WEEKLY FEATURE: Rocky Road for Massachusetts Commission

A judge of the Superior Court last week refused to dismiss a lawsuit brought by the city of Boston against the Massachusetts Gaming Commission (l.). The commission asked that the court throw out the suit, which challenges the casino license the panel issued to Wynn Resorts to build in Everett, along the Mystic River. But the judge said the verbosity of the suit makes it difficult to make a decision without further investigation.

Attorneys for the Massachusetts Gaming Commission and the city of Boston faced off in Superior Court this week where both presented arguments in the case where Boston Mayor Martin Walsh is challenging the commission’s decision last year to issue the license for the Boston metro gaming zone to Wynn Resorts. Wynn is planning a .7 billion resort casino in Everett, just across the Mystic River from Boston.

Co-plaintiffs in the case are the cities of Revere and Somerville, plus the Mohegan Sun and workers of Suffolk Downs, which all claim that the process for issuing the license was tainted and that officials engaged in various misconduct during the process. In the 153-page lawsuit they allege that the commission bent over backwards to accommodate Wynn and clearly favored it over its rival bidder, the Mohegan Sun and Suffolk Downs.

The commission, however, failed to persuade Superior Court Judge Janet Sanders to dismiss the lawsuit outright, by arguing that the lawsuit is “effectively unanswerable.”

Sanders agreed that the verbosity of the 153-page lawsuit is daunting, but believes it should get a hearing, which she scheduled for September 22.

The city of Revere has asked to begin discovery proceedings, but Sanders denied that.

“There are serious issues that need to be address here first,” she said.

Wynn Resorts, which is not a party to the lawsuit, may yet enter the courtroom. For the first time the gaming giant hinted that it might consider a defamation lawsuit against Mayor Walsh for “false statements and untrue innuendo.” An attorney for Wynn sent a letter to Walsh calling on him to “cease your campaign of falsehoods against my client and to apologize for the irreparable damage you have already caused.” The attorney, Barry Langberg, accused city officials of “reckless disregard for the truth,” that leaves them vulnerable to a defamation suit.

A spokesman for Walsh fired back, “We dispute the assertions in the letter and we firmly stand behind the allegations in the amended complaint.”

One statement in the legal documents that Wynn’s attorneys contend is defamatory claims that Wynn was given unauthorized access to police files about a convicted felon, Charles Lightbody, who was a secret owner of the Everett land that Wynn held a option to buy. According to Langberg, “This statement is false. Wynn did not employ the named investigators and Wynn has no knowledge of anyone obtaining improper access to police files. The language of your subpoena was not typical legal wording but instead was designed to spread vicious falsehoods.”

Langberg added, “Apparently, you have conducted yourselves with reckless disregard for the truth because you somehow feel your actions are immune from accountability. Such is not the case. Massachusetts law does not protect individuals even public officials from defamation liability for providing falsehoods to the media, even when they attempt to insulate themselves by disseminating the falsehoods in the form of legal documents.”

Walsh told the Boston Globe’s editorial board last week, “I will not back down.” He added, “The people of Charlestown deserve a vote on their casino.” The mayor insists that the Charlestown neighborhood of Boston will be hit by most of the traffic to the casino. “It’s the fact that Horizon Way is the only way into the casino,’’ he said. “That street is a city of Boston street.”

The city has so far racked up $600,000 in legal fees challenging the casino decision. Walsh insists that the city is entitled to be considered a “host community,” under the 2011 law that authorized three casinos and a slots parlor.

Wynn spokesman Michael Weaver addressed that contention last week in a statement: “The matter of host community status for Boston was decided by the enabling legislation, which then-Rep. Walsh voted for, and by the Massachusetts Gaming Commission in the course of a public hearing at which Boston presented.’’

Because of its insistence that it should be treated as a host community, Boston refused to negotiate a “surrounding community” agreement with Wynn. This prompted the commission to act in the city’s behalf and negotiate a settlement for Wynn to pay nearly $40 million in mitigation for traffic effects and $25 million to mitigate other effects.

Boston’s lawsuit isn’t the only one challenging Wynn’s license. A group of about 30 people opposed to the casino filed a suit challenging a land transfer from the Massachusetts Bay Transportation Authority to Wynn, a transaction that is a lynchpin in the casino going forward because it is located near the entrance.

