The chairman of the Massachusetts Gaming Commission said 2013 will be a seminal year for gaming in the state.
It could be a make or break year for casino developers competing in Western Massachusetts.
Before 2013 is over, voters are expected to get their say on specific casino projects in Palmer, Springfield and West Springfield, ensuring intense debates in communities over the benefits and problems of expanded gambling.
Stephen Crosby
Stephen P. Crosby, chairman of the Massachusetts Gaming Commission, said 2013 will be "the seminal year" for gaming in Massachusetts.
"It's going to be a busy year .. filled with aggressive competition," Crosby said.
Eleven companies across the state met a Jan. 15 deadline to submit preliminary applications for licenses to the commission, along with $400,000 fees.
The bidders in Western Massachusetts include four giants in the industry: MGM Resorts International and Penn National Gaming, which are both planning casinos in downtown Springfield, the Mohegan Sun, which is planning a casino in Palmer and Hard Rock International, which has staked out ground for a casino at the Eastern States Exposition in West Springfield.
Casinos could mean a major lift for the economy, tourism and government revenues. Each casino would create about 1,500 to 2,500 permanent jobs and more than 2,000 construction jobs.
Executives of the four companies said the coming year could determine the fate of their proposals.
Mitchell G. Etess, chief executive officer of the Mohegan Tribal Gaming Authority in Connecticut, which owns the Mohegan Sun in Uncasville, Conn., said he is optimistic about the year ahead.
The company is planning a $600 million casino, spa and hotel on about 152 acres near Exit 8 of the Massachusetts Turnpike in Palmer.
"We really love our chances in Palmer," Etess said in an interview. "We know we have a tremendous amount of support in the community."
Just last month, the Mohegan Sun ended a long search for a financial partner when it announced that Brigade Capital Management of New York would invest in the Palmer project. Last year, the Mohegan casino company also refinanced more than $1 billion in debt.
Etess said the planned Palmer resort would be in the ballpark of $800 million when including adjacent land that would be used for retail, for example, and would be developed by a separate company.
The Mohegan Sun has a head start on its competitors. The company has been planning the Palmer casino for more than five years, including opening a storefront office in downtown Palmer more than three years ago. The company is currently negotiating an agreement with Palmer town officials.
The Palmer proposal is part of the Mohegan Sun's effort to find new business amid growing competition in the Northeast, including race track casinos in New York.
Mitchell Etess
The Mohegan Sun boasted $48 million in operating income for the final quarter of calendar 2012, but gaming revenues were down about 7 percent compared with the same quarter in 2011, partly because of newer rivals in New York.
In West Springfield, Hard Rock International is planning an estimated $700 million to $800 million casino, spa and hotel on 38 acres of the grounds of the Eastern States Exposition, the organization that holds the annual 17-day "Big E" fair.
James F. Allen, chairman of Hard Rock International, said "it's an amazing match" between Hard Rock and the fair organization.
Allen said the project would be the merger of two noted brands in the entertainment industry.
"We are incredibly excited," Allen said. "The marriage was made in heaven."
Allen said the West Springfield proposal includes some attributes that will "clearly separate" the proposal from its three competitors in Western Massachusetts, including its relationship with the fair.
The gaming floor alone would be at least 150,000 square feet and would have about 2,500 slot machines and 100 tables.
The company may create up to 7,000 parking spaces, including some 2,500 to 3,000 inside a new structure, he said.
"Over the last four years, we've looked at countless locations in the state," Allen said. "This by far is the superior location."
James Allen
Allen said Hard Rock considered downtown Springfield, but believes that the minimum 38-acre site in West Springfield would provide the space needed to create a destination resort.
Hard Rock weighed some 15 to 20 sites in Massachusetts, all with some positives and negatives, he said.
Hard Rock and Mohegan are both saying they have the land that is needed for a true resort.
Both say their casinos could be gambling destinations for a regional market that includes Albany, N.Y., Hartford, Worcester and New Hampshire.
Springfield, one of the poorer communities in the state, is the only municipality in Massachusetts with two casino proposals.
Michael Mathis, vice president of global development for MGM, said the company will continue its regular meetings with the public and key stakeholders in the city this year.
Mathis said MGM is proposing a casino that could spark "economic re-generation" in Springfield.
