Building a government agency from scratch

An inside look at the launch of the Mass Gaming Commission

 Photographs by Mark Morelli

I’VE ALWAYS HAD MIXED FEELINGS about gambling. I had no moral concerns about it; indeed, for years my wife and I had enjoyed a day or two at the Saratoga racetrack each summer. Moreover, I had occasionally visited casinos throughout my life, actually becoming pretty good at blackjack when I was in the Navy many years ago. Nevertheless, I did not think that expanded gambling was a good way to boost jobs and revenues in a struggling economy. Dependent on disposable income, I thought the industry would not be recession resistant. For the same reason, I also thought of it as a zero-sum industry, with its revenues reduced if new gambling venues opened in nearby states. Gambling also had the potential to feed or create compulsive gambling problems.

I made my views clear in preliminary discussions with state officials about becoming a member of the Massachusetts Gaming Commission. So I didn’t know what to expect when I walked into a conference room in March 2012 to meet with then-Gov. Deval Patrick, Attorney General Martha Coakley, and Treasurer Steven Grossman, who were spending the day interviewing candidates for two positions on the commission. Surprisingly, my views on gambling never came up during the hour-long meeting. But we did discuss approaches to building the new commission, how to ensure that it became a first-rate public body, how I would approach functions and responsibilities far different from those I had spent most of my professional life performing, and how I saw myself blending with others from very different backgrounds to build a cohesive institution.

We also talked about the Commonwealth’s Open Meeting Law and how it might impact the speed with which the new commission could move forward and about my belief that the commission—brand new, dealing with an often extremely divisive subject, and perhaps composed of people unfamiliar to most residents of the Commonwealth—sometimes would need their public support, at least until it had had a chance to establish a reputation strong enough to carry it through inevitably choppy waters on its own.MM_McHugh_1

That day’s conversation resolved whatever doubts I had about signing up for what had the potential to be a pretty tumultuous mission. Initially, those doubts had been substantial. I had just retired after 27 years as a judge on the Massachusetts Superior Court and the Appeals Court and when the subject of joining the commission was first broached it was not on my chart of post-retirement possibilities.

The more I thought about it, however, the more I began to think that very few people are given an opportunity to build a completely new public agency, with all of the complexities and challenges that entails, particularly in an area as filled with suspicion as this one was. I decided to apply. As I went through the process, I was deeply impressed that everyone involved focused solely on how to build a first-rate and independent regulatory body. No one offered the slightest hint or suggestion about whom the commission should hire or how it should go about issuing casino licenses.  In fact, that hands-off approach pervaded the commission’s relationship with elected and appointed officials throughout my tenure. In any event, when the attorney general’s offer to join the commission arrived shortly after the final interview, I signed on.

In doing so, I joined four other commissioners whose backgrounds were far different from mine and from each other. Steve Crosby’s experience was the most varied. Among other things, he had been an entrepreneur; campaign manager for Kevin White, Donald Dwight, and Frank Sargent; the secretary of administration and finance for former governor Paul Cellucci; the chief of staff to former governor Jane Swift; and founding dean of the McCormack Graduate School of Policy and Global Studies at UMass Boston. One of the three founders of the Commonwealth Compact, he also brought to the commission a relentless drive to ensure that the economic benefits promised by the gambling legislation were shared by a diverse array of Massachusetts residents, including those who were often left out when the economic benefits of new legislation were distributed. Assertive, impatient, plain spoken, and creative, he was someone whom I respected greatly and, on a personal level, liked a great deal.

Bruce Stebbins was the other commissioner who had had a political background. He had served for two terms on the Springfield City Council, several years as the Springfield business development administrator, and in a similar position at the state level. A White House fellow during the presidency of George H.W. Bush, he had also been the New England point person for the National Association of Manufacturers for more than 10 years. He had had extensive business development experience along with deep knowledge of the economic needs of the western part of the Commonwealth.

The legislation gave the commission significant law-enforcement responsibilities and Gayle Cameron’s appointment gave it the expertise needed to carry them out. One of the most remarkable people I have ever met, Cameron began her career in the New Jersey State Police by patrolling on the New Jersey Turnpike and rose through the ranks before retiring as a lieutenant colonel, second in command of the entire force. Along the way, she had spent several years investigating organized crime and in State Police units that oversaw gambling activities in Atlantic City. She has that rare ability to walk into a room filled with strangers and come out with three new friends, an ability that proved particularly useful to all of us during the commission’s early months.

