Monthly Archives: May 2011

By Dan Ring, The Republican

Despite a downgrade of its heavy debt, the Mohegan Sun is expanding into New York with a casino in the Catskills that would complement the company’s proposal for Palmer.

Mitchell G. Etess, chief executive officer of the Mohegan Tribal Gaming Authority, said the company is set to operate and manage “The Mohegan Sun Concord,” a planned $600 million resort at the site of the former Concord Hotel in Thompson, New York. The New York casino is scheduled to open in the spring of 2013.

“It’s very similar to Palmer in terms of size and scope,” Etess said.

The planned expansion into New York comes as an agency downgraded the ratings of Mohegan’s debt, citing declining gambling revenues, increased competition and the possibility of additional competition if Massachusetts approves casinos. While it is hurt by debt, the Mohegan authority is also moving ahead with new efforts.

“It’s a good example to people,” Etess said of the New York project. “We’re clearly out there and doing projects.”

Etess said he might be more concerned about the report on debt by Moody’s Investors Service in New York if not for his company’s strong earnings during the most recent quarter.

The planned New York casino was announced the day after Etess testified about the Palmer project on Beacon Hill during a hearing on gambling bills in front of the Committee on Economic Development and Emerging Technologies. Legislators in Massachusetts are again moving to approve casinos after a bill failed last year at the last minute.

A separate company – Paper City Development – is proposing a casino for the Wyckoff Country Club off Interstate 91 in Holyoke.

Etess said the Catskills casino is a logical expansion for the Connecticut-based company. He said it would be a regional destination, much like the planned Palmer casino on 152 acres of leased land off Exit 8 of the Massachusetts Turnpike.

Etess said his company is still searching for a financial partner for Palmer. He said the company has been talking with between 15 and 20 possible investors over the last 20 months.

“It’s a very attractive opportunity to people in the investment community because it’s a location that can provide return,” Etess said. “And there’s many organizations looking to invest capital.”

Etess said there is “a huge appetite” to invest in Palmer with Mohegan, but the company could sew up a deal with a partner only if casinos are legalized in Massachusetts and the specifics of a new law are available.

He said it’s possible Mohegan might have more than one financial partner in Palmer. He said the company’s project for Palmer remains unchanged.

“It’s the same as it has been since 2009,” he said. “A 600-room hotel, slots, tables, restaurants .. a theater enough to give the amenity to your guests but clearly not be competitive with .. theaters and so forth in Springfield.”

The New York casino would include a 258-room hotel, a 75,000-square-foot casino with 2,100 video lottery terminals and up to 450 electronic table game positions, five restaurants, retail space, harness race track, grandstand and simulcast and 10,000 square feet of ballrooms and meeting space.

Etess said more than $100 million has already been spent in New York on site preparation, foundations and curtain wall, demolition and environmental cleanup.

Concord Associates, owned by New York developer Louis R. Cappelli, will develop the Catskills project with Marnell Co. of Las Vegas.

Etess said he was disappointed in the report by Moody’s. The rating agency on Monday said the Mohegan authority has “a significant capital structure issue” because it has yet to refinance $925 million in debt.

The authority owns the Mohegan Sun casino in Uncasville, Conn. and a harness track and slot machines at Pocono Downs in Pennsylvania.

“The Moody’s downgrade came after we had a great earnings report,” Etess said. “Our financial performance is very positive.”

The Mohegan authority on May 5 reported $25.2 million in net income for the quarter ending March 31, a 26 percent increase from the same quarter a year ago. Gaming revenues for the quarter declined slightly from last year to $316 million.

In an e-mail, Kathleen C. Norbut of Monson, an adviser to United to Stop Slots in Massachusetts, said the downgrade of Mohegan Sun’s debt raises questions about the financial sustainability of potential slot barns and casinos in Massachusetts.

Norbut also suggested that proposed revenues from casinos could be reduced if Congress approves U.S. Rep. Barney Frank’s bill to legalize and regulate online gambling in the United States.

Norbut and others are seeking approval of a bill by Sen. Stephen M. Brewer, D-Barre, that calls for the governor to commission a comprehensive, independent analysis of the costs and benefits of casinos.

