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Expanded New York-New England Gaming Inevitable to Bolster State Revenues

New rules will help some tribes, hurt others

The president of New York’s gambling lobbyist group predicts that full blown casino gambling will be in place at the state’s nine existing race tracks by 2015.

James Featherstonhaugh, president of the New York Gambling Association, told gaming experts at the second annual New England Gaming Summit (NEGS) this week that a constitutional amendment needs to be approved by two separately elected state legislatures and in a statewide public referendum. Featherstonhaugh expressed confidence that will occur by November 2013.

“I expect the governor (Gov. Andrew Cuomo) to endorse the general concept in the next week to 10 days. I think there’ll be passage early in the session of a very general constitutional amendment which will then be fleshed out over the course of the next year before it goes to the public,” Featherstonhaugh said. “There are currently nine conceptual expansions already drawn up. By 2014 those expansions will be shovel-ready and would be finished in 2015.”

Featherstonehaugh’s comments at the event at MGM Grand at Foxwoods November 15 coincided with news that the Massachusetts House voted 118-33 to accept casino legislation for up to three resort style casinos and one slots parlor. The Senate then approved the measure by a vote of 23-14. Final approval will be a sign-off by Gov. Deval Patrick, who has supported expanded gaming in the state for years. Casino license bids start at $85 million and bids for the slot parlor start at $25 million. The bill provides 25 percent of casino revenue and 40 percent of slot revenue for state and city taxes.

Gaming executives and analysts agreed that the Massachusetts bill is the sign of the times. Expanded gaming all over the northeast—and beyond—is inevitable as states look to bolster revenues in the continuing depressed economy, they said.

Mitchell Etess, chief executive officer of the Mohegan Tribal Gaming Authority, reflected on Mohegan Sun’s 15 years of operation in a keynote address at the beginning of the summit. Since 1996 the casino-entertainment complex contributed $2.5 billion in slot revenues to Connecticut, $6.4 billion to the economy in purchased services and $3.4 billion ion salaries and wages, he said. Mohegan Sun has “turned casino gaming into an art form—in Uncasville, Connecticut,” he emphasized. Based on the success of Mohegan Sun and Foxwoods, expanded gaming in the region was inevitable and expected. “It was the reality we had to face up to,” he said. He expressed confidence that Mohegan Sun will bring the same sort of success to a proposed casino resort in the town of Palmer in western Massachusetts. As for the future, Etess said it’s possible to anticipate the type of challenges that lie ahead. “We found out that casinos are not recession-proof and the competitive dynamics have changed.” It’s necessary to develop “a top notch product. You have to create an experience that will make them come and visit you, create new gamers.”

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Jeff Hartmann, the president and chief executive officer of the Mohegan Sun casino, said that expanded gaming is now possible because states are struggling in the poor economy and “traditional barriers” against gaming have broken down. “It’s a perfect storm of shortfalls in revenues and (the need for) job creation brought to the forefront. It’s an economic issue for many states combined with social acceptance,” Hartmann said.

Scott C. Butera, Foxwoods Resort Casino CEO, who gave the luncheon keynote address, took a lemons-to-lemonade approach to the new competitive threats to the country’s largest casino. “Looking ahead, though our response to the competition may involve a somewhat different identity for our company, we have every intention of remaining a truly great business," he said. Butera thinks that expanding competition along with a weak consumer economy are key factors in gaming markets today. "Revenue-starved state capitols see gaming as an answer to their own financial distress and that puts enormous pressure on first-movers such as Foxwoods who built its business when it was one of the few games in town.” There is a silver lining to these situations, "because they set an expectation for change that free managers to re-engineer their businesses so they compete effectively,” he said.

Dennis M. Farrell predicted the expansion of gaming beyond the New England states, New York, and Rhode Island, which is also pushing for table games to add to its slot revenues. "It's just a matter of time before you see most of the United States having gaming," Farrell said. He predicted the Massachusetts casinos could become a $2 billion industry in that state.

Expanded gaming in New York is fiercely opposed by the Seneca Nation of Indians, the Oneida Indian Nation and the St. Regis Mohawk Tribe, who together operate the five existing casinos in the state under tribal-state compacts that would be broken by the proposed constitutional amendment.

"What the proponents of commercial gaming are not telling the hardworking people of the State of New York is that these gaming companies take their profits outside of this state to invest elsewhere and long term economic development in New York remains a dream,” Oneida Nation Representative and CEO of Nation Enterprises. “When New Yorkers are presented with all the facts, we believe they will reject the effort to turn the state into Atlantic City where commercial gaming has led to depleted city revenues, increased crime, and urban decay; unlike Indian gaming where the profits are reinvested locally and the business will never leave the state.”

But the long awaited news that Massachusetts had finally approved casinos was welcomed by the Mashpee Wampanoag Tribe. "I'm ecstatic to see it passed the House and the Senate," tribal council Chairman Cedric Cromwell told Cape Cod Online soon after the Senate vote. "When you think about the economy boost it will provide and the jobs for tribe members and our neighbors and friends, I'm really excited." A casino would provide revenue to help tribe members rise out of poverty and provide education and health care, he said. "I really want to see the Wampanoag tribal nation rise and leave no Mashpee Wampanoag behind," Cromwell said. The Massachusetts legislation provides the following for the Wampanoag.

  • Provides $5 million for the governor to negotiate a tribal-state gaming compact with a federally recognized tribe that must be approved by the legislature.
  • Requires the tribe to have entered into an agreement to purchase a land for gaming and requires a scheduled vote with the host community
  • Requires disclosure of financial investment rights of any individual or entity that has invested in the tribe since 2005.
  • Sets a July 31, 2012 deadline for compact negotiations. If there’s no compact by then and the state gaming commission determines the tribe won't have land into trust, the commission can seek bids from other developers in the southeastern Massachusetts area.
  • Gives the tribe membership on a 15-member gaming advisory panel that will consider gambling policy and create subcommittees to examine community mitigation, compulsive gambling and impacts on cultural facilities and tourism.

Cromwell told Cape Cod Online he's not worried about the aggressive timeline, even though the tribe does not yet have casino land under agreement. Previous land proposals at two sites fell through and the tribe has been searching for land in Southeastern Massachusetts. “We need to work closely and stay committed — that's the equation for success," Cromwell said. "We're going to get it done."