Finally, Enrique Zuniga, who had been the executive director of a Massachusetts agency that provides loans to cities and towns for pollution control facilities, and whose background included a degree in civil engineering, a Yale MBA and a stint at Ernst & Young, provided business and finance experience that none of us possessed. He also brought with him an organizational instinct and drive that proved invaluable as we began to move forward.

Getting started

The five of us were sworn in on March 21, 2012. The next day, accompanied by Janice Reilly, who later became the commission’s chief of staff, and two administrative assistants, we arrived at what seemed like a cavernous empty office suite at 84 State Street to begin putting the commission together. Our immediate tasks were to acquire the substantive knowledge we needed to award the authorized casino and slots parlor licenses, move forward with the licensing process, and identify the key staff positions we needed to fill immediately.

Five weeks later, we were in the middle of a firestorm that erupted when we offered the position of interim executive director to a man who was then working in the governor’s office and who had acquired substantial contacts and expertise in the area of expanded gaming through his work on the gaming legislation. Years earlier, though, he had been accused of sexual assault on a minor and, while no criminal charge resulted, he had paid money to settle a Massachusetts civil action arising out of the accusations. The media reaction to our offer was immediate, explosive, and sustained. Indeed, it amplified with each passing day as legislators, treasurer Grossman, other public officials, and citizen groups voiced their increasingly heated dissatisfaction with our decision. After nine days of sustained outcry, he declined the offer and withdrew.

On a personal and institutional level, the incident was enormously painful for everyone involved. But it also revealed how closely, energetically, and, in many cases, distrustfully our activities were being watched by the media and likely by the population at large. Perhaps that revelation should not have been as surprising as it was, at least to me. With the exception of Crosby, none of us was a known quantity. Gambling, the business we were regulating, was brand new and many in the Commonwealth viewed it as unsavory. Moreover, enormous sums of money were at stake in the license awards and the combination of big money and licensing had created a toxic mix on many occasions in the Commonwealth’s history.

After regrouping, we decided on a parallel process of trying to assemble the key personnel we needed to begin operations while at the same time beginning what proved to be a lengthy and thorough search for a permanent executive director. The quality, the talent, and, perhaps above all, the collaborative instincts of the experienced leaders who joined us from other state agencies, from the State Police and from private industry gave us the ability to move forward on the operational front without waiting for an executive director to join us.

While we were assembling key staff and looking for our director, we also were visiting with and talking to gaming regulators in other states. I personally visited or talked with counterparts in Maryland, Louisiana, Mississippi, New Jersey, Pennsylvania, and Nevada to learn of their operations and approaches to regulation. Some of those approaches were dramatically different, so those discussions provided us with a rich menu of regulatory alternatives. Initially, I was surprised about how open and helpful the other commissions were, for I assumed that they would think of us as competitors and would be unwilling to share with us the keys to their success. It turned out, however, that, as in many other areas, there is a robust network of professional regulators eager and willing to share experiences and trade advice regarding new approaches to solving common problems.

As we hired key staff members and advisors and acquired knowledge and advice from our counterparts around the country, we began to draft and adopt our initial regulations. We sought public comment, much of it required and some we thought would be valuable even though it was not required. Two refrains recurred again and again as we issued regulations and undertook the licensing process.

Two refrains

Distilled, the first refrain was that we were giving insufficient weight to the views of gambling opponents who thought that the Legislature and the governor had made a huge mistake by enacting the legislation. These opponents seemed to think that the commission should not facilitate any rollout activity. Some of their comments were heated. I distinctly recall sitting at dinner one night with a group that included a local broadcast figure whom I had met fleetingly on prior occasions and to whose program I listened as often as I could. After learning through conversation that I was one of the gaming commissioners, he expressed strong displeasure at the thought of casino gambling coming to Massachusetts, displeasure he personalized as the conversation progressed. When I finally suggested that I understood his feeling but that we as a commission were trying to create a first-class, best-in-nation regulatory group so we could deal effectively with the perceived ills he thought would accompany the new industry, he paused for a minute before saying “Terrific. And if you’re successful you’ll have built a beautiful little whorehouse.” With that showstopper, the conversation moved elsewhere.

The problem with the “don’t do it” refrain was that the commission had been created to implement the legislation, not to examine its wisdom. The Legislature had made the basic decision that expanded gambling was right for Massachusetts. Our job was to implement that decision, not to rethink whether it was a good idea.

