Happy Thanksgiving from GGB; Newsletter Returns December 4

WEEKLY FEATURE: MGM Gets First Massachusetts Casino License

MGM Resorts won the first casino license in Massachusetts last week for a proposed casino in Springfield (l.). But voters in the Bay State appear to have radically changed their attitudes about whether any casino resorts should be built. Since the last polls were taken in February voters have flipped from strongly pro-casino to strongly anti-casino.

The long road to awarding a casino license in Massachusetts is over—at least for the western region where MGM Resorts was the only applicant left standing. The other two regions of the state will be much more difficult to sort out. The Boston area license features a bitter competition between Wynn Resorts and Suffolk Downs and its partner, Mohegan Sun. The southeastern region, which was reserved for a tribal casino, has been tied up in state and federal litigation and increased competition.

But MGM Resorts was pleased to be come the first full casino license holder (Penn National Gaming got the nod for the sole slot parlor at the Plainridge Racetrack in Plainville). The process for MGM began two years ago, and included many hearings, long deliberations and extensive investigations. The original field of five contenders was whittled down by several factors, including local referendums where the towns declined to become a host city to a casino.

“This is a great day for Springfield, the commonwealth of Massachusetts and MGM,” said Jim Murren, chairman and CEO of MGM Resorts. “We’re proud of what our talented team and our many dedicated city and community partners have accomplished together. We thank the Massachusetts Gaming Commission for its thorough vetting process and look forward to continuing our work with Springfield Mayor Domenic Sarno and other Springfield and Western Massachusetts elected officials and governmental leaders, along with residents and businesses of Springfield and the region, as we move this project forward.” 

The project includes a 25-story 250-room hotel with world-class amenities including a spa, pool and roof deck; 125,000 square feet of gaming space with 3,000 slot machines, 75 gaming tables, a poker room and high limit VIP gambling area; about 55,000 square feet of retail and restaurant space that will accommodate 15 shops and restaurants; and a multi-level parking garage. The project is seen as a catalyst to the revitalization of Springfield that envisions a high-energy dining, retail and entertainment district with an eight-screen cinema, bowling alley and an outdoor stage. This will be developed by Davenport Properties of Boston, in partnership with MGM.

Commissioners met in Springfield and Boston. The first full day of hearings was held in the MassMutual Center in Springfield.

Commissioners reacted positively to most of MGM’s proposal. Each of the five commissioners presented reports on different criteria that the casino developer is required to meet. They based their findings on MGM’s 236-page application. The criteria include finances, economic impacts, building and site design and impacts on local roads.

The commission held that MGM’s assumptions about revenue generation of between $412 million-$525 million each year for the first five years were “reasonable,” and agreed on the scope of the market it will draw from. The commission relied on this evaluation on the Canadian firm of HLT Advisory.

MGM figures that it will see a return on its investment after 15 years of operation, if not before.

Commissioner James McHugh, who reviewed the project’s building and site design, highlighted plans to revitalize the downtown and South End, parts of which were devastated by a freak 2011 tornado.

His analysis was not 100-percent positive. He also called on MGM to upgrade bus shelters, make the parking structure blend in with existing architecture, help upgrade State Street to make it more pedestrian friendly.

McHugh also gave points to MGM for creating partnerships with existing businesses.

McHugh praised MGM’s willingness to work with the Springfield Historical Commission about old buildings in the South End that are threatened with demolition if the casino is built.

But he added, “The MGM proposal clearly attempts to integrate itself into the fabric of downtown Springfield, but at the expense of a number of historic buildings. It appears successful at this task with some elements, such as the facades along Main Street which reflect the massing, materials, and fenestration of existing downtown buildings, but less so with others such as the hotel which lacks these same attributes and with the parking structure which would ideally be screened by smaller buildings.”

MGM promised to preserve the façade of an 11-story building, known as the “State Building,” that was built in 1929 and designed in the Classical Revival style by architect Burton Geckler. This would preserve the “look” at street level on State Street.

Another building that will be partially preserved is a 1910 structure originally built for the United Electric Company. The commission had asked that the marble-decorated lobby be preserved. The developer had already planned to preserve the building’s façade to serve as the entrance to its casino hotel.

