Mohegan Sun appears to be the favorite to operate a resort casino just across the border in Massachusetts.
In legislation slated for an October approval, Massachusetts will allow four gambling operations throughout the state, calling for the 10 proposed casino operators to compete with each other for the licenses.
But the way the law is written, the Mohegan Tribal Gaming Authority — the owners of the Mohegan Sun resort casino in Uncasville — only has to beat out one or two competitors to fulfill its plans for a $600 million gambling property in Palmer, Mass.
Using the Mohegan brand, Palmer’s favorable location and evidence of community support, the MTGA has the inside track for one of the Massachusetts licenses.
“Most people in Massachusetts feel that Mohegan Sun is the frontrunner at this point,” said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts Dartmouth, which studies the region’s gaming industry.
“They have brand recognition in New England with a strong reputation for quality,” Barrow said.
In the proposed legislation, the state will be divided into three regions, and each region will receive one resort casino license: western Massachusetts, including Palmer and Springfield; central Massachusetts, including Boston and Worcester; and southern Massachusetts, including Cape Cod and New Bedford. The fourth license can go anywhere in the state, but it is for a slot parlor, not a resort casino.
The licenses can go to any group meeting the Massachusetts criteria and are not limited to Native American tribes, as is the case in Connecticut.
Western Massachusetts has two strong proposed developments: Mohegan Sun in Palmer and Paper City Development in Holyoke. A third has been discussed by Penn National Gaming, Inc. for somewhere in the Greater Springfield area, although the company doesn’t know if it will go for the resort casino license, the slot parlor or anything at all.
“The company will review every opportunity if it makes sense for them,” said Rich Land, spokesman for Penn National Gaming.
That leaves MTGA competing with Paper City Development for the western region license.
Although MTGA hasn’t finalized its plans, the tentative proposal for Palmer is a $600 million development immediately off the Massachusetts Turnpike with a casino and a hotel, which is required by the Massachusetts gaming legislation. The location won’t include a large entertainment venue like the Mohegan property in Uncasville, or a sporting venue like the harness racing track Mohegan Sun operates at Pocono Downs in Pennsylvania.
“When it is all said and done, there’s going to be a lot of people competing for these licenses,” said Mitchell Grossinger Etess, CEO of MTGA. “It is very tough to speculate who will get them.”
To convince a Massachusetts gaming authority of the strength of its Palmer proposal, MTGA will highlight three aspects, Etess said. First, MTGA successfully operates casinos in Connecticut and Pennsylvania with a strong reputation. Second, Palmer is a great location immediately off the Mass Pike that can draw from Hartford, Worcester, Albany, Vermont and New Hampshire.
Third, MTGA has worked with the Palmer community since 2009 to develop a casino, and past surveys show two-thirds of Palmer’s population supports the development. The Massachusetts gaming legislation requires any license applicant to receive a favorable referendum vote from the host town’s residents.
“That is an awesome recipe for a successful proposal,” Etess said.
The Paper City Development proposal in Holyoke would be at the Wyckoff Country Club off I-91.
The company’s principals are a collection of western Massachusetts professionals — a lawyer, a public relations business owner, a former Springfield city councilman — and are led by Joseph Lashinger, a gaming executive who ran the Pocono Downs property in Pennsylvania immediatley before MTGA acquired it, Barrow said.
Although MTGA has a stronger argument with brand recognition, local commitment and a solid track record, Paper City has several arguments in its favor as well.
Paper City’s location — near I-91 and the Mass Pike — means the casino can draw more easily from Hartford and Albany, said Anthony Cignoli, one of the Paper City principals. The casino would benefit from existing public transportation routes of the Pioneer Valley Transit Authority, something Palmer doesn’t have.
Plus, Holyoke is further away from the defined central and eastern Massachusetts regions. There are several proposals for casinos closer to Boston, as well as closer to Worcester, such as in Milford and Charlton. A Massachusetts gaming authority might not want to approve a Palmer casino if any casino is nearby in the central region.
Lastly, Massachusetts Gov. Deval Patrick supports the casino proposal because it will immediately create jobs in distressed areas. Although Palmer has high unemployment, it is in a rural area; Holyoke has high unemployment in an urban area and seemingly would win the jobs argument, Cignoli said.
On top of the fees and taxes required under the legislation, Paper City has promised 1.25 percent of its gross revenues to aid Greater Holyoke in a plan called Holyoke Now! Although other local agreements may come from other resort casino proposals, Paper City is the first to extend such an agreement.
“It is a really, really good proposal,” Cignoli said.
Paper City doesn’t have a partner in the development, a company with a track record in the casino business that will help build the business. Cignoli said the principals are in the process of courting several would-be partners and expects to make an announcement soon.
“It will come soon so the people of Holyoke know who they are dealing with,” Cignoli said.
That partnership will come well in advance of any Massachusetts decision on gaming licenses, which would be mid-2012 at the earliest.
The legislation has to pass the Massachusetts legislature yet and be signed by Gov. Patrick. The previous two years, the state had strong casino legislation in place before support fell apart at the last minute when major players disagreed over the details.
The state seems primed for approval of a gaming bill this year because all the major players — Patrick, House Speaker Robert DeLeo and Senate President Therese Murray — met beforehand to work out the details. Patrick will sign the legislation by mid-October at the latest, Barrow said.
After the legislation becomes law, another nine to 12 months will pass before any licenses are issued, Barrow said. The state gaming commission will have to be created and appointed, and any license applicants will need ample time to shore up their details, including winning a voter referendum.
That’s fine with Mohegan Sun. “We’ve been at this for quite awhile,” Etess said.
A Palmer casino would eat into some of Mohegan Sun’s Connecticut business, as one-fifth of the Uncasville property’s customers come from Massachusetts, not to mention the draw from Greater Hartford.
The two MTGA locations would work hand-in-hand, such as having Player’s Club points transferrable between the properties. Plus, a Mohegan Palmer is a much better option than a non-MTGA resort casino opening in Mohegan’s territory and draw business away, Etess said.
“There certainly will be some impact on Mohegan Sun,” Etess said.
MTGA has had some difficulty getting properties up and running in Wisconsin and New York. The $600 million proposal for New York’s Catskills region was announced in May, but the development has slowed over financing concerns. MTGA hopes to have the financing situation secured by the end of September.
“We hope to resume construction by November,” Etess said.
The Palmer location doesn’t have financing either, although MTGA had preliminary discussions with several investors, Etess said. They are waiting to see if the state passes the legislation.
“You can’t have serious meetings until you have serious legislation,” Etess said.