The lawsuit claims that the transfer violated the state’s bidding statute. One of the plaintiffs, John Ribiero, who has been a leader of anti-gaming forces in the state, said, “The way this deal went down, this was done behind closed doors, and they should have followed a strict process.” The MBTA claims that the $6 million transaction followed a public bid process.

Meantime Wynn is waiting for an environmental nod so that it can begin construction. It plans to submit the final version of an “Environmental Impact Report” that will address traffic mitigation and environmental cleanup for the old former Monsanto chemical plant.

But it’s not waiting for the grass to grow on the 33-acre Everett site. The company plans to hold a jobs fair on July 11 to fill 4,000 positions in Everett and Charlestown. Current Wynn employees will be on hand to talk about the experience of working for the gaming giant. The jobs are in a variety of fields, including hotel management, guest services, information and technology, dining, gaming operations and human resources.

In addition to about 4,000 permanent jobs, the project is expected to generate 4,000 construction jobs as a 600-room hotel, resort spa, dining and entertainment resort rises next to the river.

Commission Criticism

Meantime the Massachusetts Gaming Commission is coming under criticism because it is spent more than 100 hours in closed session meetings that included, according to the Boston Herald, “agenda planning,” commissioner lunches and a meeting with a lobbyist.

The Herald used open records rules to examine the individual calendars of the five commissioners going back three years. The newspaper criticizes the commission for thumbing its nose at the Bay State’s Open Meeting Law, noting that no records are kept of conversations during the two-hour lunches the commissioners sometimes have together.

According to commission spokesman Elaine Driscoll, “Commissioners discuss social matters, organizational structure and morale. The commissioners do not discuss any matter that constitutes public business within the jurisdiction of the commission.”

One such lunch included a guest: Frank Fahrenkopf, former president of the American Gaming Association, who visited with the panel on October 22, 2014. He provided the commissioners with his “perspective on the overall international status of the gaming and racing industry.”

Slots Parlor

Now that Massachusetts’s first casino, the slots parlor Plainridge Park Casino, has opened, the state can expect to start seeing revenues pouring into its coffers. The state is projecting that it will collect $82 million for this new fiscal year, but that’s just a prediction. No one knows whether the amount will be anywhere near that.

Plainridge Park opened June 24 with 1,250 slot machines and during its first week in operation generated just over $6 million in revenues, of which the state will collect $2.5 million. Another $554,000 will be earmarked for the horseracing industry. Plainridge Park includes a harness racing facility. It is expected to generate about $200 million its first year. Besides paying the state about 40 percent of its revenues, Plainridge will be paying the city of Plainville $2.7 million annually.

MGM Springfield

The commission is considering a request by MGM Springfield that it be allowed to postpone the opening of its $800 million casino resort in the South End of the state’s largest city. The original plan was to start construction this spring on the 14.5-acre site. Delays began when MGM’s plans to demolish some older buildings caused the city and state historical commissions to drag their heels.

However, it was the delay in the commencement of a viaduct construction on Interstate 91 that pushed the casino developer over the edge. The roadwork could cause traffic to come to a halt frequently near the casino site. MGM is asking that it be allowed to push back the opening to September 2018.

Mayor Domenic Sarno and the city council support the request.

Southeastern Casino Zone

The fourth and final license for the Bay State will be issued for the Southeastern Casino zone. The two finalists for that license are New Bedford and Brockton, where voters have endorsed the host community agreements, although New Bedford’s voters approved theirs by a much higher percentage.

The background check, that includes financial suitability, has been completed for Mass Gaming and Entertainment and the Brockton Fairgrounds, who are partnering to propose a casino resort on the fairgrounds, owned by the Carney family.

New York-based KG Urban, which has partnered with Foxwoods to propose a casino resort along the New Bedford waterfront, is still undergoing this process.

Both must submit detailed projects by September 30. The commission’s goal is to choose between them sometime this fall. It could also decide not to issue a license.

Wild cards in the Southeastern zone are the Mashpee Wampanoags, who await a ruling by the Bureau of Indian Affairs on their request to put land into trust in Taunton, where they hope to build a casino resort, and the Aquinnah Wampanoag, which is in court battling a federal lawsuit by the state to prevent the tribe from building a small Class II casino on Martha’s Vineyard.

Despite the lawsuit, the Aquinnah last week announced that they plan to move forward with refurbishing the unfinished 6,200 square foot community center into a casino.