“When is Beacon Hill going to conduct a transparent discussion of the costs and impacts of expanding predatory gambling by an industry that is and has been in decline?” Norbut asked in her e-mail.

The gaming market in the Northeast is growing increasingly competitive, and prompting investments in new projects, according to a report in April by the Center for Policy Analysis at the University of Massachusetts at Dartmouth.

The recession of 2008 and 2009 took a toll on the industry, the report said. The market appears to be stabilizing this year, but last year was the fourth consecutive year-to-year decline in gaming revenues for the two Native American casinos in Connecticut, the report said.

The casino industry in New England employs 19,200 people at the Foxwoods Resort Casino in Ledyard, Conn. and the Mohegan Sun, two race track casinos in Rhode Island and a slot barn in Bangor, Maine, the report said.

Pennsylvania has 10 full-blown casinos. New York has 11,500 video lottery terminals at eight race track casinos and is planning further expansions, the report said.

 

By Wayne Woodlief

There are some sure things about the new push for casino gambling and racetrack slots in Massachusetts. There are billions to be made, though the casino operators, most from out of state, would pocket most of it.

Still, there would be enough left that cities and towns, local chambers of commerce and construction unions are lobbying hard for the new revenue from licenses and taxes on the casinos.

Supporters were out in force at a hearing by a joint Senate committee Wednesday. About two dozen Palmer residents wore bright blue T-shirts urging gaming there and nearly as many union members held a huge placard outside the State House urging “Casinos Now” and “Jobs Now” before marching into the hearing room wearing T-shirts with the same messages.

And Robert Haynes, the usually voluble AFL-CIO president, delivered a pithy boost for casinos and racinos, and for their most ardent supporter, Speaker Robert DeLeo. “Seven words,” said Haynes, who just last week had blasted DeLeo-led crackdowns on collective bargaining. “This week I agree with the speaker.”

But it is the unknowns that make passage of gaming legislation, which was stalled last year, still a very dicey proposition, one about which legislators should be wary and slow down any rush to licensing judgment.

• State Sen. Jamie Eldridge warned that many local businesses may well lose customers’ buying power to the bright lights of gaming halls, echoing similar concerns in 2010.

• The projections of as much as $500 million a year for state government and local aid may be too rosy. Although the state might score big with the initial licenses, that isn’t recurring revenue and the huge letdown could cloud future years.

• But the greatest emotional and social toll is the pressure gambling puts on families when a member gets deep into the habit.

Scott S. (some recovering gambling addicts prefer to remain anonymous), a businessman from western Massachusetts, testified Wednesday that he amassed huge debts, faced foreclosure on his house and became so depressed that he contemplated illegal activities and even suicide.

In a follow-up interview, he told me that he probably had an underlying gambling problem but in 2006 got some disturbing medical news. Depressed, he started playing the high-limit slots at Mohegan Sun.

“That August I won $46,000, but enough was never enough and I left the casino that weekend with $3,000,” he said.

Scott explained that he received a line of credit from the casino and got “really hooked” on those slots. In March 2007 he won $220,000 at Mohegan Sun but quickly lost it back and wound up owing $200,000 by the next March.

“I started selling my assets — a brand-new motorcycle, a snowmobile and an antique car, a camper . . . basically all for pennies on the dollar.” He took out a second mortgage to pay down the huge credit-card debts and then sent them mounting again with more casino losses. But he reached out to the Massachusetts Council on Compulsive Gambling, which helped him get counseling and stop gambling.

“I’ve been free of betting for more than two years,” Scott said.

Attorney General Martha Coakley testified that proper law enforcement and protection of public health must be ensured at the casinos and that she wants to see regulations aimed at detecting possible money laundering by organized crime figures, given the enormous sums that would be circulating through casinos.

Cause to be careful, yet it was one man’s testimony that spoke most poignantly about the risks of casino addiction and caused Sen. Karen Spilka, the hearing co-chair, to say, “Thank you for your courage (in coming forward). Congratulations with your recovery. Stick with it.”

 

Dan McGowan, GoLocalProv News Contributor

There are few sure things about the 2012 election cycle, but a vote to expand casino gaming in Rhode Island appears to be the exception. With the state desperate to bring in new revenue, members of the General Assembly will soon decide whether to allow a public referendum on next year’s ballot that would ask voters to allow table games at Twin River and potentially generate over $100 million for the state, according to one legislator.

