Oct 18, 2013
05:25 AM
Connecticut Today

Connecticut Casinos Look to Get In On Massachusetts' Casino Expansion

When the Massachusetts State Legislature passed its Gaming Act in 2011, it authorized the Massachusetts Gaming Commission (MGC) to license three regional resort casinos and one statewide slots parlor. Before anyone could say, “And they’re off!” Connecticut superstars Foxwoods Resort Casino in Mashantucket and Mohegan Sun in Uncasville had applied for two of the licenses: Foxwoods in Milford, Mass., 25 miles from Boston (part of Region A), and Mohegan in the western Massachusetts town of Palmer (Region B).

So far, they’ve both submitted the requisite 230-page application to the MGC, along with a signed host-community agreement, and anted up the $400,000 fee. The next challenge they face is winning a referendum vote in these communities: Mohegan’s vote takes place on Nov. 5, and Foxwoods’ on Nov. 19. If they do, the MGC plans to make the call for Regions A and B by the end of April.

Applicants will be evaluated on five criteria, says MGC Director of Communications Elaine Driscoll: “potential for economic development, finance, building and site design, community mitigation and the quality of the general overview, what we call the ‘wow factor.’” Of these, she adds, community mitigation—how applicants have agreed to remunerate the host community on issues such as public safety, traffic and infrastructure concerns—is an element “very important to MGC’s mission.”

The mitigation agreements currently stand as follows: Foxwoods has agreed to pay the town of Milford $33 million for community development up front—which will expand local police, fire and sewer services, and finance a new ladder truck for the Milford Fire Department (at an estimated price of $1 million)—as well as more than $30 million in projected annual payments, including real estate taxes, 2 percent of all gross gaming profits above $500 million, and school-aid contributions. Foxwoods’ development team has agreed that 95 percent of its hires for the 3,000 permanent jobs created by the project should live within a 50-mile radius.

Mohegan Sun’s agreement with the town of Palmer includes $16 million in annual payments for economic development, larger fire and police departments, and publicworks improvements, including 25 percent of the casino’s first $400 million in gaming revenue. This sum would constitute half of the entire 2014 operating budget for Palmer—a town of only 12,500 people—and exceed its annual tax revenue for the year.

Both casinos face stiff competition. Foxwoods is squaring off against Wynn Resorts Ltd.—the company owned by famed Las Vegas casino mogul Steve Wynn—which is proposing a casino in the Region A town of Everett that won 86 percent approval in a June referendum vote. A third bid, for a casino in East Boston, has been proposed by the Massachusetts owners of the Suffolk Downs race track.

Since a bid by Hard Rock Massachusetts to establish a casino in West Springfield was voted down by community referendum in June, Mohegan is now in a mano-a-mano contest with MGM Resorts International’s proposed casino in downtown Springfield. MGM’s urban plan contrasts sharply with Mohegan’s design for Palmer, which is a $1 billion shopping, dining and entertainment complex with 300,000 square feet of retail space, two hotels and a 70,000-square-foot, indoor-outdoor aquatic adventure park. Set on 150 acres amidst wetlands and forest just off the Massachusetts Turnpike, the Mohegan complex will attempt to evoke a hilltop town in Europe.

Foxwoods’ Massachusetts proposal—also boasting a $1 billion price tag—promises nearly 1 million square feet of gaming, retail and resort amenities, plus a 5,400-space parking garage. Whatever the ultimate cost of these projects, there’s little doubt they’ll pay big dividends, if Foxwoods’ and Mohegan’s history in Connecticut is a reliable indicator.

Founded by two of the state’s tribal nations (the Mashantucket Pequot Indians . who opened Foxwoods in 1992; and the Mohegan Indians, who followed suit with the Sun in 1996), over the past 20 years the casinos have contributed billions of dollars to state coffers under an agreement that requires them to file 25 percent of their slot-machine revenue in taxes every year. In 2007, says state Rep. Stephen D. Dargan (D-West Haven)—who, as co-chair of the legislature’s Public Safety and Security Committee is responsible for casino oversight—this sum reached its peak of $430 million. “A good percentage of that went back to our 169 towns, and helped them keep property taxes down,” he says.
 

