POSTED: 1:30 a.m. HST, Jan 5, 2014
BOSTON » When Massachusetts finally gave in after decades of resistance and decided two years ago to legalize casino gambling, it seemed a relatively easy way to fill the state's recession-battered coffers.
Some of the nation's biggest casino operators, including Caesars Entertainment, MGM Resorts International and Wynn Resorts, rushed in to get a piece of this potentially lucrative market. Having spent millions of dollars lobbying lawmakers to allow casinos, they then spent millions more selling themselves to voters, mainly by promising streams of revenue and thousands of jobs.
But a funny thing happened to the moguls on the way to staking their claims. Voters in several towns rejected them. While they did not object to casinos per se, they told pollsters, they did not want them in their own backyards.
Even Gov. Deval Patrick, who pushed through the casino legislation, acknowledged that he would vote against a casino if one were proposed for the town in the Berkshires, in western Massachusetts, where he owns a second home.
As if voter rejection were not discouraging enough, the casinos also faced an unusually tough gatekeeper in the Massachusetts Gaming Commission, which was charged with investigating them and will be selecting one casino for at least two of three regions in the state this spring. The winnowing produced daily twists and turns that transformed the process into a running soap opera. Investigators raised questions, for example, about Caesars' suitability for a license. One involved a rather tenuous tie to an alleged Russian mobster. Still, Caesars withdrew, despite having spent $100 million here.
There were revelations about a possible conflict of interest involving the gambling commission chairman, who was subsequently sued by Caesars, which is looking to redeem itself. And the commission made some eyebrow-raising decisions, like allowing a casino proposal to move forward even though it had been defeated by one of the two towns it would straddle (the commission said the law was ambiguous).
Adding to the drama is Steve Wynn, of the Wynn Resorts gambling empire. He is already trying to change the long-set state law that says gamblers must pay a tax on any winnings over $600, an amount he says is so low it will discourage customers. At one commission hearing on his company's practices, he fell asleep at the witness table.
Lawsuits are now flying, and a nascent statewide movement to repeal the 2011 casino legislation has picked up steam.
"Watching the way this is playing out, for those of us who opposed the casino legislation in the first place, just reinforces our concerns," said Michael S. Dukakis, a former governor.
Gambling is not anathema to New England, despite the region's Puritan roots. New Hampshire started the nation's first state lottery in 1963. New England's first casino, Foxwoods, opened in Connecticut in 1992; today it is one of the largest in the world.
It was the success of Foxwoods that helped inspire Massachusetts to consider casinos in the first place; so many residents were going to Connecticut to gamble that officials here decided to give them a reason to part with their money at home.
The casinos scouted locations and made lavish offers to their potential host communities to win support. Towns that were struggling financially tended to accept them. Wealthier towns spurned them, fearing that the quality of life would deteriorate because of increases in traffic and crime, the ripple effects of gambling addiction and the cannibalization of local businesses, especially mom-and-pop enterprises.
"The gambling industry is constantly looking for new markets, but it's finding it very difficult to get into the markets they want to be in," said Richard McGowan, who teaches business at Boston College and is an authority on gambling. "They want to be where the money is."Scott Harshbarger, a former state attorney general and former president of Common Cause in Washington, is helping to lead the casino repeal movement. Anti-casino activists have gathered enough signatures to get the measure on the November ballot, but a legal challenge must first be resolved.
"This is a mess, and it's going to get worse, not better," Harshbarger said of the process. He said the repeal movement was driven in part by a growing sense that statewide voters should have as much say as lawmakers when it comes to plopping down $1 billion casinos in New England's town squares.
"If we're going to make this kind of radical change in our culture and public policy, maybe the people ought to vote on this and not just the legislature, which is influenced by special interests," he said.
The process has defenders. One is Stephen Crosby, chairman of the gambling commission. He said in a brief interview that the law was working as intended, especially because it gave local control to towns so that casinos would end up only in places that wanted them.
"This is a controversial industry with a very sophisticated, nuanced law to try to make it as good as possible," he said. "That gives lots of room for people to be knocked out of the box, and that's happening."
Crosby caused some controversy himself for revealing late in the game that he had a potential conflict of interest because of previous ties to a landowner who stood to gain millions of dollars if his site in Everett, near Boston, was selected for a casino. Although the state ethics commission cleared him, Crosby recused himself from voting on the land transaction; still, skeptics want him to recuse himself from all decisions involving a license in the Boston region. He said he could be objective and that fair and reasonable people would see that he is.
By its Dec. 31 deadline, the commission received applications from just four casinos, about a third of the number originally anticipated. In western Massachusetts, only one operator, MGM Resorts, which has proposed an $800 million casino in Springfield, is up for a license; voters in two other towns said no.
In the southeast region, a license had been set aside for a Native American tribe, presumably the Mashpee Wampanoag, which has won approval from voters in Taunton. But the tribe is awaiting a federal ruling on its land; meanwhile, KG Urban Enterprises has applied for the southeast license for a casino in New Bedford. No decision is expected for some time. (Separately, Patrick has gone to court to stop another tribe from building a casino on Martha's Vineyard.)
In the greater Boston region, where billions of dollars are at stake, only one application was complete. Wynn Resorts, which was spurned by the relatively affluent town of Foxborough, won approval from the town of Everett to build a $1.3 billion casino on chemically contaminated land on the waterfront.
A second application for the Boston region was filed by Mohegan Sun, the giant Connecticut casino operator, for a $1.3 billion resort casino at the fraying Suffolk Downs thoroughbred racetrack, which is partly in Revere. But the Mohegan/Suffolk proposal still needs to be approved by the town, which is scheduled to vote Feb. 25 in what will be an intense campaign that is likely to motivate pro- and anti-casino forces from beyond its borders.
The proposal emerged at the eleventh hour after a convoluted series of events, including Caesars' abrupt withdrawal and a rejection by voters in East Boston, which the track straddles. Casino opponents say the commission bent its rules to allow the proposal to move forward, in part to ensure some competition against Wynn in nearby Everett.
To sweeten the pot for Revere voters, Mohegan signed what may be the most lavish host community pact in the state. It includes an opening payment of up to $33 million plus $45 million in infrastructure improvements and, perhaps most enticing, preference for Revere residents for the project's 2,500 construction jobs and 4,000 permanent jobs. City officials in Revere are fully on board, calling the proposal a once-in-a-lifetime opportunity for a complete transformation.
Once the licenses are awarded this spring, each winning casino must pay the state $85 million in a nonrefundable license fee. Construction could begin by summer.
The potential for chaos exists, though, if statewide voters then decide in November to repeal the casino law. But the developers are not thinking about that now.
"I'm worried about a meteor hitting, too," said Chip Tuttle, the chief operating officer of Suffolk Downs. "But there's not much I can do about it."
Katharine Q. Seelye, New York Times