A bill introduced by William San Bento (D-58) has not gone in front of the House Finance Committee yet, but if last year is any indication, it should have no problem getting to House floor and passing in both chambers.

And this year, Governor Donald Carcieri isn’t there to block the vote.

Could Generate $100 Million

San Bento proposed the legislation a week after the Town of Lincoln approved a resolution asking the General Assembly to give residents the opportunity to vote on expanding Twin River to allow blackjack and other tables. The state requires both local and statewide votes to alter the gaming laws.

San Bento says the opportunity to generate new revenue is too important not to give voters the ability to decide. By voting to expand to table games, the state rep believes Rhode Island will be able to get a head start on Massachusetts (which is widely expected to enter the gaming business) and start to win back Ocean State residents who make the trip to Foxwoods and Mohegan Sun to gamble.

“I honestly feel the addition of table games could generate another $100 million in revenue for the state, at a time when we face a significant budget deficit and the potential for cuts in state programs,” San Bento said last week.

Similar Bill Passed Last Year

This isn’t the first go around for San Bento and casino gaming. He sponsored a similar bill last year that overwhelmingly passed the House (68-12) and the Senate (21-14). But Governor Carcieri vetoed the referendum when it went to his desk.

At the time, Carcieri said too much “critical financial information” was unknown for him to sign the bill. He wanted to learn more about the split of money between the state and the casino.

“Leaving the question of splits to future determination is a deeply flawed strategy because the very grant of gaming authority to a private party, before determining the financial arrangement with the state, eviscerates the negotiating power of the state,” the former governor said.

The question of how much the state would potentially receive is still up in the air, but it is believed Governor Lincoln Chafee would not veto the bill if it passes again. On multiple occasions during his campaign last fall, Chafee said he doesn’t believe full-fledged gaming is much of leap from the current form, which only allows slots and video machines.

San Bento Confident

San Bento (at left) agrees with Chafee. He dismissed the idea that table games are any different than video games. He said he is confident his bill will be supported by his colleagues.

“There will always be detractors,” San Bento said. “We have it all right now. It’s semantics when any one says [table gaming] is a different kind of gambling. It’s not true. This is something that won easily last year and I believe it will help bring in revenue.“

The Need To Beat Massachusetts

San Bento believes the time is now for expanded casino gambling because the state can’t afford to lose potential gamblers to its neighbors to the north. According to a 2010 study conducted by the University of Massachusetts – Dartmouth, “Rhode Island residents spent approximately $235.9 million in CY 2009 at Connecticut’s two Native American casinos, compared to $250.9 million in CY 2008, $261.0 million in CY 2007, and $291.6 in CY 2006.”

In comparison, the study found that “Rhode Island residents spent approximately $246.8 million at Twin River and Newport Grand in CY 2009, compared to $286.2 million in CY 2008, $271.6 million in CY 2007, and $251.3 in CY 2006.

The relatively even numbers suggest Rhode Islanders are willing to travel for an enhanced experience, which in Connecticut’s case, means larger casinos that include table games. If Massachusetts were to move forward with full-fledged gaming before Rhode Island, San Bento said Ocean State could stand to lose even more potential players, even if Twin River eventually expands its gaming.

For San Bento, it appears the argument is about what the state can expect to lose just as much as about what it stands to gain.

“If we don’t [expand to table games], we’ll lose almost $100 million in revenue,” he said. “The state needs to be ahead of the curve.

 

 

BOSTON – The debate over legalizing casinos is gearing up again on Beacon Hill.

Massachusetts lawmakers are holding a public hearing Wednesday on more than a dozen gambling-related bills.

Supporters see a chance to push the reset button on a debate that has repeatedly stalled out – including last year’s failure by Gov. Deval Patrick and House Speaker Robert DeLeo to bridge differences over allowing slot machines at the state’s racetracks.

Casino foes are hoping DeLeo and Patrick again come to loggerheads. They say casinos are bad news for the state and aren’t worth the short-term infusion of revenue into Massachusetts coffers.

Patrick is also sounding increasingly ambivalent.

He said that while he and DeLeo are talking, casinos are no longer one of his top priorities.