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Deadline Approaches For MA Casino Developers

Wednesday, January 02, 2013

 

After opening the floodgates by signing casinos into law in November of 2011, Massachusetts Governor Deval Patrick made the state coveted territory for casino developers. And with applications due January 15th, a clearer picture revealing the Bay State’s legitimate contenders to claim the four licenses is beginning to emerge.

“We’ve had eleven entities participating in the scope of licensing meetings,” said Massachusetts Gaming Commission Director of Communications Elaine Driscoll. While developers are not yet required to reveal the locations that they are interested in, they have provided company and personal names, giving the public a sense of who is behind the casino plans and where they might be headed.

Identifying Those Involved

According to Driscoll, four entities have already paid the required, non-refundable $400,000 application fee. Those who have anted up include MGM Springfield, Penn National, Suffolk Downs and Plainridge Racecourse. Other developers or companies that have participated in the meetings but haven’t yet paid are Steve Wynn, Hard Rock, Mohegan Sun Massachusetts, Massachusetts Gaming & Entertainment LLC., Clairvest, and Raynham Park. All of the entities have declared their interest in obtaining a resort casino license with the exception of Plainridge and Raynham, which are pursuing a slots license, and Clairvest, whose interest is unknown. Driscoll also says that Ameristar had originally participated in meetings but has since elected not to pursue development.

Paying the initial application fee early doesn’t necessarily indicate that one development company is more committed than another. Driscoll says the only important factor is that all interested companies submit their paperwork by January 15th, adding that the door is still open even for those companies who haven’t been participating in the licensing meetings. In addition, Driscoll says that none of the development companies should have trouble coming up with the $400,000 fee.

Healthy Competition

Chapter 194 of the Acts of 2011 gives the Massachusetts Gaming Commission the power to permit up to three full resort casinos, one each in the Greater Boston area, southeastern Massachusetts, and western Massachusetts. The law also permits licensing of a single slots facility, not pegged to any particular region.

According to Driscoll, the Gaming Commission will have the luxury of choosing between proposals in every field.

“The commission is pleased as it appears there will be multiple competitors for every license,” said Driscoll.

Many Worcester residents were particularly disappointed in how the state’s regions were divided. When the Patrick Administration first proposed casino gambling back in 2007, Worcester was part of the Western region stretching all the way out to the Berkshires, considered a prime position to become home to a casino. But when the 2011 bill cleared Beacon Hill, Worcester was lumped into the highly competitive eastern sector, pitted against casinos in Boston and its suburbs. New England’s second largest city’s casino gaming fate was all but sealed.

Implications For Connecticut

Economists expect casino gaming will be an economic engine for the Bay State. Director of UMass Dartmouth’s Center for Policy Analysis Clyde Barrow projects that three years after the casinos are opened, at a time when they are expected to be running at optimal levels, the businesses will generate around $12 billion annually in gross gaming revenues, $400 million in non-gaming revenues, and 10,000 to 12,000 permanent jobs.

The decision to move forward with three casinos will also likely have consequences for its neighbors. Connecticut’s Foxwoods Resort Casino and Mohegan Sun are expected to lose a significant chunk of their business soon after the three Massachusetts casinos are operational.

“About 35% of Foxwoods’ customers comes from Massachusetts, and 20% of Mohegan Sun’s,” said Barrow. “We project that two thirds of those customers will return to gamble in Massachusetts within the first year that the casinos are up and running.”

But that doesn’t mean the massive Connecticut casinos are going down without a fight. Barrow says the casinos have demonstrated their desire to stay afloat despite the tough and competitive economic climate.

“There are several strategies that they seem to be pursuing,” said Barrow. “One is that they’re trying to get bigger and bigger. But it seems they’ve passed their critical mass and are at the point where getting any bigger doesn’t do any good.”

Barrow also says the Connecticut casinos are working to become more of an international destination, but notes this can be difficult as “there are only so many multi-millionaires out there.”

What About Rhode Island?

On November 6th, Rhode Island voters elected to implement table games in Lincoln’s Twin River but not in Newport’s Newport Grand. Each question needed to be approved statewide and also within the specific community.

How the pair of Rhode Island casinos fare hinges on the location of the three Massachusetts casinos. According to an independent study conducted by Christiansen Capital Advisers, LLC., the best case scenario for the Ocean State would be casinos at Suffolk Downs in East Boston, New Bedford, and at any one of three locations in Western Massachusetts. The worst-case scenario would include casinos in Foxboro, New Bedford, and at any one of three locations in Western Massachusetts. The study projects that depending on which gaming scenario in Massachusetts is chosen, the installation of table games at Twin River yields a net increase in Rhode Island gross gaming revenue of between $21 and $55.8 million by 2017. By those same projections, Newport Grand, struggling to compete with the casinos that offer table games, would be forced to cease operations by 2017.

 

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