Connecticut's Casino Operators Gambling On Massachusetts
Hartford Courant
July 27, 2013
It's a high-stakes game. Connecticut's two casino operators are betting on a chance at one of three resort casinos in Massachusetts with competing development proposals ranging in cost from $800 million to more than $1 billion.
The pitches — Mohegan Sun in Western Massachusetts and Foxwoods in the Greater Boston region – have many similarities.
The two aren't competing against each other. Instead, they're up against other rival gambling titans, most with successful Las Vegas casinos.
It's a high-stakes game. Connecticut's two casino operators are betting on a chance at one of three resort casinos in Massachusetts with competing development proposals ranging in cost from $800 million to more than $1 billion.
The pitches — Mohegan Sun in Western Massachusetts and Foxwoods in the Greater Boston region – have many similarities.
The two aren't competing against each other. Instead, they're up against other rival gambling titans, most with successful Las Vegas casinos.
The proposals both involve sprawling campuses in small towns away from cities and urban traffic. They offer a design and business model that has been financially successful in Connecticut for decades, albeit eroding as gaming competition proliferates in neighboring states. Both contend that they already have a loyal customer base in the Northeast.
Before the plans can be pitched to the Massachusetts Gaming Commission at the end of the year, they must have a "host community agreement" and a vote of support by residents.
But Foxwoods and Mohegan Sun are in very different competitions otherwise.
Vocal Resistance, Vocal Support
Foxwoods is embroiled in a local battle, never mind competition from two competing casino plans in the Boston area.
On Wednesday afternoon, protesters lined a suburban street in Milford, Mass., holding signs that read "No Casino" and "Keep Milford Casino Free."
The protesters were elbow to elbow with members of the Laborers' International Union of North America, LIUNA, Local 609, who held signs of support that said "More Revenue" and "More Jobs."
This is the town where Foxwoods wants to build, on a 187-acre site east of Interstate 495. Most of the Milford community is west of the highway, said David Nunes, a partner in, and chief development officer for, the Foxwoods plan. The casino site has about 1,000 acres of conservation land around it.
"We really are in an oasis, and you can replicate what the New England gambler is already used to," Nunes said. "New England gamblers are used to Foxwoods and Mohegan — these two places built out in, literally, what was considered the middle of nowhere when they were constructed. So, if you look at that and say, 'Are you giving them exactly what they experience now and enjoy?' Yes."
But Rob and Cathy Mitchell of Casino-Free Milford live on the eastern side of Interstate 495, and they're worried about many aspects of Foxwoods' plan to build nearby.
"My property values are going to take a huge hit," Cathy Mitchell said.
Traffic is a major concern, too. Foxwoods has introduced elaborate reconstruction of the exit off I-495. Protesters are worried about the town's water supply, property values, social problems, the intimate character of the town and myriad other factors.
Geri Eddins held a sign opposing the casino, too. The proliferation of gaming in New England means that new resorts in Massachusetts aren't going to be as successful as Connecticut casinos were when they were the only large-scale gaming in the region.
"We're very concerned about the over-saturation of the market," Eddins said.
Nunes, said opposition is typical for any casino development.
"This always gets viewed in a larger-than-life negative light, and then when it gets built, in every community that you've seen almost across the country, people realize it's a 24-hour business, seven days a week, and the traffic trickles in, and it doesn't come at one time. … It's not even as bad as a giant office development," Nunes said.
The project is supported by local laborers — some who live in Milford and others who don't. The Local 609 business manager for LIUNA, Chris Murphy, said about 80 of 550 laborers are out of work in his union.
"We've got a bridge project … Everything in my local together is a tenth of what this would be," Murphy said.
Foxwoods derives confidence from a rationale that people are already familiar with the brand.
"Foxwoods knows the New England gambler better than anybody," Nunes said.
Foxwoods has a Massachusetts database and the company understands the ideal mix of table games, such as poker and craps that customers are looking for in a New England casino resort.
"Having that database helps in terms of, we know who to market to," Nunes said. "We know who to look for. We know where they're coming from. We know how to build and design this around them."
However, Foxwoods faces several hurdles.
At a public meeting Wednesday night to explore the social and economic effects of bringing a casino to town, Foxwoods consultants suffered some blistering criticisms. Several Foxwoods representatives say the casino has polled people in town, and they consistently get about 60 percent support despite a very vocal and organized opposition.
Foxwoods hopes to have a user agreement with the town in early September and a required vote to gauge support in November. That's not the end of the process. Foxwoods would need to get the land rezoned from its current commercial use zoning to a zone specifically for a casino, too.
