The Massachusetts Gaming Commission is calling for some changes in the state gaming law, and doing so in a way that appears to buttress Steve Wynn’s claim that Mohegan Sun is pursuing a Bay State casino license to protect its casino operations in Connecticut.
The commission sent a memo this week to top officials on Beacon Hill calling for them to make a handful of changes in the state gaming law. In the memo’s introduction, the commission explains that two casino developers, MGM and Wynn, believe a number of issues with the law need to be resolved before they can operate successfully in Massachusetts. By contrast, the commission said, Mohegan Sun supports the legislation as written. The memo then sides with MGM and Wynn on a tax withholding provision, which the commission said “would have the consequence of favoring the Connecticut casinos, by driving regular players out of Massachusetts’ casinos.”
The Gaming Commission has indicated in the past that it favored a change in the tax withholding provision, but it had never before raised the issue of potential loss of business specifically to Connecticut casinos as an argument for such a change.
It was unclear Thursday whether the proposed changes in the law will, if passed, allay the concerns of MGM and Wynn. Both casino operators have suggested in the past that they might walk away from Massachusetts if the law remained unchanged. Neither could be reached for comment on that issue, but the commission’s memo is likely to restart infighting between Wynn and Mohegan Sun, the two rivals for a casino license in the Greater Boston area, over which operator is a better fit for Massachusetts.
Wynn, in previous comments before the commission and in an interview with CommonWealth, has repeatedly suggested that Mohegan Sun is desperate to obtain a license to operate a casino in Revere to protect its casino in Uncasville, Connecticut. Wynn wants to build a casino in Everett that he says would go head-to-head Mohegan Sun and Foxwoods in Connecticut.
“The only interest of the Indians is to smother this threat to their main business, where they have billions invested,” Wynn told CommonWealth in March. He also said the tax on table games in Massachusetts will be 25 percent, compared to zero in Connecticut, giving Mohegan Sun an incentive to steer as much business as possible to Connecticut. “To pick Mohegan Sun, if you represent the state of Massachusetts, is an act of gross irresponsibility,” he said.
Michael Weaver, a spokesman for Wynn, issued a statement Thursday saying the “withholding requirement would benefit the Connecticut operations of Foxwoods and Mohegan Sun, and disadvantage Massachusetts resorts, and, by extension, the Commonwealth itself. We are only concerned with the interests of Massachusetts and are not burdened with a Connecticut conflict.”
Mohegan Sun officials say there is no conflict. Indeed, they have repeatedly said that their agreement with Brigade Capital Management, which is putting up most of the money for the proposed Revere casino and taking a 60 percent ownership stake, bars them from showing any preference for the Connecticut casino.
Mitchell Etess, the CEO of Mohegan Sun, has also characterized his company’s stance on the gaming law differently than the Gaming Commission did. The Gaming Commission said Mohegan Sun “has stated clearly that it does not require any legislative changes to proceed, and in fact supports the legislation as it stands.” But Etess says his company’s position is that, unlike Wynn, it needs no changes in the law to proceed.
“We will work with the regulators in whatever shape or form they want,” Etess previously told CommonWealth. “If they want to increase [the withholding provision], we’re certainly not going to stand in their way. But we’re not saying that has to change or we’re not going to operate.”
Etess and other Mohegan Sun officials have portrayed Wynn as someone who jumped into the casino licensing process knowing the rules but then threatened to walk away unless those rules were changed.
In its memo, the Gaming Commission urged lawmakers and Gov. Deval Patrick to make five changes in the law. The key one is the withholding provision, which would require casinos to withhold taxes immediately on any winnings over $600. Consultants hired by the commission estimated the disruption caused by the provision would drive players away from Massachusetts, resulting in the loss of $28 to $57 million in tax revenue. It was unclear from the commission’s memo whether the loss estimate was an annual number or not.
Wynn and MGM called for a number of other changes in the law, but the Gaming Commission said many of those, including on-site child daycare and mental health services, could be dealt with administratively.
The commission also said it could delay the collection of some casino licensing fees until after a ballot effort to repeal the gaming law is resolved. (The Supreme Judicial Court is currently deciding whether the question can go on the ballot in November.) Nevertheless, the commission said it would be a “reasonable action” for the Legislature to pass legislation promising to return the $85 million casino license fee if the law is repealed.
Wynn and others have raised concerns that the 25 percent tax rate on gross gaming revenues could be changed in the future or that an Indian casino could be approved in southeastern Massachusetts with a lower tax rate. The commission urged lawmakers not to make any change in the tax rate for the 15-year duration of the casino licenses but deferred action on the so-called tax parity issue.
Gaming panel