Gaming panel fine tunes license conditions
Wynn, Mohegan have until Friday to respond
The Massachusetts Gaming Commission fine-tuned its licensing conditions on Wednesday and gave Mohegan Sun and Wynn Enterprises, the two applicants for a Greater Boston casino license, until Friday at 5 p.m. to say whether they will comply with them or not.
The conditions adopted by the four commissioners hued closely to those proposed by individual commissioners over the previous two days, but the debate over them provided hints about how they may vote in awarding the casino license.
Commissioner James McHugh., a former judge, is difficult to read, but he clearly has major concerns with two aspects of the Wynn casino proposal for Everett. He won support from his fellow commissioners for a condition urging, but not commanding, that Wynn revamp the design of its hotel tower.
McHugh also joined with Commissioner Gayle Cameron in pushing for several conditions requiring Wynn to spend tens of millions of dollars addressing traffic problems at the already heavily congested Sullivan Square in Boston, through which two-thirds of Wynn’s patrons are expected to travel.
“Sullivan Square is a big piece, perhaps a primary piece, of this project to proceed,” he said. While acknowledging Wynn can’t address the traffic problems at Sullivan Square alone, McHugh indicated he believes Wynn must be aggressive in dealing with them. “This is a key to the success of this proposal,” he said.
Commissioner Enrique Zuniga pressed for several conditions addressing his concerns about Mohegan Sun’s finances. One of his conditions would require Mohegan Sun to increase by $100 million the amount of capital invested in the casino to reduce the project’s debt-to-capital ratio. McHugh pushed back against the $100 million requirement and others proposed by Zuniga. “Why do we want to get this deeply involved in the financing arrangements?” he asked.
But Zuniga persisted, stressing several times that he was “uncomfortable” with Mohegan Sun’s finances. At one point he indicated he would probably have to vote against Mohegan Sun receiving a casino license if his concerns weren’t addressed to at least some degree by licensing conditions. The commissioners endorsed his $100 million capital condition, but they backed off or watered down two other conditions that would have required the commission to approve any credit agreements or ownership transfers negotiated by Mohegan Sun.
The four commissioners also slightly narrowed the focus of a condition limiting how much marketing Mohegan Sun Connecticut can do around the Massachusetts casino. There had been some confusion about the marketing agreement, but Mohegan Sun clarified that its Connecticut casino will provide its entire database of customers to its proposed Massachusetts casino and won’t market to any customers within a 60-minute drive of the casino. A condition adopted by the commissioners would bar any of Mohegan Sun’s other casinos from marketing to customers in Connecticut, Massachusetts, Rhode Island, and New Hampshire at a level that exceeds marketing efforts by the Massachusetts casino.
The four commissioners also approved a mitigation package for Boston that provided $1 million up front and $2.6 million annually for five years, plus a pledge to purchase $15 million worth of goods from Boston vendors. The package is far less than the $20 million-a-year mitigation arrangement Boston negotiated with Mohegan Sun.
The commissioners basically adopted the mitigation package that Wynn offered Boston, and tacked on additional money to address traffic congestion at Sullivan Square. Boston Mayor Marty Walsh this summer halted negotiations with Wynn over the mitigation package, and asked the commission to negotiate on his behalf. That now looks like a bad decision, one that may cost the city millions of dollars if Wynn wins the license.
McHugh described the package as the minimum the city could have received if it had gone to arbitration with Wynn. He and Cameron said the commissioners only chose to compensate Boston for actual casino impacts.
There were a host of other conditions agreed to by the commissioners, but for the most part they were fairly routine. One required Wynn to hire no less than 75 percent of its employees from within a 30-minute drive of the casino. Another required Mohegan Sun to waive tribal immunity in connection with any issue that arises with the casino. A third required Mohegan Sun to clarify its own statements about how much it will spend with local vendors.
The commissioners started the day by addressing claims by the two applicants that they had misstated or omitted key facts regarding their applications in presentations on Monday and Tuesday. Mohegan Sun’s response to Zuniga’s fairly tough finance presentation, for example, was 13 pages long and alleged “a large number of material factual errors and mistakes in methodology.” The commissioners, including Zuniga, acknowledged some mistakes, but in general rejected most of the challenges as differences of opinion.Mohegan Sun and Wynn officials have until 5 p.m. Friday to submit written responses to the proposed licensing conditions. The commission said it will meet on Monday to discuss those responses and select a licensee.
McHugh told reporters after the meeting that any outcome was possible, including a decision not to award a license at all. He ruled one outcome as impossible, however. “We’re not going to have a tie,” he said.