Gaming panel denies Boston host status

Surprise Mohegan-Suffolk lease provision removed

The Massachusetts Gaming Commission adopted a narrow interpretation of state law on Thursday in voting 4-0 to deny Boston host community status for proposed casinos in Revere and Everett. The vote dealt a stinging rebuke to Boston Mayor Marty Walsh and denied voters in East Boston and Charlestown the chance to decide the fate of the proposed casinos on their borders.

Despite a whirlwind of activity this week by Boston officials and a forceful presentation by a newly retained private attorney, the four members of the Gaming Commission (the chairman, Stephen Crosby, recused himself from all Greater Boston matters prior to the hearing) were unanimous in their verdict.

The only real questionmark was the stunning disclosure that the previously secret lease agreement between Suffolk Downs and Mohegan Sun/Brigade Capital contained a provision giving the track’s owners the power to turn the day-to-day operations, as well as all revenues and losses, associated with the track over to the casino operator. The provision had the potential to marry the proposed casino on the Revere portion of the track with the track itself, which is located primarily in East Boston. That potential marriage buttressed claims that the track was an amenity of the proposed casino and that both Boston and Revere should be considered host communities. Mohegan Sun/Brigade Capital and Suffolk Downs quickly dealt with the threat by deleting the provision from their lease agreement.

Gaming Commission members apparently had been aware of the provision in the lease agreement but never mentioned it previously. Indeed, the commission had earlier ruled the lease agreement was a trade secret that needed to remain confidential. But, under pressure from the city of Boston and the group No Eastie Casino, the commission decided to release on Friday most of the agreement’s contents. The Gaming Commission also announced plans to release most of the contents of the option agreement that Wynn Resorts has on land it is planning to purchase for a casino in Everett.

Boston’s corporation counsel, Eugene O’Flaherty, said after the Gaming Commission’s ruling that the city will consider all its options, but it doesn’t have many. A legal challenge is possible, and the hiring of private attorney Thomas Frongillo suggests the city may be considering going that route. But state law gives the Gaming Commission sweeping powers to interpret the law and carry out its duties. Frongillo hinted during the hearing that the city might use its permitting power to block the proposed Wynn casino in Everett because approvals for improvements to Boston roads would be necessary. But that approach could backfire if the city drags its feet and Boston’s roads end up being more clogged than they need to be.

Walsh, who voted for casino gambling as a state representative, fought a somewhat haphazard battle to have Boston designated a host community. He questioned whether the Gaming Commission had the authority to designate a host community at all. He accused the commission, particularly its chairman, Crosby, of bias. And last week he convinced Gov. Deval Patrick to intervene and push for a delay in the Gaming Commission vote, apparently telling the governor that he was near a deal with the two casino developers. It turned out he hadn’t met with either developer for several weeks and he didn’t formally launch negotiations with them until this week. He had one meeting with Mohegan Sun/Brigade Capital and none with Wynn Resorts.

The question of host community status hinges on a few words in the state gaming law. The law defines a host community as a “municipality in which a gaming establishment is located” and defines a gaming establishment as a “gaming area and any other nongaming structure related to the gaming area and may include, but shall not be limited to, hotels, restaurants, or other amenities.”

Frongillo, who represented the city at the hearing, took different approaches in arguing Boston should be given host community status for the two proposed casinos. He argued that the Suffolk Downs racetrack, located primarily in East Boston, was an amenity of the proposed Revere casino and the lease provision giving Suffolk the power to turn the track’s management over to Mohegan Sun/Brigade was evidence of that. “It’s a joint venture,” he said.

Frongillo also noted the original Suffolk Downs casino proposal called for a casino at the track and designated both Boston and Revere as host communities. When East Boston voters rejected that casino plan, Suffolk Downs shifted gears, assuming the role of landlord and bringing in Mohegan Sun/Brigade to run a casino on the Revere portion of the track. Frongillo said the two proposals were really no different from each other. “This is still a project for a casino and a racetrack at Suffolk Downs,” he said.

Celeste Ribeiro Myers of No Eastie Casino said Mohegan Sun/Brigade has tried to build support for its casino plan by promising to save the Suffolk Downs racetrack while at the same time trying to distance itself from the track for host community purposes. “All along these folks have been fighting to have it both ways,” she said.

Regarding the Wynn casino, Frongillo didn’t have much to offer. He said questions about whether criminal elements will benefit from Wynn’s purchase of the land in Everett should disqualify the project from consideration for a casino. On the question of host community status, he said the entrance to the Wynn property is in Boston and the entrance should be considered part of the gaming establishment. He also said Wynn’s plan to steer events to TD BankNorth Garden and Symphony Hall and to shuttle guests by water taxi to destinations around Boston indicated these Boston locations were amenities to the casino.

“This is a Boston casino, not an Everett casino,” Frongillo said. “That’s how it’s going to be promoted.”

While Frongillo’s arguments were technically correct, the commissioners and the casino proponents undercut them using strict interpretations of the law. The commissioners, for example, acknowledged the proposed casinos in Revere and Everett will have big impacts on Boston, but said those impacts should be dealt with by negotiating surrounding community agreements with the casino developers.

Commissioner James McHugh, a former judge, said Frongillo was interpreting the statute’s reference to amenities too broadly. “In a loose sense, you could say the skyline of Boston is an amenity,” he said. McHugh said he interpreted an amenity to mean something that enhanced the value of the casino and would be under the casino’s control or ownership. Under that interpretation, Symphony Hall and the Garden could not be considered amenities.s “This is the statute we’re bound by,” McHugh said.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

The other commissioners agreed with a narrow reading of the law, although Commissioner Bruce Stebbins told Wynn officials he felt they were interpreting the law too narrowly. Wynn lawyers said only the proposed casino, hotel, restaurants, and other buildings connected to the casino should be considered part of the gaming establishment, but Stebbins said he felt the proposed boat docks and an amphitheater should also be located. Even so, the docks and the amphitheater would be located entirely in Revere.

Several commissioners expressed concern about Wynn’s land deal in Everett, but McHugh indicated he felt the problems associated with that deal were being handled properly by reducing the sales price to remove the “casino premium” and by requiring participants in the deal to certify that no one other than the named owners would benefit from the sale.