Apparently Massachusetts wants Las Vegas-style resort casinos, just not the global giants like Caesars that actually know how to build and operate them.
The Massachusetts Gaming Commission’s stunning rejection of Caesars as not suitable to bid in Massachusetts has executives at MGM and Wynn wondering who’s next.
Global operations and overseas casinos might logically seem like feathers in the cap for gambling developers hoping to build in a sophisticated state like Massachusetts.
But suddenly foreign dealings are seen as liabilities as investigators for the state’s fledgling gambling watchdog goes overboard scrubbing the backgrounds of various casino bidders, probing every minor blemish and tangential business relationship.
Yet a lot more is at stake here than which casino bigwig will get to make a killing in the newly minted Massachusetts gambling market.
Rather, who builds and runs the state’s new casinos could determine whether they truly become the resort destinations envisioned by Gov. Patrick and state lawmakers.
In the balance is whether Massachusetts, after years of debate and millions spent vetting various bidders, will wind up with true destination casinos.
That means casinos that attract high rollers from around the world and spur economic development, not just another bunch of honky-tonk slot parlors feeding off local gamblers that you can find in the backwoods of West Virginia or Pennsylvania.
“My nightmare scenario exists when irresponsible investigators start to apply standards that they invent that run afoul of common sense and our ability to comply abroad,” Steve Wynn fumed in recent, table-pounding testimony before the new Massachusetts commission.
Wynn, whose name is synonymous with high-class Las Vegas casino, has every right to be worried.
Caesars’ sin was allegations of Russian mob ties, not against an investor in the casino giant, but rather a passive investor in a hotel company with which Caesars a fairly hands – off relationship that licensed its name to Caesars on a project.
Now, the commission is looking hard at the giants’ overseas casinos, sending investigators to dig up dirt on the casinos Wynn and MGM have built to tap the rough and tumble Chinese market.
Yet Massachusetts probably needs these savvy casino tycoons more than they need us.
After all, of all the states that have rolled the dice on casinos, the Bay State may have some of the most ambitious goals.
A Tall Order
While many states are happy enough to find an alternative to jacking up taxes, the newly minted Massachusetts Gaming Commission has made it clear it is looking at the big picture.
The commission wants to see glitzy, eye-popping casino proposals with a “wow” factor, in the words of Steve Crosby, the no-nonsense casino commission chairman.
We want unique architecture, billions in new, high-end development, and maybe even casino moguls ready to pitch in and help recruit the latest hot shot tech or life science company.
Bidders need to show “an appreciation for and collaboration with the existing Massachusetts ‘brand,’ i.e., our intellectual/knowledge economy; our biomedical, life sciences, educational and financial services economic driver,” according to the state’s casino license application.
Wow, that’s one tall order and frankly worth being a bit skeptical about.
But if this ambitious plan is to have any chance of success, it needs the backing and expertise of the biggest players in the gaming industry, with the deep pockets and fat customer databases to build and operate such mega casinos.
That means brand names, like Caesars.
“I think it was a grotesque overreach by the commission,” said Clyde Barrow, director of the Center of Policy Analysis at the University of Massachusetts Dartmouth and a gaming industry expert.
And it also means players like MGM and Steve Wynn, who fear their bold bids to build casinos in Macau and tap the rich Chinese market will also make them vulnerable to nitpicking by an arguably overzealous commission.
Both have faced controversy for aspects of their business dealings in Macau, where, to put it mildly, the rules about what goes and what doesn’t are a bit different.
Yet the fact that Caesars, Wynn and MGM are global brands with customer relationships spanning the globe also make them perfect candidates to build casinos in Massachusetts.
These giants of the Vegas Strip have the kind of sophisticated marketing machines to drive traffic to a new casino, from tourists just in from Oklahoma to high-rollers from South Korea, China or Japan.
They have also been there and done that many times before when it comes to rolling out sophisticated resorts aimed at the high end of the gambling market.
More high-rollers and tourists from far-flung points mean more dollars pumping into the local economy and more development to serve and entertain the guests.
That means luxury hotels, fine restaurants, golf courses, shops, and many other amenities.
An example of what a big – name Las Vegas tycoon can do in a regional casino market can be found in Bethlehem, Penn.
Sheldon Adelson, the czar of the Las Vegas Sands empire and another casino mogul who is taking a pass on Massachusetts, has shown in Pennsylvania what a brand name casino giant can do in a local market.
Adelson, who was born in Dorchester but whose right-wing politics put him out of step with his native state, turned an old steel mill in Bethlehem into a gambling mecca, complete with a hotel to serve all the high-rollers coming in from New York.
Sands Bethlehem now generates more revenue from table games than any other Pennsylvania casino, a sure sign it has become a favorite among gamblers with a few dollars to spend.
And it stands out in a state where most casinos in Pennsylvania are glorified slot halls, without even a hotel to call their own.
All of which brings us to Rush Gaming, now a lead contender to team up with Boston’s Suffolk Downs after the Massachusetts Gaming Commission’s surprising decision to lower the boom on Caesars.
Headed by a Chicago billionaire, Rush has two rather mediocre casinos to its name, SugarHouse in Philadelphia and Rivers in Pittsburgh.
A glorified slot hall without a hotel, SugarHouse is an underperformer, with a legion of high-powered casino companies now bidding to build a second casino in Philly.
Rush, which unlike Caesars was deemed suitable by Massachusetts regulators, got into hot water earlier this year with Pennsylvania’s casino watchdog after letting a compulsive gambler play for 70 hours straight. To make matters worse, this lost soul had already put his name on a statewide “self-exclusion” list that should in theory have barred him from entering any Keystone State casino.
But Rush has one big advantage when it comes to competing in Massachusetts: No overseas casinos and frankly, no business record to pick over. It’s perfectly mediocre.
Baltimore developer Cordish Cos., which recently built the Maryland Live! casino, also has the benefit of a modest track record in the casino business that barely extends beyond its home state.
Hard Rock, the Seminole tribe’s casino empire, has a bigger reputation, but apparently not lots of potentially troublesome overseas ventures.
As Suffolk Downs looks for a new gaming industry partner, the lack of any foreign ventures now looms large as a vital qualification, notes one insider.
“They {Suffolk} have some suitors. They would prefer someone who doesn’t have foreign ties – no one can figure out the commission’s standards.”
For a sharp state like ours, that seems like a rather sad and dumb standard.
Scott Van Voorhis can be reached at sbvanvoorhis@hotmail.com.