Preserving the ornate, gold and marble lobby with its stained-glass dome and blending it into the entry to the hotel will be expensive.

The developer has also agreed to preserve some historic features of a 1913 building that once housed the city’s first cinema. MGM is also committing to preserving parts of several other buildings in the area.

MGM was criticized for not emphasizing energy efficient equipment and facilities more.

Springfield was the most hotly contested of all of the cities where a casino was proposed. At one time the city was targeted by Penn National Gaming and Ameristar at the same time that Hard Rock International wooed neighboring West Springfield, where voters decided against host-city status.

MGM and the other remaining applicants are concerned, however, about the possibility of the anti-casino initiative qualifying for the November ballot. It has asked the commission to consider issuing a provisional license and not requiring it to pay the $185 million license fee until after the ballot measure’s fate is decided. It would prefer to wait until July, when the court rules on the initiative, before paying anything. The company worries that if the repeal is approved that it would lose the $185 million.

The commission has asked the legislature to address this issue by amending the gaming expansion law to provide for refunding applicants’ fees if the law is repealed.

Where once Massachusetts voters were solidly in favor of the gaming expansion law of 2011, in the last few months support has eroded until the most recent polling shows that a majority do not support opening Las Vegas style casinos in the Bay State.

Last week Suffolk University/Boston Herald released the results of a poll that show that voters oppose casinos 47 percent-37 percent, an almost complete flip in sentiment from just a few months ago. In February, the same poll gave casinos a solid 51 percent-37 percent margin. The 2011 law authorizes three casino resorts, each in a different region and one at-large slots parlor.

However, within days another poll, this one by the American Gaming Association found different results in which, “Voters recognize that casinos are an economic driver that supports jobs and boosts growth in communities across the nation, and Massachusetts is already reaping the benefits that our industry delivers,” according to Geoff Freeman, president and CEO of the association.

This is good news for the Repeal the Casino Deal supporters, who are trying to gather enough signatures to qualify an initiative that would repeal casino gaming for the November ballot. They need to collect 11,485 valid signatures by June 18, although they are aiming at more than twice that amount. These would be added to about 75,000 previously collected. They are waiting for a ruling by the Supreme Judicial Court on whether their initiative is constitutional.

The Repeal group is using the process of gathering signatures to help build the statewide campaign, animate the ground game and reach out to build a grass-roots organization.

Last year current attorney general and candidate for governor Martha Coakley ruled that the initiative violated the U.S. Constitution by taking property (i.e. the contracts that the casino developers will have with the state) without due process. Coakley is strongly supporting casinos in her campaign to win the Democratic nomination for governor. The latest poll could be bad news for Coakley, especially if the high court rules against her.

Some attribute the change in attitudes to the uptick in the economy. When the casino law was passed in 2011, the economy was considerably weaker, and the job-creating potential of four casinos was seen as necessary. Now the economy is stronger, and gaming is seen as less necessary.

The Massachusetts Gaming Commission, tasked with picking the best candidates for a casino license, is poised to issue a license for the Western part of the state, where the only remaining candidate is MGM International, and its proposal for Springfield.

The commission must also issue a license for the Boston Metro zone, where there are two rival proposals, one by Steve Wynn for Everett and the other by the Mohegan Sun, which wants to build on property owned by Suffolk Downs racetrack in Revere. Both towns are adjacent to Boston, where voters rejected the original Suffolk Downs/Caesars Entertainment proposal in November that would have had one foot in Revere and the other in East Boston. This caused the racetrack owners to quickly strike a new partnership with the Mohegan Sun, which has proposed a casino resort in Revere alone.

The poll asked the 800 respondents whether Revere or Everett should be given the license, and 55 percent said, “neither,” with 18 percent supporting Revere and 5 percent supporting Everett. The voters of both of those towns have voted to support their respective casino proposals.

In anticipation of a favorable ruling by the Supreme Judicial Court, Repeal the Casino Deal has begun gearing up for a statewide campaign, hiring political consultants and bringing all of the local anti-casino organizations into a statewide umbrella group. They say they can’t wait until the ruling to get organized. It will combine groups such as Quaboag Valley Against Casinos, No Casino Springfield and No Slots Leominster.