If Foxwoods makes it through several hurdles in Milford, its plan will be up against a proposed $1 billion casino by magnate Steve Wynn along the Mystic River in Everett and a $1 billion rival plan by Caesar's Entertainment at Suffolk Downs in East Boston.
Between A Lion & A Hard Rock
The Mohegan Tribal Gaming Authority is up against instantly recognized national brands in a fight for the Western Massachusetts license. Each promises something different for the region, and much of the conversation will be about setting, not just perks.
Mohegan Sun has cultivated its pitch to Palmer residents for more than four years, and the town voted to support a similar casino proposal back in 1997. Palmer Town Manager Charlie Blanchard talks about why Mohegan's plan is better than either an MGM Resorts International site in Springfield or a Hard Rock Hotel & Casino in West Springfield. Mohegan could have a host community agreement with Palmer by early August and an election to gauge voter support between 60 and 90 days after the agreement is signed, as required by state law.
Mohegan believes it is addressing exactly what the Massachusetts legislation to allow resort casinos — and the state Gaming Commission — describe as criteria for a resort, said Mitchell Grossinger Etess, CEO of the Mohegan Tribal Gaming Authority.
"They wanted resort destination gaming because of the fact that there are two successful resort destination casinos in Connecticut …," Etess said.
"We selected Palmer because it was a great site," Etess said. "It has amazing access. You get right off of the turnpike [Massachusetts Turnpike, Interstate 90] and you're right at our site."
The 152-acre site for Mohegan's casino, adventure water park and retail destination in Palmer dwarfs competition in urban and suburban settings. Hard Rock Hotel & Casino wants to build on 38 acres of the Eastern States Exposition site in West Springfield. MGM Resorts International would build on less than 15 acres in the heart of Springfield.
"We really believe that what New Englanders want in their gaming destination is rural … Rural is what Mohegan Sun and Foxwoods are," Etess said. "We don't believe that having a casino in downtown Springfield is going to be able to attract people from out of state to come for the weekend to downtown Springfield."
MGM Resorts International has a plan that is almost the antithesis of Mohegan's model. MGM Resorts International chairman and CEO James J. Murren said he wants to revive Springfield as the entertainment hub of the region with live musical acts that have been siphoned out of Massachusetts by Connecticut casinos.
Murren and other MGM executives celebrated a vote of support by Springfield residents, 58-to-42 percent, on July 16. Murren graduated from Trinity College in Hartford in 1983 after studying art history and urban studies.
"Economic activity in an urban core is vital," Murren said while celebrating the July 16th vote.
"Casinos in Connecticut dragged all the entertainment away from Springfield and exacerbated a decades long decline."
Unlike Mohegan's pitch, MGM promises to bring Massachusetts customers back into the state by squaring off with Mohegan's entertainment at its Connecticut casino. Mohegan isn't planning entertainment acts in Massachusetts because Etess said he doesn't want to compete with existing venues in Western Massachusetts.
MGM sees it differently — that they will compete directly with Mohegan Sun in Connecticut by collaborating with existing Massachusetts venues, said Michael Mathis, vice president of Global Gaming Development for MGM Resorts International.
It's already happening. MGM Springfield held a Pitbull concert at the MassMutual Center over Memorial Day weekend.
"Entertainment [is] a really important, we think, aspect of any successful competitor that wants to recapture that marketshare," Mathis said.
An inherent disadvantage for Mohegan in Massachusetts is that the tribe has spent billions of dollars in their Connecticut facility.
"While they're proposing a large investment in Palmer, they've got a larger investment, arguably, that they would be protecting in Connecticut overall, and they pay a significant lower gaming tax through their compact with the state than they would pay in Massachusetts," Mathis said.
Hard Rock is partnering with the site of The Big E, which is a large campus for conferences and trade shows in addition to the 17-day agricultural and entertainment event. Hard Rock would have an isolated suburban setting that is easily accessible from Interstate 91, different from the activity of downtown Springfield or the rural setting in Palmer.
"Our differentiator is partnering with the largest regional destination in the Eastern states," Tim Maland, President of Hard Rock Hotel & Casino New England.
"We're creating a safe suburban destination that will be focused on entertainment and fun," Maland said. "And we think that we benefit the residents of West Springfield a great deal by working as a neighbor and a partner."
http://www.courant.com/business/hc-foxwoods-mohegan-massachusetts-casino-strategy-20130725,0,2806347,full.story
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