| Globe staff February 11, 2014
State Attorney General Martha Coakley urged Massachusetts regulators on Monday to prohibit casinos from placing liens on the homes of patrons with unpaid gambling debts, calling the practice “deeply concerning” in a letter to the state gambling commission.
“Protecting against predatory lending and overly aggressive debt collection in the gaming industry is critical, because the odds are stacked against the patron being able to earn back the value of the loan,” wrote Coakley, who is also a candidate for governor. “This practice by the gaming industry in which customers’ homes are put at risk should not be allowed.”
Coakley cited an article
in Sunday’s Globe that detailed the longstanding practice by the two large Connecticut tribal casinos, Mohegan Sun and Foxwoods, of placing liens on homes of residents who owe the casinos money advanced for gambling.
Casino industry specialists have said it is unusual for a gambling business to employ property liens as a collection tactic.
“This story highlights the need for a robust set of consumer protection regulations before these establishments begin operations,” Coakley wrote.
Both of the Connecticut casino companies are applicants for gambling licenses in Massachusetts. Foxwoods is pursuing a casino in Fall River, seeking the sole resort casino license for Southeastern Massachusetts.
Mohegan Sun is competing for a license to build a gambling resort in Revere, on about 42 acres belonging to the Suffolk Downs racetrack. The other applicant is a Wynn Resorts proposal in Everett.
Many casinos offer credit to gamblers, as a convenience for big players who would be uncomfortable traveling with huge wads of cash.
Gambling companies have access to credit bureaus to determine if the player has the financial resources to cover the advance.
When a casino approves a credit line, a player signs what is essentially a check for the amount loaned.
If the loan is not repaid before the customer leaves, the casino will cash the check and the money will be drawn from the player’s bank account. If the account is short, however, the check will bounce.
Since the early 2000s, Foxwoods and Mohegan Sun have placed dozens of liens on Massachusetts properties, seeking payment, interest, and fees.
State law will allow the state’s casinos to extend gambling credit to customers, under rules established by the Massachusestts Gaming Commission. The rules must include “procedures for confirming that a patron has an established credit history and is in good standing,” according to the state’s gambling law.
The commission has not yet written those rules and procedures, but that task is coming up: The panel intends to place the issue on the agenda of an upcoming meeting, the commission’s spokeswoman, Elaine Driscoll, said Monday evening.
In Coakley’s letter, she offered the commission her office’s expertise to help “in crafting regulations that effectively protect consumers, while allowing businesses to operate fairly in the marketplace.”
Mohegan Sun, which last week vigorously defended its credit and collection policies in a letter to the Globe, addressed Coakley remarks in a statement last night: “We have always indicated our willingness to work with the Gaming Commission within whatever regulatory framework they establish.”
Coakley said in an interview Monday that for many people a home “is the one place they have any equity or any assets.”
Liens, which accrue 12 percent interest a year, cloud the title to properties, affecting a homeowner’s ability to sell or refinance.
“We are concerned it would have a very negative impact here if people incur debt and this practice is permitted,” Coakley said.
She believes that if casinos cannot chase debtors with property liens, they may be more conservative in lending.
Leaders of an effort to repeal the state’s 2011 casino law called Monday for the commission and lawmakers to hold hearings on the credit and collection policies of the casinos.
“This is a shining example of the many facets the Legislature overlooked [in legalizing casino gambling], but which can’t be ignored or swept under the rug, even at this late date in the process,” wrote representatives of the Repeal the Casino Deal campaign, including former Massachusetts attorney general Scott Harshbarger.
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Mohegan Sun faults rival Wynn in casino bid
Adopts aggressive stance
Officials at Mohegan Sun, who want to build a casino hotel in Revere, unveiled a pointed turn in their public relations strategy Monday, offering new and aggressive criticism of a rival casino proposal by Wynn Resorts in Everett.
“Unlike Wynn, our commitment [to building in Massachusetts] is not contingent on anything,” Mitchell Etess, chief executive of the Mohegan Tribal Gaming Authority, said in an interview at the Globe.
He said that Wynn Resorts, the Las Vegas company run by billionaire casino developer Steve Wynn, has demanded numerous accommodations from state offices — on environmental regulations, taxes, access to his proposed site, and other considerations — and suggested Wynn may not proceed with his project if he does not get what he wants.
“We’re ready,” said Etess. “We don’t need changes in the law.”
Mohegan Sun, which has a deal to lease 42 acres of land at the Suffolk Downs racetrack for a casino resort, has been mostly mild-mannered in its public comments since joining the race for the Greater Boston resort casino license in November, extolling its own project without sharp criticism of Wynn.
The company’s communication strategy was similar to the cautious approach favored by Suffolk Downs officials in an earlier casino proposal on the East Boston side of the racetrack property, which voters rejected last November.
What changed?
“At some point, we felt we needed to point these things out,” said Etess.
That point may have come late last month, when the competing casino companies each made public presentations before the state gambling commission.
Mohegan Sun barely acknowledged there was another applicant for the license, instead focusing on the merits of its own proposal.
Wynn, on the other hand, personally blasted Mohegan Sun’s building design and suggested that the rival company had a tax incentive to steer big gamblers away from Massachusetts and to the Mohegan Sun casino in Connecticut, where table game revenues are not taxed.
Etess struck back Monday, saying Mohegan Sun’s agreement with its financial partner, Brigade Capital Management, contains language to ensure the casino company cannot favor the Connecticut property over a Revere casino.
Etess said Mohegan Sun could be up and running more quickly, in part because the property where Wynn wants to build, a former chemical site, is contaminated and must be cleaned. Etess also suggested Wynn may be unable to move forward without changes to state environmental regulations, which a Wynn project development adviser denies.
Etess also criticized a series of recommendations Wynn submitted to the gambling commission, outlining proposed changes to the state’s casino law.
All casino applicants were instructed on their application form: “Describe any postlicensing actions by the Commission or the Commonwealth of Massachusetts that you believe will be essential for the success of the project you are proposing.”
Wynn’s list recommended changes to the way cash prizes must be reported for tax purposes, and proposed that commercial casinos pay state tax equal to whatever revenue-sharing provisions are paid by a tribal casino, among a number of other suggestions.
Mohegan Sun, Etess said, is willing to work within the rules Massachusetts established. The company’s application answered the question about proposed changes this way: “Because we participated in the gaming act’s creation and noted the careful deliberation with which the Legislature used to craft it, [Mohegan Sun] does not think that the gaming act needs any major legislative changes to be successful.”
Clyde Barrow, a casino expert at University of Massachusetts Dartmouth, said the main audience for Mohegan Sun’s new, more aggressive posture “would be the Gaming Commission, since they are the ones that will make the decision about issuing the license.”
He said it is common for casino companies to bad-mouth each other in competitive battles for limited licenses.
“The initial process is to call attention to your project and point out the positives on its own merits,” said Barrow. “The next stage of that argument is to point out the contrast between your project and the competitors.”
Though casino companies have been competing in Massachusetts for more than a year, they have mostly refrained from attacking each other publicly until recently.
One early exception occurred in late 2012, when representatives from three gambling companies pitching casinos in Springfield ripped each other’s projects in an article in The Republican newspaper.
Springfield city officials privately warned the companies to play nice.
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