Former state Attorney General Scott Harshbarger, who is advising the group, told the Boston Globe, “What a shame, if and when we get on the ballot, if we’re not in the process of mobilizing our increasing grass-roots momentum.”

The group has appointed Darek Barcikowski as campaign manager. The Salem-based consultant has experience managing campaigns for state senator, mayoral races and worked on the campaigns of Rep. Stephen F. Lynch and U.S. Senator Edward Markey.

The group’s newly appointed campaign fund-raiser, Kristin MacEachern, has 20 years of experience in the field.

They can expect plenty of pushback from pro-casino groups, however. At the very least they can expect to be outspent by factors of five or ten to one by supporters of gaming, such as Dale Bergvine, a Plainville resident interviewed by the Boston Globe last week, who said, “There are a lot of jobs at stake here.” He added, “Hopefully it doesn’t get on the ballot, but if it does, I’m sure it will be overwhelmingly defeated.”

Plainville, where Penn National Gaming has won the first Bay State casino license, is a strong supporter of gaming. More than three-fourths of the town’s voters supported the slots parlor in the host community election last fall. But it is surrounded by communities that defeated such proposals.

Although Penn has said publically that it isn’t worried about the initiative, town officials in Plainville, which stands to make $4 million annually in taxes, are not happy about the poll results. They are hedging their bets by not spending the money yet!

Planning board member Jim Trockmorton told the Sun Chronicle, “As a town official I’m concerned because Plainridge is supposed to bring a lot of revenue into the town. As a resident, I’m concerned because it could mean a lot of jobs.” He added, “I’m deeply concerned. That was supposed to be our Hail Mary prayer.”

Construction has already begun for the $225 million slots parlor, which, if completed, will have 1,250 slot machines.

Boston Metro zone

The recent hosting of the Suffolk Downs party celebrating the running of the Belmont Stakes highlighted the fact that the racetrack is depending on a casino license for Revere to stay in business and save the jobs of its 325 employees. That doesn’t take into account jockeys and horse trainers, farmers and breeders. Some studies put the number of people whose jobs are dependent on Bay State racing at nearly 1,500. Most of those jobs require skills that are not transferable to other industries.

The venerable racetrack has been losing money in recent years, about $50 million since 2007, according to CEO Chip Tuttle. Tuttle recently told WBUR, “The ownership here has been extraordinarily patient. They’ve been willing to make that investment on the idea that there may be a pot of gold at the end of the rainbow.”

Some of the “gold” that Tuttle speaks of is additional money for larger purses that could attract higher quality horses to race at the Suffolk Downs. This is a dynamic that is demonstrated again and again in the U.S. Racetracks that are not in some way connected to slot machines, are in general not profitable.

Take it as a sign that the Mohegan’s feud with Palmer, where it lost a close host community election in November, is still smoldering. Last week the tribe indicated that if signs on the Massachusetts Turnpike supporting a Palmer city council member, Paul Burns for reelection are not taken down from land it leases, that the landlord will be in default of the lease. Burns has frequently accused the tribe of not fighting hard enough to win that election,

Suffolk Downs and the Mohegan Sun are competing for the license with Wynn Resorts, which wants to build in Everett.

Southeastern Casino zone

Foxwoods has denied reports that it has shifted its interest from Fall River to the historic whaling town of New Bedford as the site for a casino resort.

A spokesman for the casino told reporters, “We have not, in any way, shape or form, said that Fall River is unsuitable.” However, the spokesman would not confirm or deny whether the casino is talking at all with New Bedford’s mayor, Jon Mitchell, about the Whaling City Golf Course, which the mayor has long supported as a site for a casino.

However, other members of the city government favor a waterfront location, and favor the proposal for an abandoned power plant that has long been advocated by KG Urban.

The commission has set September 23 as the deadline for casino applicants in the southeastern zone and could award a license as soon as February of 2015.

In March Foxwoods revealed plans for a $750 million casino resort on a 30-acre mall. Two months later Fall River Mayor William Flanagan announced that Foxwoods was looking for a 120-acre parcel on the waterfront. So far, no host community agreement has been announced.

Foxwoods originally sought a license in the Boston metro zone in Milford, only to be turned down by the voters in November.  Gaming developers rejected by one community are eligible to apply for a license in another town.