MGM Springfield is set to open in September

Connecticut’s tribal casino operators are top candidates to buy out MGM Springfield casino

The Connecticut casinos are not the only potential contender for MGM Springfield should it be put up for sale. Penn National Gaming of Pennsylvania has been mentioned.
2018-04-23
Reading time 4:19 min
As MGM is in early talks to possibly acquire a Wynn Resorts casino being built outside of Boston, industry experts believe that Foxwoods Resort Casino and Mohegan Sun are the top candidates to take over its new Springfield casino, since that acquisition would require the company to sell it off.

“We believe some combination of Mohegan Sun/Foxwoods and a [real estate investment trust] would make the most sense for Springfield,” John DeCree, a director and analyst at Union Gaming in Las Vegas, said in a report this week. “It would eliminate an immediate competitive threat to the Connecticut casinos and offer a growth opportunity without development risk.”

As reported by Hartford Courant, Connecticut’s two tribal casino operators — Foxwoods Resort Casino and Mohegan Sun — are seen by industry experts as top candidates to take over MGM Resorts International’s new Springfield casino should the Las Vegas gambling giant set its sights on Boston.

Speculation about an upheaval in Massachusetts’ fledgling casino landscape heated up after the Wall Street Journal reported that MGM was in early talks to possibly acquire the casino under development by Wynn Resorts outside Boston. Such a decision could reverberate across Connecticut.

A move by MGM to Boston, which is a bigger, more profitable market than Springfield, faces a significant hurdle: individual casino operators can only hold one of the three licenses in Massachusetts.

Analysts say giving up Springfield — selling it once it is completed, perhaps at a discount to its $960 million development cost — is the most likely option.

DeCree, writing in a note to investors last week, said Mohegan Sun or a combination of Foxwoods and Mohegan Sun — already collaborating on a satellite casino in East Windsor to compete with MGM Springfield — is a likely buyer for Springfield.

On a recent conference call with analysts, “Mohegan Sun suggested they would invest in new projects where there could be a rapid return in capital,” DeCree wrote. “An imminent opening casino in Springfield (September, 2018) would fit this parameter.”

Both Mohegan Sun and Foxwoods sought unsuccessfully to push into Massachusetts when the state legalized casino gambling and authorized three licenses.

A joint purchase of MGM Springfield by Foxwoods and Mohegan Sun could take place either with or without the development of the East Windsor casino, DeCree said.

While the purchase would make sense from the standpoint of eliminating a competitor for the tribes, it might be hard to sell to policymakers and regulators in Massachusetts, said Frank Fantini, chief executive of Fantini Research in Dover, Del., publisher of Fantini’s Gaming Report.

“These decisions start to enter the realm of politics,” Fantini said. “The very reason the tribes might be motivated is the very reason Massachusetts regulators and Massachusetts policymakers might not want to see them get it.”

Massachusetts will want operators who will bring as much revenue and as many jobs to Massachusetts as possible, Fantini said.

Massachusetts doesn’t “want someone who has a built-in conflict of interest because they are trying to protect their flagship properties in a neighboring state,” Fantini said.

Fantini adds: “Not to mention how upset the Connecticut legislators who passed a bill and went through all that turmoil to let them build that casino in East Windsor.”

But for Connecticut, the tradeoff may be stronger, casino companies based in the state, Fantini said.

Foxwoods and Mohegan Sun referred questions about DeCree’s report to a spokesman for MMCT Venture, the tribal partnership pursuing the East Windsor casino.

Andrew Doba, the spokesman, declined to comment on “rampant speculation,” noting that MMCT’s concerns remain focused on preserving jobs and revenue in Connecticut. MMCT is “100 percent” focused on developing, opening and ensuring the long-term success of the gambling venue.

MGM did not elaborate on its statement from last week saying it does not comment on “rumor or speculation.” It also said it is focused on the opening and success of MGM Springfield. Wynn Resorts did not return an email seeking comment.

The Connecticut casinos are not the only potential contender for MGM Springfield should it be put up for sale. Penn National Gaming Inc. of Pennsylvania, which operates Plainridge Park casino in Plainville, Mass., has been mentioned. Others that could be interested are two Nevada-based companies: Eldorado Resorts, the operator of 20 casinos, and Boyd Gaming Corp., which runs 24.

The speculation about an MGM purchase of Wynn’s $2.4 billion casino project in Boston followed revelations that Wynn co-founder Steve Wynn sexually harassed employees and that the company did not disclose a settlement with one victim.

Massachusetts is investigating Wynn Resorts and may consider disciplinary action that could result in the loss of its gaming license.

Steve Wynn has since stepped down as CEO and sold all his shares in the company.

New leadership at Wynn also has told investors that the company is refocusing its strategy, reassessing its spending and may move away from regional gaming, DeCree wrote. Wynn could well be rethinking its Boston project, with $1.5 billion still to be spent, he said.

The Massachusetts Gaming Commission declined to comment on the investigation or speculate about potential shifts in casino operators.

Massachusetts law does allow for a transfer of a casino license. Changes cannot be made to the original agreements with regulators or the community without state approval.

Industry experts say MGM is a different company than when it won the Springfield license in 2014. Four years ago, MGM generated $1.5 billion in net earnings before taxes and other expenses. That has now risen to $2.5 billion.

In addition, MGM also has a significantly larger presence on the East Coast, including MGM National Harbor in Maryland and The Borgata in Atlantic City.

But other suitors for Wynn Boston also could line up: Caesars Entertainment, based in Las Vegas, which has the Caesars and Harrah’s name; and Asian casino giant Genting, which partnered with the Mashpee Wampanoag tribe on a casino in southeastern Massachusetts that was started but has yet to be completed.

Las Vegas Sands Corp., based in Nevada and known for its Parisian and Venetian themed casinos, also is a possibility.

If an MGM-Wynn deal is in the making, it is unclear how quickly it might unfold.

Last week, Elaine Wynn, Steve Wynn’s ex-wife, co-founder of Wynn Resorts and the company’s largest shareholder, called for a shake-up on the company’s board of directors, according to a filing with regulators.

Elaine Wynn called for nominations to the board to be extended at least 60 days, with new directors constituting a majority of the board.

In the filing, Wynn said the changes on the board should be completed before any “material decisions are made that could affect the long-term interests of shareholders.”

Leave your comment
Subscribe to our newsletter
Enter your email to receive the latest news
By entering your email address, you agree to Yogonet's Condiciones de uso and Privacy Policies. You understand Yogonet may use your address to send updates and marketing emails. Use the Unsubscribe link in those emails to opt out at any time.
Unsubscribe
EVENTS CALENDAR