Uncertainty over tribe's status deters casino investors
With less than a week until applications and the accompanying $400,000 fee are due, uncertainty over the status of the Mashpee Wampanoag Tribe's casino appears to be keeping some companies from taking the gamble.
Lawyers for KG Urban Enterprises, the only company that has publicly announced its intentions to file an application by the Massachusetts Gaming Commission's Sept. 30 deadline, argued Monday that the tribe's head start in the Expanded Gaming Act continued to cause "irreparable harm" to potential commercial bids in Southeastern Massachusetts, known as Region C.
KG Urban sued Gov. Deval Patrick and the Massachusetts Gaming Commission in November 2011, saying the tribal provision amounted to a "race-based set-aside" that violated the U.S. Constitution.
"The tribal preferences in the Gaming Act and the pervasive uncertainty over whether non-tribal applicants will be able to compete for a license in Region C on a level playing field have hindered non-tribal developers' ability to attract investors and gaming operator partners to projects in the Southeast," the attorneys wrote in support of a motion for summary judgment filed Monday.
It is unclear whether KG Urban, which hopes to clean up a hazardous-waste site on the New Bedford waterfront, has a gaming partner.
Andy Paven, a spokesman for KG, would say only, "We're committed to filing an application."
The brief in support of summary judgment makes a case similar to what KG Urban has argued throughout its two years in U.S. District Court — the tribe's path to a federal casino is a complicated by hurdles and potential lawsuits.
The tribe got a blip of hope two weeks ago when a legislative committee acted favorably on the compact it reached with Patrick.
Now the compact, which sets out how much the state would receive from a tribal casino, appears to have stalled again.
No date has been set for the full House to vote on the deal, Seth Gitell, a spokesman for House Speaker Robert DeLeo, said Monday.
The compact first must win approval of the House and Senate before it goes on to the federal Bureau of Indian Affairs for consideration.
On Monday, tribe spokesman Paula Gates said she had nothing new to report on the compact status.
State attorneys have until mid-October to respond to KG Urban's motion and Judge Nathaniel Gorton won't issue a decision until well after Monday's deadline for commercial applications in Region C.
The application process hasn't created nearly the buzz that applications in the other regions generated. Nine of the 11 companies that applied in Regions A, B and for a slot license were known before the deadline.
A sticking point in Region C is that while the gaming commission seeks commercial bids, it also has said publicly that whether a license is awarded will take into account the "economic consequences" of the compact and tribe's land application process at that time.
"Opening the region to commercial applications while continuing to place a thumb on the scale in favor of the Mashpee not only violates the Equal Protection Clause, but is a fundamentally flawed business proposition," KG's filing states. "As long as there is a chance that the whole process may be scuttled based on events beyond applicants' control, gaming operators and investors will continue to steer clear of the Southeast."
Clyde Barrow, a casino expert at University of Massachusetts Dartmouth's Center for Policy Analysis, said there is little doubt that the Mashpee proposal in Taunton has stifled interest in the region.
"I guess the explanation is people are still skeptical that rug could get pulled out from under them at any time by the Indian tribe," Barrow said.
Smaller casino companies such as Ameristar and Pinnacle Entertainment are out there, but have been unwilling to partner with land owners like Claremont Cos., which owns more than 170 acres in Bridgewater, Barrow said. Investors are likely worried they could pour in millions — KG estimates it has spent $8.5 million to date — and have the tribe enter at a later date without having to pay the state a percentage of gross gambling revenues. Commercial casinos pay a 25 percent tax.
On Thursday, commissioners said a landowner in Region C could apply without having a gaming partner in place. Commissioners also said that companies that lose out in other regions of the state, as Hard Rock recently did in West Springfield, could team up with a landowner who applies in Region C.
Claremont's president, Elias Patoucheas, did not return a call seeking comment on the company's intentions.
The commission plans to award licenses in Regions A and B in April and would be seeking bids by suitable applicants in Region C three months later.
"It's a very tight window for unsuccessful bidders to get involved in (Region) C," commission Chairman Stephen Crosby said Thursday. "It's feasible, but tough."
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