 

That accomplishment pales when one considers other aspects of their economic impact. “When they first emerged, they were a huge source of jobs,” says Alissa DeJonge, vice president of research for the Connecticut Economic Resource Center. “They employed about 20,000 people in the mid- to late ’90s.”  (The current number is closer to 10,000.) Both casinos have also made a point of supporting local vendors. “I went to an event at Foxwoods where there was a map that showed all the companies in Connecticut they did business with, down to the one that sells them toilet paper,” says Dargan.

Their support for local nonprofits, says state Sen. Andrew Maynard (D-Griswold), has also been exceptional: “Everything from the Mystic Maritime Aquarium and local schools to the United Way and organizations for the homeless—I can’t begin to list them all,” he says. The Mashantucket Pequots also used their Foxwoods largesse to build the much admired Mashantucket Pequot Museum & Research Center. “And they’ve been enormous donors to the Museum of the American Indian in Washington, D.C.,” Maynard says. “Trying to support and advance the history of their people and all Native American tribes is as important to them as anything they do, I think.”

The fact that they’ve been such good corporate citizens has local observers rooting for their expansion into Massachusetts to succeed, even though all agree this will draw revenue away from Connecticut. Tony Sheridan, president of the Eastern Connecticut Chamber of Commerce, has taken part in community discussions in both Palmer and Milford, Mass., to support the Foxwoods and Mohegan Sun bids. “I’ve told the people in those towns that they really need to take a hard look at the culture of the bidding organizations,” he says. “The difference between the Wynns and Trumps and Native American tribal nations is night and day. The tribal nations will be way ahead in terms of their sensitivity to community needs, the environment and their employees. The only motivating factor of the non-tribal gaming enterprises is the bottom line.”

Meanwhile, the casinos themselves have been planning for the financial losses Massachusetts gaming may bring here, whether they win the licenses to build or not. One important key, says Mitchell Etess, chief executive officer of the Mohegan Tribal Gaming Authority, “is building, for lack of a better term, the ‘destination factor.’”

Toward that end, Mohegan Sun is planning a $50 million expansion in Connecticut: a “Downtown District” that will add 50 retailers, a “Taste of New England” gourmet food hall, a 14-screen movie multiplex and Kings Bowl, a bowling and dining attraction. Foxwoods, which completed its last expansion, MGM Grand, a year before the 2009 financial crisis—resulting in recessionary losses and a $2 billion debt—has successfully resolved this problem and is in the process of adding an 80-store Tanger Factory Outlet Centers mall, a $115 million 300,000-square-foot project that will connect MGM Grand to the Grand Pequot Tower. The resort is also planning a multimillion-dollar renovation of its gaming areas, restaurants and hotel rooms, slated to begin next year.

These projects clearly seem aimed at bringing in new visitors who would not necessarily come to the casinos to gamble, but rather for their ancillary attractions, which also include concerts and sporting events. “The more you build the destination factor, the more certain people can envision coming to the casino and spending a couple of eight or 10-hour days here, as opposed to those who visit casinos that only offer gaming,” Etess says.

The powers-that-be at Mohegan have also been careful to double-down (and even quadruple-down) when protecting their gaming interests: They own or manage casinos in Pocono Downs and Atlantic City, and are pursuing contracts in Washington, D.C., and Philadelphia. “We knew competition was coming in Massachusetts, so we focused on diversifying geographically,” Etess says. “We set up a separate business unit to collect revenues outside the immediate area.”

In the long run, state Sen. Maynard believes Mohegan Sun and Foxwoods will prevail against all comers—after all, they survived each other, though only eight miles apart. “They were the first in the region and managed to chart their own courses successfully,” he says. “They made Eastern Connecticut a top national and international entertainment destination. I suspect other casinos will not be able to match that kind of record for a number of years.”

 

Connecticut Casinos Look to Get In On Massachusetts' Casino Expansion

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