Tribal Chairman Tobias Vanderhoop, interviewed by the Vineyard Gazette, said, “The property has been transferred to the Aquinnah Gaming Corporation. So they are making preparations to move forward with the project. Under the IGRA we have federal rights and the tribe has moved through the process to get all the appropriate approvals at the federal level to move forward. With previous votes of the citizens of the tribe, and tribal government, yes, we are moving.”

The town of Aquinnah issued a cease and desist order to the tribe after reports circulated that the tribe had retained a contractor and had begun cleanup of the site. The order quotes tribal chairman Vanderhoop as saying that the tribe would not allow town inspections of the site.

According to a spokesman for the town: “They’re under the opinion that they don’t need town approval. We think that’s an interesting interpretation.”

After voting to issue the order, town Selectman Jim Newman commented, “I’m disappointed by the fact that I thought we’ve had a pretty good relationship with the tribe, and that there has been no dialogue about the casino.”

Another selectman, Julianne Vanderhoop, declared, “I think this board has tried to convene with Tobias and other members of the planning team down at the tribe on several occasions. We’re trying to develop a better relationship by communication and regular meetings and I have heard little to nothing since the last meeting was held early in the year.”

The tribe has said that it plans to ignore the letter. An attorney for the tribe stated last week, “The tribe’s position, consistent with the federal government, is that IGRA supersedes all laws of the commonwealth and the town that are integral to the tribe’s operation of a gaming facility.”

According to Cheryl Andrews-Maltais, head of the tribal gaming corporation, the Aquinnah hope to offer bingo beginning this fall.

The tribe’s claim that it has the right to offer gaming is challenged by the state, which claims that the tribe signed away those rights in 1983 when it agreed to a land settlement of 400 acres in return for agreeing to abide by state and local zoning laws. Congress passed a law in 1987 that said the land was subject to state law, as well. The Massachusetts Supreme Court has ruled that the tribe is bound by those agreements. However, the tribe maintains that this was superseded when Congress passed the Indian Gaming Regulatory Act in 1988. Both sides in the federal lawsuit hope to get a definitive ruling on this issue. The judge will hear the case beginning August 12 in Boston.

Construction on the community center started in 2004 but was never completed.

The casino is controversial among the tribe itself. About 75 percent of the 1,200-member tribe lives off of the island. The minority that lives on the island actually opposes the Class II casino.

Lottery Apprehensive

That running figure the Massachusetts State Lottery perceives trying to overtake it is the newly minted Bay State casino industry. Although the state lottery sold nearly $5 billion in tickets when the fiscal year ended, lottery officials say they will be monitoring sales closely to see if they are negatively impacted by the new slots parlor. The lottery is monitoring weekly sales within a 15-minute, 30-minute and 60-minute radius of Plainridge. That includes about 200 agents who account for about $123 million in Lottery sales per year.

Michael Sweeney, interim executive director of the lottery commented last week, “We’re really looking at this as an opportunity, as a chance to review all our products. We see this as a very healthy challenge.”

Sweeney’s boss, Treasurer Deb Goldberg, told the Associated Press, “When people ask me what I think of local gambling, what slots or casinos will do, I say it doesn’t matter whether it’s 1 percent or it’s 10 percent. Any percent that is an impact takes away from my ability to send money back to cities and towns.”

She sounded combative last week on a WBZ radio program: “I’ve been telling the casinos, ‘Bring it on. We’re going to win.”

Anthony Salvidio, a recently appointed lottery commissioner, sees an opportunity to entice casino jackpot winners to spend some of their winnings on the Lottery as they gas up at convenience stores. “If anything it’s an advertising opportunity,” he said. “You can almost concentrate some of your advertising in those spots around there.”

The profits from last year’s lottery, about $935 million, are sent as aid to municipalities.

State law allows the lottery to penetrate within the casino itself and sell tickets there, including at the casino gift shop and Flutie’s Sports Pub. The lottery has also deployed several vending machines that sell scratchers and Mega Millions tickets.

Commission Chairman Stephen Crosby notes that state law is written so that some of the money generated by casinos will be set aside for local aid, including all of the money paid to the state by Plainridge. He told the Washington Times last week, “It is highly likely that local aid will go up as a result of the introduction of casinos, not go down.”

The introduction of casinos into other states has affected lottery sales only slightly. In Ohio the reverse effect was noted. The state’s seven racinos have siphoned off profits from the four casino resorts in Ohio’s largest cities.