The proposal to build a $650 million casino on the New Bedford waterfront is dead, falling victim to a lack of financing amid concerns about the viability of large gaming resort in Southeastern Massachusetts.
The abrupt withdrawal of KG Urban, the New York-based developer that had proposed a glass-walled complex with panoramic views of the historic harbor, is the latest setback in the state’s long-term strategy to lure gamblers back from casinos in Rhode Island and Connecticut.
In its letter to the state Gaming Commission, KG Urban said investors were not convinced that the venture would work in an increasingly competitive environment.
“As you can well imagine, we deeply regret reaching this conclusion,” KG Urban, which spent more than $10 million in an eight-year quest for the casino, wrote in a four-paragraph letter to the commission dated Wednesday.
Among its concerns, the company cited a plan being developed by the Mashpee Wampanoag tribe to open a casino in Taunton, within 25 miles of the site in New Bedford. A state-licensed New Bedford casino would be at a huge disadvantage, because as a federally recognized tribe, the Mashpee would pay no taxes, while the New Bedford facility would face a 25 percent tax.
KG Urban’s abrupt withdrawal comes at a time of growing uncertainty over plans for the two other resort casinos authorized under the state’s 2011 casino law. Under current forecasts, those casinos, originally expected to open in 2016, won’t go on line until at least 2018, meaning the state already faces about two years of delay in realizing forecasts of thousands of new jobs and hundreds of millions of dollars in new revenue.
The state officially entered the casino era last month with the opening of Plainridge Park Casino in Plainville, but that facility is much smaller than the resort casinos, which are to include hotels, planned for Springfield and Everett.
MGM Resorts, which is developing the casino in Springfield, recently announced a one-year delay caused by nearby highway construction, while Wynn Resorts’ plans for a casino in Everett are hung up in court, facing an aggressive legal challenge from Boston Mayor Martin J. Walsh.
Even before KG Urban’s withdrawal, some Gaming Commission members had expressed skepticism over a casino in Southeastern Massachusetts because of the well-established competition in Rhode Island and Connecticut.
“It’s the most challenging region because it is less populated and has less market potential,” Commissioner Enrique Zuniga said during a commission meeting in March.
Now the only bidder for a Southeastern Massachusetts casino is a partnership of Rush Street Gaming, which operates four casinos in the Midwest, and George Carney, the longtime owner of Raynham Park race track. The group wants to build a $650 million casino on the site of the Brockton Fairgrounds, which Carney owns.
Commission chairman Stephen P. Crosby has often stated his intention to award the license only after competition between at least two bidders.
A spokeswoman for the commission declined to comment on Wednesday, but said members will discuss KG Urban’s decision at a meeting already scheduled for Thursday.
The withdrawal came as a bitter blow to New Bedford Mayor Jon Mitchell, who had hoped a casino would spur economic development in a city long plagued by high unemployment. In March, Mitchell delivered an impassioned appeal to the commission, pledging full support for a casino to be located on a former power plant site on Cannon Street.
“KG Urban’s decision to abandon the Cannon Street project is an extreme disappointment and a great shock,” Mitchell said in a statement Wednesday.
Mitchell said he and city residents had been led to believe by the developers that financing had been secured. In a June 23 referendum, New Bedford voters approved hosting the casino by a whopping 73 percent to 27 percent margin.
“City leadership and the people of New Bedford relied on these assurances in casting their enthusiastic support for the project,” Mitchell said. “We have been united as a community and have done everything possible to support” the KG casino proposal, “so city residents and its leadership are all understandably upset.”
When — and whether — the Mashpee Wampanoag tribe will get approval from the US Bureau of Indian Affairs for a casino is a matter of intense speculation. The tribe’s application is subject to a complex body of federal law.
“We’ve always seen our project as an economic boon for Southeastern Massachusetts,” Cedric Cromwell, the Tribal Council chairman, said in a statement after learning of KG Urban’s withdrawal. “As our plans in Taunton move ahead, the economic benefits will become more apparent to everyone in the region, including the people of New Bedford.”
Mass Gaming & Entertainment, the developers proposing a Brockton casino, also released a statement pledging to remain in the hunt for a license.
“Our project will provide the Commonwealth with over $100 million a year in tax revenue once a resort casino is built in Brockton as well as $10 [million] to $12 million” to the city annually, the group said.