynn previously signed a similar agreement with Malden. The agreements just came under the April 29.
In a related development, the Mohegans, who unsuccessfully tried to pass a casino proposal in Palmer last year after spending $22 million in the attempt, is lashing back against the real estate company that owns the land it wanted to build on and is now suing the tribe, claiming it didn’t try hard enough to win the election.
The tribe has filed a counter suit against Northeast Realty Associates, claiming that it undermined the referendum and violated an exclusivity agreement. The tribe lost the referendum by 93 votes. It is seeking to recover its $22 million spent over five years in pursuit of the casino.
When the Mohegans lost the election, right after the recount was announced, they quickly pivoted to form a deal for a $1.3 billion casino deal with Suffolk Downs, which had lost its own election the same month. They are suing Northeast to recover $22 million. The tribe’s lawsuit in many ways mirrors the real estate company’s suit, including the breach of the exclusivity agreement. It also accuses Northeast manager Leon Dragone of working against the casino campaign and of being “a hindrance,” to the election effort.
Before filing the lawsuit in February Dragone had tried to get the tribe to commit to building a commercial center on the 152-acre site, or to commit to give up its 99-year lease. The lawsuit seeks to force the Sun not to pursue any casino license other than for the Palmer property.
Western Massachusetts Casino Zone
An arbitration panel has sided with the town of Longmeadow over MGM Resorts in the dispute over how much compensation the town should receive for MGM’s Springfield casino resort, if it is granted a license.
The three-person panel ruled that the town will get $4.4 million over 15 years including an $850,000 up front payment. The casino developer has filed an objection to the ruling with the commission.
The process of arbitration between West Springfield and Longmeadow and MGM Resorts is also nearing its conclusion. The “surrounding communities” were unable to reach a settlement with the developer, which forced arbitration.
The panel decides between the “best and final” offers of the disputants.
MGM previously reached “surrounding community” agreements with Agawam, Chicopee, East Longmeadow, Holyoke, Ludlow and Wilbraham.
Indian Casino
Attorney General Coakley last week filed a brief in federal court that denies that a court decision involving Alabama’s Poarch Band of Creek Indians is irrelevant to the claims of the Wampanoag Tribe of Gay Head (Aquinnah) that it is entitled to build a Class II casino on Martha’s Vineyard.
“Any comparison of (the Alabama) case to this case is unfounded,” said the brief. The tribe argues that because the Indian Gaming Regulatory Act takes precedence over state law forbidding Indian gaming that Bay State law that would prevent the tribe from building a casino on its land in Aquinnah does not apply. Coakley responds that in the case of Alabama, both sides conceded that IGRA applied to them. However, the agreement between the state and the Aquinnah that the tribe would abide by state law was reached four years prior to the adoption of IGRA by Congress, she contends.
The two sides are waiting for the federal judge to determine whether the dispute belongs in federal or state court.
