WEEKLY FEATURE: First Bay State License Set to Go

Massachusetts’ first gaming license—for a slots parlor—will be issued by the state Gaming Commission on February 28, if things go according to schedule. The owners of Raynham Park believe they have the inside track because more than 80 percent of locals approve their plan (l.). Meanwhile the casino vote in Revere for the Suffolk Downs casino may not be the slam-dunk as previously thought.

The Massachusetts Gaming Commission plans to announce the winner of the state’s first gaming license and only slots parlor license on February 28 following a full schedule of meetings around the state. Three days before that voters in Revere will decide the fate of the Mohegan Sun and Suffolk Downs proposal for a casino resort.

Three competitors are vying for the right to build a casino with as many as 1,250 slots but no gaming tables.

They include the Cordish Cos., which wants to build in Leominster, Penn National Gaming, which proposes a casino at the Plainridge racetrack in Plainville, and Raynham Park, a defunct dog-racing track that now only offers off-track betting.

Last week the group behind Raynham Park proposal, Parx Raynham Casino, was expressing confidence in the city’s chances of winning the license, citing local ownership by longtime dog racetrack owner George Carney as being the proposal’s hole card.

A spokesman for the park said last week, “With the Carney family, we are the only proposal with local ownership, which gives us a tremendous advantage. Our location is unbelievable. And the community support from Raynham and surrounding communities is key to our proposal. I think it’ll be clear to the commission how much local support we have.”

Another advantage is that Carney and his casino partner Greenwood Racing—whose casino brand is Parx—attracted a larger percentage of the vote, 86.1 percent, than the other two proposals, with 76 percent for Plainville and 61 percent for Leominster.

Raynham Board of Selectmen Chairman Joseph Pacheco said that another advantage his city has is that it could probably be up and running faster than the other two proposals, with about six months.

During testimony before the commission, Greenwood Racing CEO Anthony Ricci declared, “We feel we have the best application, we’ll get the most revenue for the state, we have the best location, the best team, the highest level support in our host community and we’re paying the most benefits to the surrounding communities. I feel we made a great case and clearly in our mind we are the choice.”

Boston Metro

Revere voters are being bombarded by arguments pro and con as the February 25 host community election approaches, the town’s second casino vote. The first time they voted, in November, the town’s voters supported the Suffolk Downs proposal by 62 percent to 38 percent.

But this time opponents, especially religious leaders, say they have had more time to organize to try to defeat the proposal by the Mohegan Tribe, and its would-be landlord, Suffolk Downs.

This time is different, says Pastor Nick Granitsas, who appeared at a news conference last week. “The last time we did not organize,” he said. “The faith community within its own spheres was opposing it, but we weren’t organizing and working together, and we really failed.”

Granitsas and fellow pastors have formed Friends of Revere. Pastor Tim Bogertman, interviewed last week by the Boston Globe, declared, “We believe this community needs a voice,” he said. “There are no political leaders in Revere standing up against this proposal, so we’re the last line of defense.”

These ministers know that pastors in East Boston helped provide the margin of victory that defeated the Suffolk Downs proposal at the same time that Revere voters were approving it.

Revere City Council President Anthony Zambuto rejects all of the arguments that religious leaders such as Granitsas and Bogertman present about higher crime rates, increased traffic and problem gambling.

The $25 million annually the city will get trumps all that, he says. “We’ll be safer here because of this casino,” he said, quoted by WBUR. “We’ll have 25 more police [officers], 25 more firefighters and the security will be much better in the city than it is now.”

While pastors are attempting to organize their parishioners, Suffolk Downs was holding a seminar to show how many jobs a casino would create. At the seminar 200 attendees learned that the casino will create 4,000 jobs, with the lions share going to local residents.

Mayor Dan Rizzo attended the same event and urged those present to show up in force at the polls on November 25.

The Mohegan Gaming Authority, besides trying to win an election, also has to deal with an annoying mosquito bite coming from the town of Palmer, where for five years the tribe pushed to build a casino.

That is, until November 5, when the town’s voters turned down the proposal by a slim margin of less than 100 votes. Now, the relationship has soured from the perspective of former supporters, who say that the Mohegans didn’t really put their heart and soul into winning.

During the process of its casino campaign, the Mohegans acquired an extended lease on 152 acres which it still has, and which the current owner, Leon Dragone of Northeast Realty Associates would like to get out of. Dragone and some other business leaders are floating the theory that not only did the Mohegans not try hard enough, but that they never intended to win, but only wanted to tie up the only piece of property suitable in Palmer for a casino—to keep it out of rival hands.

Dragone accuses the tribe of “abandoning” the town. He says he is looking at legal remedies to force the tribe to relinquish the lease.

Palmer council member Paul Burns has taken it farther, sending letters to the gaming commission accusing the tribe of trying to tie up the property.

The Mohegans, for their part, say they have every intention of developing the property and plans to release details soon.

