What's with Massachusetts?
Why have voters in town after Commonwealth town declined to embrace casino projects that promised to enrich them, employ them, entertain them, all while "mitigating" the impacts of the potential bad stuff - traffic, crime, problem gambling?
We're not talking about nuclear waste storage facilities here.
Still, Bay Staters, at least the majority of them in West Springfield, Palmer, East Boston and Milford, have rejected casinos, while voters in grittier places like Everett, Springfield and Revere have approved them. With the deadline for final applications little more than five weeks away, not one surviving casino operator has been cleared to advance to Phase Two in the Massachusetts Gaming Commission's labyrinthine approval process.
"I'm not surprised," Roger Gros, publisher of Global Gaming Business magazine, said of the string of referendum defeats. "The polls say people like casinos, but it's very much the not-in-my-backyard syndrome. They don't want one down the road from them."
That attitude might have contributed to Mohegan Sun's Nov. 5 failure in the western Massachusetts town of Palmer, where voters rejected a $1 billion proposal that included a water park and a retail component in addition to the usual gaming amenities. The 93-vote margin was close enough to warrant an upcoming recount, which isn't expected to change anything.
And, presumably, plenty of voters in Milford, southwest of Boston, similarly believed a $1 billion Foxwoods Massachusetts project would have had a negative impact on their quality of life. Sixty-five percent of those who cast ballots last week rejected the plan.
With the votes counted, the Casino-Free Milford group exhaled.
"From our very first meeting held around a kitchen table, we acknowledged that we would be fighting a David vs. Goliath battle," the group said in a statement. "We knew we would never be able to match the dollars of the Foxwoods campaign. We also knew that money does not buy you everything, and so we focused our efforts where they would count the most - on the people of Milford - by spreading our message slowly, friend to friend, neighbor to neighbor."
How's a casino operator supposed to counter such grassroots fervor?
"You always second-guess yourself," said Mitchell Etess, chief executive officer of the Mohegan Tribal Gaming Authority. "We thought we ran a good campaign. There were things we could have emphasized more than we did, but I don't know. I don't think we'd do anything different if we had to do it over again."
The results in Palmer were particularly surprising given that residents there had backed the concept of a casino for years. However, polling about a month before the Election Day referendum indicated support for the Mohegan Sun plan had dwindled, according to some familiar with the process.
"There's still a tremendous amount of misconception in the world - certainly in Massachusetts - about what a casino really means," Etess said. "Apparently, operators have not been able to communicate the realities of what these places bring. We're still trying to overcome negative stigmas that have been around for ages and ages, despite the Wall Street-ization of the industry."
Which leads back to the not-in-my-backyard aspect of things. Plenty of data suggest Bay Staters like to gamble. It's long been documented that they constitute roughly a third of Foxwoods Resort Casino's customers and a fifth of Mohegan Sun's clientele. They also make up a big chunk of the crowd at Twin River, the Lincoln, R.I., facility that's gotten a boost from the July introduction of table games.
"It is interesting," said Peter Trombetta, a Moody's gaming analyst, that residents of a state that seems to have a propensity for gaming have whittled down the field for casino licenses to a very few.
"When you listen to the opposition's arguments, it's concerns over traffic, an increase in crime - issues that can be exacerbated in a neighborhood setting," he said. "… Some people who voted no may go to a casino in another city."
It may seem significant that the casino projects that won referendums are in urban areas, but it's unclear what conclusions can be drawn. What's known is that Mohegan Sun and Foxwoods, champions of the destination "rural model" in southeastern Connecticut, sought to extend their brands into Massachusetts in rural (Palmer) and suburban (Milford) settings.
"People in the Northeast seem to be less interested in the destinations and more in convenience and location, so putting casinos in urban settings with high population densities has been more successful," said Trombetta, who cited Philadelphia's SugarHouse as an urban casino that has done well.
A tight economy tends to put the brakes on casino-goers, too.
"If you decrease consumers' discretionary income with higher payroll taxes, increased health care costs or high gasoline prices, people are going to stay closer to home," Trombetta said. "If their entertainment budget is to go out to see a show, they're less likely to drive for an hour and spend the night. That might be out of their budget."
Gros, on the other hand, believes casinos should be in places that are hard to reach.
"They haven't been successful in cities like New Orleans, Detroit, Cleveland," he said. "Most successful ones are in suburbs."
Will Bay State gamblers end up tossing dice in Springfield and Everett, the cities where voters approved casinos proposed by MGM Resorts and Wynn Resorts? Given the way the gaming commission flagged Caesars Entertainment, an international operator that then withdrew from the Suffolk Downs project, it's an open question.
"Wynn's got the inside track in the east," said Gros, who doesn't believe Suffolk Downs will be able to move forward with a redesigned project that's located solely in Revere. The race track, which straddles Revere and East Boston, was rejected by East Boston voters.
Gros said Steve Wynn has had "some issues" and could run afoul the gaming commission's vetting process. "He abides by the laws in Macau, but they're not as strict there," Gros said.
MGM, the only remaining applicant in western Massachusetts, could also face questions, he said.
Some have suggested the Bay State's licensing process is too stringent and that the state could end up with no casinos as a result.
"For Massachusetts to turn its back on Caesars, MGM and Wynn would be crazy," Gros said. "You're going to end up with second-rate companies that are short on cash. And Wall Street's not going to want to invest in second-rate companies."
Mohegan Sun's Etess disagreed.
"I think they've done a good job," he said of the commission. "They've set up a process that can work. People have to remember that it's a privilege, not a right (to operate a casino in Massachusetts)."
Mohegan Sun and its partners passed the commission's "suitability" scrutiny with flying colors. Then came the referendum in Palmer.
b.hallenbeck@theday.com
http://www.theday.com/article/20131124/BIZ02/311249911/1018
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