Race for Greater Boston casino license heats up as decision nears

Whether the Mohegan Tribal Gaming Authority or Wynn gets the license, uncertainty looms until November 4, when Massachusetts voters will decide whether to repeal a 2011 law allowing three resort casinos in different regions of the state, as well as one slots parlor. If the referendum passes, it will nullify all pending casinos, including an MGM Springfield casino and a slots parlor in Plainville, Mass.

The hearings this week in Boston finalize a long process involving town votes for each plan, arguments about how much money the casinos would pay to neighboring communities, and criticism about gaming commission Chairman Stephen P. Crosby's business relationship with one of the landowners in Everett, where Wynn Resorts wants to build a casino. Crosby recused himself from the process in May.

All this is amid the expansion of gaming venues in the Northeast while overall casino revenues in the U.S. have fluctuated since a high in 2007, making the industry's future unclear. Boston, however, is a plum opportunity.

"This is the big one," said Clyde W. Barrow, chair of the political science department at the University of Texas-Pan American. Barrow has done extensive research on gambling and casinos, particularly while he was director of the Center for Policy Analysis at the University of Massachusetts Dartmouth until leaving last month.

A Boston casino could draw a larger crowd than any other gambling venue in Massachusetts, according to experts who analyze gaming trends. "It's going to be the most capital investment, has the ability to generate the most tax revenues," Barrow said. "So, I think this is the single most important decision the Commission will make on license."

The gaming commission has already awarded two other licenses. The commission gave MGM Resorts International a license to build an US$ 800 million casino in Springfield and Penn National Gaming was given a license to operate a slots parlor in Plainville, Mass. A third resort casino could be allowed under state law in the southeastern part of the state.

Keith Foley, senior vice president at Moody's, is a financial analyst who covers the casino industry. He wrote a report in June detailing a slight decline in total gaming revenue across the U.S. — 1.8 percent in April and 0.8 percent in May for 15 of 18 states and regions that allow gambling and reported results. Las Vegas and Nevada overall were an exception to the trend.

"The one advantage a place like Boston may have is it is a relatively international city like Las Vegas, and it may have more traffic, or may be able to have a lot of people during the week go there," Foley said. "One of the problems with the Connecticut casinos and Atlantic City is, while they may be very busy on the weekend, they don't have the convention space, or the people coming during the week. They were never able to get that like Las Vegas gets. The real issue is, can Boston get that?"

The Mohegan Tribal Gaming Authority, which owns and operates Mohegan Sun, has competed with new and expanding gambling opportunities in Rhode Island, New York and Pennsylvania.

The Boston license is important to the Mohegan tribe because if it doesn't get it, it will have a significant competitor who could take away a lot of its Connecticut business, Foley said. "If they get it, that's potentially a very good thing in that it's somewhat of a hedge against what's happening in Connecticut," Foley said. "Connecticut is losing gaming revenue, similar to Atlantic City in a way, to other Northeast gaming regions that are more convenient to where the gaming population is."

Wynn Resorts did not respond to requests for an interview, and Mohegan Sun officials were unavailable last week to talk about the Gaming Commission's deliberations and decision.

If named winner of the Greater Boston resort casino license, Wynn Resorts would have to consider redesigning the exterior of the proposed hotel tower in its Everett casino plan, according to a recommendation the state gambling commission will consider later this week.

If Mohegan Sun’s Revere casino plan prevails, the company might have to come up with another US$ 100 million in equity and agree to market the facility to people in Connecticut and Rhode Island as least as aggressively as it markets its Connecticut flagship resort to those customers.

The Mohegan tribe has a casino in Pennsylvania and manages Resorts Casino Atlantic City. The Mohegans are also developing a casino in Washington state for the Cowlitz Indian Tribe. As New York expands its gaming options, the Mohegan tribe has proposed a US$ 550 million casino in the Catskills at the former Concord Resort Hotel in Thompson, N.Y.

Separately, the tribe is diversifying its investments outside of gaming. The tribe has franchise agreements to open 15 locations of a Colorado burger chain, called Smashburger, and 15 new locations of Pennsylvania-based Arooga's Grille House and Sports Bar. The tribe also bought a wood-pellet production plant owned by the Pennington Seed Co. in Peebles, Ohio.

The Boston casino license, however, is still the most lucrative opportunity, with estimated annual gaming revenues of US$ 800 million to US$ 1 billion five years after opening, Barrows said. "Out of all those opportunities, this would certainly be the most lucrative of anything they've done so far outside of Connecticut," Barrows said.

Ultimately, the winner in the Boston license contest would be the state of Massachusetts, which stands to gain tax revenue and would likely get casino customers in state who have gone to Mohegan Sun or Foxwoods Resort Casino in the past, said the Rev. Richard McGowan, associate professor of the Carroll School of Management and in the economics department at Boston College. "If anything, it's declaring war on the two Native American casinos … which is why Mohegan wants to run the one at Suffolk Downs," McGowan said.

The recommendations from gambling commissioners, not yet final, were among the biggest surprises Monday on the first day of what is expected to be a weeklong deliberation by the commission, before it picks a winning project by Friday or early next week.