Massachusetts a long slow road to travel to get to a casino

The latest state to walk down the gambling road, Massachusetts is walking slower than the others.  The American Gaming Association studied the subject and concluded that 3 years was the average it took a state to go from passing legislation to opening its first casino.  It may take only 3 years on average, but there are other examples of a long drawn out process.  For example, the second casino license in Philadelphia has yet to be awarded, 6 years after the enabling legislation passed.

The estimates now for Philadelphia are another year to award the license, there are six bidders, and then at least one more year before a casino could be built and opened.  That would be 2014 or 2015, ten years after the legislation passed.  Kansas has had similar experiences; Kansas took so long to begin the approval process that most of the would-be bidder either dropped out or lost their financing commitments.  While Kansas was in the midst of its process the economy collapsed and financing for casinos dried up completely.  One of the potential license sites is so unattractive that the state cannot find one single bidder.  Kansas is lucky of it has received one tenth of the revenue envisioned by the governor or imagined by the legislature in 2007 when it passed the enabling legislation.

The reasons the process gets drawn out are usually multiple; the review and approval processes can be complicated as the regulators vet the companies, the proposals and the financing; sometimes the process is further confused by secondary local reviews of projects – that is certainly the case in Massachusetts; even once a license has been chosen and approved, financing can delay the project.  In fact, the second most common reason, after the approval process, for delays is financing.  It is easy enough to draw pretty architectural pictures and promise the regulators that a company will built a magnificent palace, but quite another to find people willing to finance the palace’s construction.  In their enthusiasm to get the license companies often over promise and over estimate the market’s potential. Regulators and elected officials are notoriously addicted to the most inflated bids and grandiose promises of glittering palaces.

Over estimating the potential of any given location is not the fault of the casino companies are alone, local officials, legislators and regulators also share in the blame.  New Orleans was probably the classic example of too much naive enthusiasm; everyone, including Harrah’s thought it did not matter how much was spend on the license, in taxes and on the construction; a casino in New Orleans was sure to be a winner; only it was not.  Harrah’s outbid every major casino company in the country for the right to New Orleans.  Almost immediately after opening, Harrah’s was forced to renegotiate all of the taxes, fees, special conditions and the financing.  New Orleans simply is not ideal location for a casino that people that it would be in the late 1990s.   Many observers at the time believed that the New Orleans casino would bankrupt the entire Harrah’s corporation.

In 2012, everyone has more experience at evaluating a casino’s potential than they did in 1999 when Harrah’s New Orleans opened.  Still every big city Detroit, Philadelphia, Baltimore, Washington D. C., New York City, Miami, Atlanta and Boston has generated its share of overly optimistic local boosters.  Most of those cities are still in the run-up stage, so the revenue projections are more hype intended to generate support for the legislation than anything else.

Massachusetts has complicated the process more than most states by allowing local government to have a leading role, but not the determining one in the selection of a licensee.  Besides the complicated weaving through the bureaucratic nightmare, getting a casino in Massachusetts will be expensive.  The enabling legislation dictates that each licensee must pay an $85 million fee, pay a 25 percent tax on gaming revenues and invest at least $500 million.  The gaming commission added a $400,000, non-refundable, application fee.

Ultimately and by statue, the gaming commission is in charge of the process; its first order of business was hiring staff, drafting regulations and gathering public opinion.  With a year of experience in that part of the process, the commission seems well-satisfied with itself; potential licensees do not seem as satisfied.  Three major bidders Sheldon Adelson, Ameristar and Steve Wynn kicked some tires and then left the state; Wynn has come back, but says he is not committed to bidding.  Wynn says he would be interested if……. If it makes financial sense, if the process does not become to complicated – his first bid was rejected by the local community – and if the gaming commission does not invent yet more hoops to be jumped through.  It would be hard to say that any real progress has been made toward the first casino being licensed, built and opened, but the chairman of the commission says they are moving as quickly as possible. Well maybe there are; but other states have found it possible to move faster.

Ohio is almost the direct oppose of the Massachusetts; the ballot measure allowing for four casinos in Ohio passed in November of 2009; by the spring of 2012 the first casino had opened and by the  spring of 2013 all four casinos in Ohio will be open and operating.  Everyone involved in the process in Ohio from the governor on down was interested in facilitating the issuances of licenses and the opening of the casinos.  The local authorities were as eager and helpful as the state authorities.  The casinos were not required to build something larger than the market will support and therefore were able to finance their projects; all in all, it was a perfect mix.

In that same period of time, Massachusetts may have awarded one or two of the four licenses authorized. Then again it may not have issued any licenses – no one knows how long it will take.  They don’t know because no one is certain what exactly the process will be and worse it is unclear who will be making the decisions; park commissions, mayors, city councils, citizens groups and the chairman of the commission all believe they have veto power, if not the power of approval.  If Ohio was the perfect mix of positive forces, then Massachusetts seems to be the perfect mix of negative ones; to an outsider it looks like anything that could go wrong will go wrong. This is going to be a long slow road to travel.  In the meantime, the competition has more time to get ready for the fight.

 It’s taking a lot longer than I imagined,” said City Councilor Sal LaMattina, “I really don’t understand why it’s taking so long. The state is losing out on important revenue and jobs. I hope they speed up the process.”  Nearly every other state that has legalized gambling has seen casinos open in half the time the Massachusetts Gaming Commission is expected to take, an industry study shows, as developers get restless about the Bay State’s red tape.  A study by the American Gaming Association showed that 23 states with legalized gaming had casinos up and running within three years of legislation being passed, with most having them open within 12 to 24 months. Gaming was approved in Massachusetts in 2011 but officials don’t expect the first license to be issued until 2014, meaning the first casino likely won’t open until 2016 or later. – Dave Wedge, Boston Herald, 12-5-12

 As Las Vegas casino mogul Steve Wynn looks at Everett for a possible resort-style gambling complex, the potential development is stirring a mostly cautious response from city leaders. Reacting to the surprise news that plunged Everett into the thick of the high-stakes drama of casino development in the state, the city’s elected officials voiced excitement but also concerns about what it would mean for Everett to host one of the gambling venues. To begin public dialogue on the issue, the city is inviting residents to an open forum on the proposed development.  John Laidler, Boston Globe, 12-5-12

The Park Commission voted Wednesday to enter into negotiations with MGM Resorts International, which is proposing to enhance Riverfront Park, purchase a small playground and bring additional business to two municipal golf courses as part of its plans to build an $800 million casino project in the South End. The five-member commission voted unanimously to begin all three endeavors with MGM but stated that its vote was not final approval and was not an endorsement of the casino project. MGM is one of two companies proposing a casino in Springfield. Penn National Gaming is proposing a competing casino project in the North End of the downtown district. Peter Goonan, The Republican, 12-5-12

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