The tribe has been wrapping up negotiations for mitigation agreements with surrounding communities. It recently announced tentative agreements with Cambridge, Chelsea, Lynn, Malden, Medford, Melrose and Salem, which will get $3.75 million between them. Salem, for example, at 14 miles the city farthest from the proposed $1.3 billion casino will be paid $50,000 annually and preferences in hiring and purchasing.

The Mohegans are still in talks with Boston, Saugus and Winthrop. 

Because he has been so public in his criticisms of the Massachusetts casino licensing process and of the law that authorizes three casinos resorts and on slots parlor in the state, gaming mogul Steve Wynn was asked recently why he has stayed in the race to obtain a license to build in Everett, why he has invested $500 million of his company’s money and is prepared to borrow another $1 billion.

The question arose during the quarterly earnings call that he held two weeks ago. He talked about his request that the Bay State legislature make alternations to the law that would benefit his casino if it’s built and he also opposes the proposed Mashpee Wampanoag tribe’s casino in Taunton being taxed at a lower rate, 17 percent, than the 25 percent that commercial casinos would be taxed. He argues for a level playing field.

The irrepressible Wynn recently sent a memo (obtained by the Boston Herald) asking that the tax rate be lowered to what the tribe would have to pay if it is able to build. That would represent a $160 million cut in the state’s take.

Wynn wrote, “A Wampanoag casino in Taunton would be a mere 40 miles from our proposed investment in Everett and a real alternative for our patrons. All resort casinos should operate pursuant to the same economic terms with the same tax applied to all operators of the same type of facility.” The request for a tax cut was part of a list of things that Wynn asked the commission to consider.

Wynn has also met privately with Bay State lawmakers to lobby them to make some changes to the law that would make it easier for him to operate a casino, assuming that he wins the license. However, at least publically legislative leaders have indicated that they are not interested in making any changes to the law.

During the conference call Wynn joked about the 18,000 pages of his license application for the Everett casino and called the licensing process, “particularly grueling.”

When asked why he has put up with all of this, Wynn revealed that his own board asks the same question all the time. Part of the attraction of the Boston area, he explained, is that it attracts a large number of international visitors, including many from Asia. Moreover, Wynn plans to build a casino resort that will outshine another others planned or already existing on the East Coat.

He also believes that a signature Wynn resort in Boston will attract Eastern Seaboard residents to his other resorts in Las Vegas. He also expects to make a $300 million profit.

Southeastern Massachusetts

Recently Foxwoods, still nursing wounds from its defeat in Milford, announced that it had approached the community of Fall River, whose city government greeted the proposal enthusiastically.

The city’s mayor, William Flanagan and Foxwoods are now working together to craft a casino proposal that they can go forward with. One of the first things they must do is locate a site for the $750 million casino resort, which would have 140,000 square feet of gaming, as many as 20 restaurants, a hotel, concert venue and convention center.

At a joint press conference Flanagan said the proposed casino resort could generate up to 5,000 permanent jobs. Fall River’s unemployment rate is nearly twice that of the rest of the state. That is one reason that the casino may garner more support than it did in Milford, which is not an economically distressed town.

Flanagan said the goal is to make Fall River a destination that would attract tourism to the entire region. At the same joint appearance Foxwoods CEO and president Scott Butera agreed, calling casino resorts, “economic engines like nothing else in the world.”

Past history would seem to favor the proposal. Fall River has held several non-binding elections and its citizens have been polled numerous times over the years. Each time the community has indicated strong support for a casino.

Clyde Barrow of the University of Massachusetts at Dartmouth told Casino.org, “Assuming they get a site and can negotiate a host agreement, I have no doubt a casino proposal would pass in Fall River.”

Finding a site of between 30 and 40 acres may the most challenging aspect of assembling the casino proposal. It is such a pressing issue that the mayor made an appeal at the press conference for willing land sellers to step forward.

Foxwoods has one advantage over other potential rivals in the southeastern zone: it has already passed the state’s financial and ethical suitability vetting last year.

The southeastern zone licensing process is not as advanced as the process for a slots parlor and for the Boston metro and Western zones, whose licenses could be issued by May. Foxwoods is the second commercial entity to show an interest, with KG Urban being the first.

The inside track may still belong to the Mashpee Wampanoag Tribe, whose tribal state gaming compact was officially recorded last week by the federal government. The Bureau of Indian Affairs published the compact in the Federal Register, which makes the 20-year compact official.

The agreement details how much the tribe would pay the state if it is allowed to build and operate its proposed $500 million First Light Resort and Casino in Taunton.

The BIA had 45 days from the day the compact was signed by Governor Deval Patrick to reject, accept or allow the compact to go into effect by inaction. It chose to allow it to go into effect without comment. 

The tribe still needs for the BIA to approve of its application to put land into trust in Taunton. So far no timeline has been announced for that, although the tribe maintains that a decision is immanent.

This is the second gaming compact approved by the state and tribe. The first one was rejected by the BIA because of the percentage the tribe was obligated to pay for gaming revenues and for addressing issues that the BIA felt should not be discussed in a gaming compact.

The second compact has a sliding scale in which the tribe pays as much as 17 percent and as low as nothing depending on how many casinos open near to it.