To be sure, we did ask gambling opponents for their thoughts on how we could mitigate specific harms they feared gambling would produce, harms like addiction, increased crime, adverse impact on housing prices, and the need for increased public services. We took those concerns seriously in the regulations we adopted and, in some cases, in license conditions we imposed.  Some of those regulations and license conditions, such as allowing slot machine players to insert temporal or monetary limits on the slot machines they are playing, exist nowhere else in the country. But reexamining the wisdom of expanded Massachusetts gambling was not part of our portfolio.MM_McHugh_4

The second refrain was that we were often “making it up as we went.” That refrain was particularly prevalent when one group or another thought they had secured a debate-ending victory only to discover that they had not. An example was the vote in East Boston and Revere on a proposed casino that straddled the border between both cities. Because part of the proposed facility would be located in each city, the legislation gave voters in both cities veto power over it. When East Boston voters exercised that veto, opponents of the project believed that that was the end of efforts to place a casino either on the Revere or on the East Boston side of the dividing line. Consequently, they were outraged by our decision to allow a later proposal for a casino located only in Revere to go forward after Revere voters alone exercised their right to approve it.

Stripped of its snarky pejorative, the claim that we were “making it up as we went” contained at least a grain of truth. Indeed, the same claim can be made about the way most administrative agencies proceed from time to time. We were implementing a new, expansive, and highly complex statute. In certain areas, the Legislature had left explicit blanks in the legislation and wanted the commission to fill them in. For example, the legislation says that applicants for a casino license must make a minimum capital investment of $500 million but allows the commission to require a higher capital investment and to decide whether some cost elements, such as the purchase price of land, should be included in the required investment.

The first step in implementation, therefore, was to think through issues and potential problems that might arise in the licensing and later regulatory processes and create regulations to address them. Identifying the problems and issues and choosing what seemed the best of a variety of ways to address them was not always easy. But it was an essential task, just as it is an essential task for any agency charged with implementing a new legislative program.

After regulations were promulgated, we had to apply them to specific issues and questions arising out of actions by cities and towns, applications by those who sought licenses, requests by interest groups to participate in hearings, and so on. In most cases, one or more of our regulations clearly dictated how the issue or question should be resolved. In some cases, though, the regulations turned out to be ambiguous when applied to a specific problem. In those cases, we had to interpret and apply our regulations in a way that was most consistent with their text and the text of the statute. In some rare cases, it turned out that we had never anticipated the precise issue or question that arose and, as a result, our regulations did not clearly provide a solution. In those cases, the commission had to find a solution in the statutory and regulatory framework as a whole and, perhaps, adopt a new regulation to govern future like cases.

All of that can be viewed as “making it up as you go.” Implementing the Legislature’s handiwork is sometimes difficult and messy, but it is the only way to advance complex policy objectives in a complex environment, particularly an environment that was new and filled with unmarked pathways. It was the only way, that is, to effectively introduce expanded gaming to Massachusetts.

The transparency with which we tried to conduct our decision-making undoubtedly contributed to the “making it up as you go” complaint, for our public discussions may well have led observers to conclude, at least from time to time, that we had no idea where we were going. Like watching “turtles on Ambien” is how Boston Globe columnist Joan Vennochi once described our proceedings. The sausage-making quality of those early discussions is undoubtedly part of the reason that one seasoned Massachusetts politician told me early on, in what I’m certain he felt was helpful advice, that “transparency can get you in an awful lot of trouble.”

But those public discussions were critical to making sound decisions and it was important for those affected by the decisions to see how we made them. The discussions sometimes went on for so long because we had very different initial approaches to the same issue. We also were pretty strong-willed and came from environments where our decisions were often the last word. At the same time, we all were trying very hard to do as much as we could by consensus.

The transparency of our licensing proceedings had a particularly powerful impact on those directly affected by them. No other commission in the country makes licensing decisions in fully open proceedings the way we do. The effect of that openness was visible in the faces of those in the audience who were positively or negatively affected by the direction in which our discussion trended at given points. I had presided over a variety of very high stakes cases, civil and criminal, while I was on the Superior Court but I had never seen anything like the tension that gripped the more than 200 people who filled the meeting room at the Boston Teachers Union Hall while we discussed awarding the Boston casino license.

The license contestants were not the only ones immediately affected by our discussions. All of our meetings were live-streamed so anyone with access to the Internet could see them in real time. Obviously, many were watching. I learned after conclusion of the slots-license hearing that the price of Penn National’s stock ticked slightly up or slightly down over the three days of our public deliberations as those of us who favored Penn National or The Cordish Companies, the other principal contestant, made our points.

