Want to build a casino in Massachusetts? Better head west, high roller – all the way to Springfield, Palmer or Westfield, that is. Suffolk Downs is close to galloping away with the Boston-area license, and the Mashpee Wampanoag tribe is homing in on the license for Southeastern Massachusetts.
That leaves Western Massachusetts, where efforts by Connecticut’s Mohegan Sun to gain an early lead have faltered, encouraging some of the biggest casino companies in the world to roll the dice.
“I think it’s pretty wide open at this point,” said Clyde Barrow, director of the Center for Policy Analysis at UMass Dartmouth and an expert on the New England gambling industry.
The Massachusetts Legislature last fall gave the green light to a trio of casino licenses for the state — two for Eastern Massachusetts and one for Western Massachusetts. A single slot parlor license, which can also go anywhere in the state, is also up for grabs.
The competition for the Western Massachusetts casino license is now starting to heat up, with a bevy of big-name casino companies preparing to go head to head for the right to plant their flag at the crossroads of New England.
Ameristar Casinos has targeted Springfield, while Penn National is exploring building a casino in Westfield.
Hard Rock, owned by the casino rich Seminole tribe, has been looking at Holyoke and other locations, while MGM is on the prowl again for a Western Massachusetts location after an initial proposal to build in Brimfield fell through.
Finally, there is Mohegan Sun, which has spent years crafting plans for a casino in Palmer in anticipation that Massachusetts would eventually follow Connecticut’s lead and legalize casino gambling.
In fact, for a time it looked like the Western Massachusetts competition would be as dull as the jockeying for the two Eastern Massachusetts licenses, with Mohegan seemingly poised to block out any serious competitors.
But Mohegan failed to close the deal.
Mohegan’s Early Lead Vanishes
Mohegan first rolled out plans for a casino in the struggling industrial town back in 2009, opening up a storefront office to spread the word about its project.
The Connecticut casino giant spent the last three years building support among local officials and residents in Palmer – crucial since the new Massachusetts casino law requires both a pact with local officials and approval by voters in a community-wide referendum.
The logic was clear – with gambling coming to Massachusetts, Mohegan clearly would rather get a piece of this market to offset what is expected to be a big loss in business at its Connecticut gambling palace.
Yet just as it began rolling out its Massachusetts casino plans, the tribal casino found itself grappling with a decline in slot revenue from the recession and a looming deadline to refinance hundreds of millions of dollars in debt.
While Mohegan succeeded in finally hammering out a debt deal in March after months of behind-the-scenes negotiations, slot revenue, after seeming to stabilize late last year, is on the decline again.
Meanwhile, as its financial troubles mounted, Mohegan has scaled back its Palmer casino plans.
When Mohegan first pitched its plans for a Palmer casino, it was pegged as a $1.1 billion project. The most recent iteration, however, has shrunk down to just over half that, to $600 million.
Feeding Frenzy
In the predatory gambling industry, Mohegan’s financial floundering has been akin to blood in the water for competitors eager to sink their teeth into the juicy Massachusetts casino market.
Right now, market opportunity is trumping potential profits as casino giants decide where to place their bets in Massachusetts.
MGM, Hard Rock and Penn National are titans of the casino industry, some of the biggest players around.
But these and other big players have shunned the Eastern Massachusetts license competition, even though the ultimate prize is much richer, with Suffolk Downs pushing plans for a billion-dollar casino.
The obvious explanation is that the Western Massachusetts license is still seen as up for grabs while the Eastern and Southeastern licenses are not.
Still, a Western Massachusetts casino would hardly be a consolation prize.
UMass Dartmouth’s Barrow sees the potential for $400 million in annual revenue and 2,500 jobs, making it a major gambling destination in the Northeast.
“It would be the fourth largest casino [if it were] in Atlantic City,” he said.
Scott Van Voorhis is a Banker & Tradesman columnist.
