THE MASSACHUSETTS GAMING COMMISSION on Thursday adopted a cautious approach on gambling in southeastern Massachusetts, voting 4-1 to reject a casino license application for the struggling Gateway City of Brockton and ceding the market to the proposed Mashpee Wampanoag tribal casino in Taunton.
The decision was driven by three concerns. The commissioners feared the financial impact of having two casinos competing head-to-head in southeastern Massachusetts. They wanted to be fair to the Indian tribe. And, while they generally praised the Brockton casino applicant, Mass Gaming & Entertainment, they faulted the company for turning in a subpar proposal.
Stephen Crosby, the chairman of the commission, thought the inward-looking design of the Brockton casino proposal and its failure to connect more closely with the surrounding community had the potential to suck economic activity out of the community. “It’s just not compelling to me,” he said of the casino design. “It has a downside risk of undercutting economic development.”
Commissioner Bruce Stebbins said the license application of Mass Gaming & Entertainment was “not up to the level of excellence that I would expect.” Both Stebbins and Crosby said they might have voted for the Brockton proposal if the company’s application and design for the proposed casino had been better.
Commissioners Gayle Cameron and Enrique Zuniga said they were concerned about the risk of having two casinos in southeastern Massachusetts, which is considered the weakest gambling region in the state. They relied on a study done for the commission that showed if two casinos were operating in southeastern Massachusetts state gaming tax revenues overall would decline by as much as $42 million.
The lone dissenter on the commission was Lloyd Macdonald, who argued that the risk of having two casinos in southeastern Massachusetts was minimal because of flaws in the commission’s study and the fact that the tribal casino was unlikely to get very far off the ground. He also argued forcefully that the state should support economic development in a struggling community like Brockton.
“We’ve got a city that desperately needs economic development, workforce development, and an infusion of capital to better serve its citizens,” he said. “A no vote means Brockton, we’re sorry, you can’t have it.”
Mass Gaming & Entertainment promised 1,477 full-time-equivalent jobs paying $43,394 in salary and benefits. That pay package was well below the $52,219 that MGM Resorts intends to offer its employees in Springfield.
The Mashpee Wampanoag plan to build their casino on land in Taunton that the federal government allowed the tribe to take into trust. In its land-in-trust decision, the government adopted a fairly novel interpretation of federal law that is being challenged in court by abutters who have received financial support from Mass Gaming & Entertainment. Macdonald, a former Superior Court judge, said the tribe faces a “very credible and potentially fatal federal court challenge.”
Macdonald questioned several assumptions contained in a report analyzing the impact of two casinos in southeastern Massachusetts. With just the Taunton casino, the commission’s consultant, HLT Advisory, estimated total gaming revenue statewide once all casinos are up and running would be $1.7 billion a year, with state tax revenues totaling $433 million. If a Brockton casino were also approved, the firm estimated the state’s total gaming revenue would rise by $46-$64 million, but tax revenues would fall by $28-$42 million.
Macdonald noted that the HLT study estimated large numbers of gamblers driving from the Boston area to southeastern Massachusetts would bypass the Brockton casino and head for the tribal facility in Taunton. “Intuitively, it doesn’t seem to make sense,” he said.
The commissioner also questioned the study’s assumption under one scenario that the Taunton casino would be “bigger and better” than the one proposed for Brockton. While the tribe has talked of spending as much as $1 billion on its casino (compared to $676 million on the Brockton facility), Macdonald said a bigger and better casino was unlikely because of the legal uncertainty surrounding the facility and the need for the tribe’s financial backer, the Genting Group, to get its money out of the project as fast as possible.
Macdonald also pointed out that the Gaming Commission would have oversight over the Brockton casino, but not the tribal facility. He said the tribe has only committed to build phase one of its project, a bare-bones casino. “The bigger and the better – I think that’s highly speculative,” he said.
Zuniga, Cameron, and Crosby acknowledged the legal and financial challenges faced by the tribe, but decided to leave any determination to the courts. “I don’t think it’s our job to forecast an outcome,” Cameron said.
Crosby said state officials who crafted the state’s gaming laws felt all along that Indian tribes should be given the first crack at opening a casino in southeastern Massachusetts. He noted the commission only solicited commercial casino applications when the land-in-trust process dragged on for so long. Stebbins and Zuniga said it was best to put off granting a commercial casino license in southeastern Massachusetts until the tribe’s legal and financial situation becomes clearer.
Cedric Cromwell, the chairman of the Mashpee Wampanoag tribal council, issued a statement pledging to open his facility by next summer. “Historically, our people have been the recipients of a string of broken promises. Today is not one of those days,” he said. “I commend the Gaming Commission for making a difficult but wise and just decision.”
In a letter to the Gaming Commission, Brockton Mayor Bill Carpenter said the casino would bring badly needed jobs to a community with unemployment levels 150 percent above the state average. He also noted the facility would bring four-star hotels and first-class restaurants to a community that has none. He noted the majority of Brockton’s hotels are currently used by the state as homeless shelters.
The commissioners used a three-step process in reaching its decision on the Brockton casino license. They first discussed the ratings individual commissioner had given Mass Gaming & Entertainment for aspects of its proposal – sufficient/very good for finances; sufficient for economic development, mitigation, and building and site design; and insufficient for wow factor. The five commissioners accepted each of the ratings except for Crosby’s insufficient grade on the project’s wow factor, which was raised to sufficient.
Then the commissioners reached consensus that Mass Gaming & Entertainment met the minimal qualifications needed for a casino licensee. Where they differed was on whether a commercial casino license should be awarded to Mass Gaming.
While the commissioners at times seemed to suggest the Brockton facility was calibrated to fit the diminished expectations of the market, in the end they felt Mass Gaming & Entertainment should have offered something more.
“This does not meet the standards that are required,” Crosby said, noting that the Brockton proposal did not qualify as a destination resort.