In the main, the kind and degree of scrutiny our activities engendered was somewhat more intense than I anticipated. Totally unexpected, however, was the degree of personalization that accompanied some of that scrutiny.

The personalization began with Crosby’s arguably belated disclosure of a non-disqualifying relationship he had had with one of the owners of a piece of land in Everett where the casino proposed by Steve Wynn was to be built. Along with the disclosure, he voluntarily removed himself from all commission decisions regarding that land. Months later, he attended the opening day celebration at the Suffolk Downs racetrack we all had attended the previous year in our capacity as racing commissioners, albeit before Suffolk Downs had filed its casino license application. In both cases, and even though he had taken himself out of decision-making about the land before the commission made any decisions about it, the reaction was ferocious. Indeed, so sustained and ferocious was that reaction that Crosby decided that he was distracting from the licensing work the commission was performing and stepped away from all aspects of that work insofar as it affected the Boston-area casino. Shortly after he stepped down, I was met with fiery accusations of bias from the city of Boston’s legal team.

It was deeply unpleasant to watch the pummeling Crosby took for months before he removed himself. By the time he did, I had worked with him on a daily basis for more than two years and knew, saw, and felt that he was dedicated exclusively to the best interests of the commission and the Commonwealth. It was likewise unpleasant to be the focus of bias claims regarding an approach to licensing all of the commissioners and staff had worked so hard to make fair and transparent. On reflection, though, two principles emerged, at least for me.

Two principles

The first is that, having adopted and publicly articulated high standards for transparency and zero tolerance for conflicts of interest, the commission sometimes had an obligation to do more than the law or its own standards required to create a buffer zone between appearances and requirements. The public expected perfection and was not keen on nuance or subtle distinctions, particularly from a body set up to govern activity it already viewed with great suspicion. Doing more than the law and standards required was necessary to prevent a perception that the commission was doing less.

The second principle embraces three rules that Elaine Driscoll, our public information officer, repeatedly stressed in one form or another. First, when faced with claims and allegations that seemed to suck all of the air out of the room, the commission had an obligation to keep moving forward with the hope and expectation that its conduct and accomplishments would show that the claims were baseless. Second, the commission’s responses to those claims had to remain at all times on the high road. Third, the commission had to avoid personalized responses that likely would fuel a series of entertaining but hugely unproductive volleys in the public square.

I broke the second rule in late July 2014, when, at a public meeting after the city of Boston announced that it would not participate in any of the commission’s procedures for determining mitigation measures, I said that the city, and inferentially the mayor, had “abandoned” the residents of Charlestown. For a host of reasons, that characterization was a mistake. Accurate or inaccurate, it did nothing helpful to resolve the difficult problems that then existed and clearly increased the temperature of an already overheated environment.  Moreover, it was a step in the direction of the hugely combative approach the Boston legal team had taken to every aspect of the licensing process from the time the team appeared on the scene in January 2014, through the very end.

That hugely combative approach, coupled with the implacable opposition to any form of expanded gambling from Somerville Mayor Joseph Curtatone, gave me grave doubts about whether, regardless of its merit, the proposal for a casino in Everett could ever get off of the ground. Those doubts were reflected in my lone vote in favor of a casino in Revere instead of Everett. In the end, and to their credit, deliberate and protracted discussions between Mayor Walsh and Steve Wynn revealed and built upon areas of common interest and a resolution both could enthusiastically support. Nevertheless, I can’t help wondering whether resolution might have come a little earlier if I had kept that characterization to myself.

At this point, the commission is a little over four years old and is well into a transformation from a startup focused primarily on licensing and formulation of policy to a mature body in full regulatory mode. Remaining issues from the licensing process are in the hands of courts and administrative agencies; until those issues are resolved, I won’t discuss them. However they are resolved, the commission’s structure, key policies, and key personnel are in place, fully ready to face the numerous regulatory tasks and challenges that lie ahead.

Meet the Author

James McHugh

Former commissioner, Massachusetts Gaming Commission
Some of my initial feelings about expanded gambling have not changed over the last four years. They have been leavened, though, by the quality of the three companies the commission has licensed, the people who run them, the commitment to diversity each has displayed, and the energy each expends on building and maintaining an enthusiastic, team-oriented workforce filled with the potential for upward mobility. With those licensees and with the regulatory structure we created, I believe that Massachusetts will have the best gambling environment possible. I am delighted to have had the opportunity to participate with energetic and talented colleagues in its creation.

James McHugh, a retired state Appeals Court judge, served on the Massachusetts Gaming Commission from 2012 to 2015.