Tribal Chairman Cedric Cromwell hailed the federal action: “It’s now official. Today is a day of great significance for the Mashpee Wampanoag Tribe. The Tribal State Compact was officially placed in the Federal Register today and will now take effect as federal law. This is another important step towards the Mashpee Wampanoag Tribe bringing Project First Light destination resort Casino to the Great City of Taunton, creating much needed jobs, and a tremendous economic uplift for the people of Southeastern Massachusetts, City of Taunton and the Mashpee Wampanoag Tribe.”

Although state law originally gave the tribe a virtual lock on the southeastern license, last May the gaming commission opened the license up to commercial bids because of the delays the tribe has encountered in putting land into trust.

Western Massachusetts

With MGM Entertainment’s proposal for an $800 million casino in Springfield almost certain obtain a license; the region’s entertainment venues are casting a wary eye at the casino resort that is planned for the city’s East End.

The just-completed year was a year of growth for venues such as Mullins Center, where sporting events attracted more attendance and musical events also attracted a larger audience.

According to a spokesman for the center, quoted by the Republican, “There are a variety of live entertainment events and genres that have great potential in the New Year. The casino project would certainly have an impact on the area’s entertainment by creating additional options in an already congested entertainment region.”

The Iron Horse Music Hall also saw growth during 2013. Its owner, Eric Suher, fears the “huge impact” that he expects the Springfield casino to have on his business. “MGM is an entertainment driven company, so they understand better than any other casino company how the right entertainment will draw patrons into their establishment. Clearly, I am concerned about my Northampton venues and Mountain Park in Holyoke,” he said.

The MassMutual Center, which saw a small decline in business last year, expects synergy to arise from its location in Springfield not too far from the proposed casino. According to General Manager Matt Hollander, “If everyone who has come downtown to enjoy an event at the MassMutual Center would encourage their friends to so the same, we will be well positioned to grow our entertainment offerings.”

Operators of Springfield’s CityStage and Symphony Hall also anticipate collateral benefits from the casino.

Crosby Lawsuit

Meanwhile Massachusetts Gaming Commission Chairman Stephen Crosby last week asked a federal judge to dismiss a lawsuit brought against him by Caesars Entertainment, which accuses him of failing to disclose a possible conflict of interest arising from a former business association with a friend who is one of the principals in the Wynn proposal, Caesars rival for the Boston metro license. It also claims that Crosby personally asked Wynn not to withdraw from the process.

Attorneys for Crosby and Karen Wells, who leads the commission’s investigative arm and who is also named in the suit, jointly filed motions to dismiss the lawsuit, calling its accusations, “groundless.”

Caesars and Suffolk Downs were partners in proposing a casino that would have included both Revere and East Boston. However issues that arose during an investigation of Caesars ethical and financial suitability caused Suffolk Downs to ask Caesars to withdraw its participation days before the issue went to the voters of both towns. The voters of Boston rejected the proposal but the voters of Revere approved it. 

Repeal Gaming

Repeal the Casino Deal, a group of Bay State business leaders who feel that casino gaming hurts small business, has collected $175,476 so far to fund an initiative for the November ballot that would strike down the gaming expansion law of 2011.

It has also put together a legal team of constitutional experts to carry the group’s case to the highest court in the state. It will be led by Thomas O. Bean and H. Reed Witherby, both veterans of the state Attorney General’s office.

They will argue that the initiative does not violate the Constitution. The current attorney general, Martha Coakley ruled that the repeal would be unconstitutional because it would, “impair the implied contracts between the commission and gaming license applicants.” The petitioners appealed her ruling to the Supreme Judicial Court, which is expected to hear arguments in May and rule in June.

They will be pitted against high-powered attorneys hired by casino developers, who have started to take the anti-casino group seriously. They have requested to intervene in the case.

Bean, quoted by the Boston Globe, summed up the anti-casino group’s main talking point about the casino industry, “They don’t want the people to vote. It’s reasonable to say they are concerned.”

One argument that the repeal advocates make is that it was legal for the public to outlaw dog-racing in the Bay State, which they say is not all that different from outlawing a casino.

Although supporters outnumber opponents of casinos in the state by a percentage of 53 to 39 percent, the support is perceived as soft enough to be vulnerable to a well-funded campaign. It is also a concern that support has fallen slightly in past months from 61 percent in November.

Since the well-funded initiative that would give the voters a say in whether casinos are built in the Bay State is gaining traction and momentum, the gaming commission last week floated a proposal that it hopes will keep potential developers from worrying that their non-refundable licensing fees might be lost to them if the initiative wins at the ballot box in November.

The legislature’s Joint Committee on Economic Development will hear testimony from a representative of the commission on whether it ought to be able to give refunds on the $85 million license fee for a casino resort or $25 million for a slots parlor.

Commission Chairman Stephen Crosby is asking the legislature to act before February 28, when the commission awards the one slots parlor license.

The state’s budget for this year is built on the assumption that it will collect $110 million in casino licensing fees. Next year’s budget anticipates $53 million in licensing revenue and $20 million in taxes from the revenue of the first casino expected to open.