Las Vegas-based MGM is proposing an about $800 million casino resort on 10 to 15 acres in the South End, generally bounded by Main Street and East Columbus Avenue and State and Union streets.
"It looks to incorporate, complement and support existing businesses in the region and in the city," Mathis said.
Michael Mathis, a vice president at MGM, met with Springfield residents in January to outline the company's casino proposal.
Mathis said a critical part of MGM's plan is a pedestrian bridge that could go across State and Main streets and connect to the MassMutual Center, which is owned by the Massachusetts Convention Center Authority and which, about eight years ago, received $71 million in state-funded work including a new adjacent convention center.
"It's a regional asset," Mathis said of the MassMutual Center. "I think we can do a lot to support that facility."
Mathis said the MGM casino would make the downtown vibrant, improve public safety and boost public perception of a part of the city that is often empty on nights and weekends.
He said MGM looked at whether crime and the city's homeless population would affect business at a casino, but concluded that a resort would be "a big benefit" to the downtown.
In the North End of Springfield, Penn National is planning an $807 million casino complex on 13.4 acres. As part of the project, Penn National has an option to purchase The Republican's 1860 Main St. building and property and vacant land on the Connecticut River.
Penn National, based in Wyomissing, Pa., also has a "50-50" partnership with Peter A. Picknelly, chairman and CEO of Peter Pan Bus Lines. His brother, Paul C. Picknelly, president of Monarch Enterprises in Springfield, is among local partners in the MGM plan.
Timothy J. Wilmott, president and chief operating officer of Penn National, said he wanted to be careful to avoid over promotion of the economic impacts of a casino in Springfield but he said there is no question it would have a positive effect on the economy.
Timothy Wilmott
Wilmott said a casino in Springfield would help but it would not be a panacea.
Wilmott also said he was not worried about crime in the downtown or the homeless population. He said the environment should dramatically improve, partly because of increased security around a casino and the urban revitalization spurred by the project.
Penn National's plan includes an overhaul of the historic Paramount Theater and relocating the Peter Pan bus terminal to Union Station.
The Republican's building would be demolished, along with the existing Peter Pan terminal. Using the proceeds from the sale, the newspaper would relocate its newsroom and office personnel to a new downtown location, thus keeping jobs in Springfield. A new printing plant would be built in an industrial park off Interstate 291 in Springfield.
During Penn National's official unveiling on Dec. 20 at the Paramount, George Arwady, publisher and CEO of The Republican, told a crowd that The Republican found itself in the way of an $807 million project in the downtown.
"That was a problem," Arwady said. "We needed to get out of the way."
Wilmott said Penn National looked at sites such as the fairgrounds in West Springfield. He said the company concluded that a downtown casino in Springfield would have more of an "overall ripple effect" on the economy and would stand a better chance of winning the competitive bid process.
Wilmott also touted Penn National's financial strength, saying it has one of the more conservative balance sheets in the industry.
The company's track record includes the opening of three casinos last year "on time and on budget," he said. Penn National opened casinos last year in Toledo and Columbus in Ohio and one in Kansas.
In order to move ahead in the licensing process, Penn National and other casino developers need to negotiate agreements with communities where they want to locate. Those agreements would include ways to mitigate the effects of casinos, including possibly sharing a percentage of gaming revenues.
Casino companies also need the approval of voters in communities where they want to locate casinos, but the timing of those referendums largely depends on the gaming commission.
Before ballot questions are held, the five-member gaming commission must complete the first phase of the licensing process, including possibly weeding out some companies that were among the 11 preliminary applicants. That preliminary phase includes investigations of a company's finances, ethics and top officers and directors.
If a company passes the commission's investigation, and a company then finalizes an agreement with a potential "host" community, a referendum can be held. The ballot question can take place no fewer than 60 days after finalizing an agreement.
Crosby, the chairman of the commission, said it is unclear when the commission's background investigations will be complete. It could be in the late spring or in the fall, depending on whether company officials appeal findings by the commission, he said.
Springfield Mayor Domenic J. Sarno is expected to announce on Feb. 11 whether he will negotiate mitigation agreements, including fees and taxes, with MGM Resorts and Penn National Gaming, or only one of the companies. Sarno will decide if one or both companies go to the ballot.
Late this year, developers are expected to submit bids to the commission for specific sites for casinos, depending on voter approval.
The commission is aiming to award the first casino resort license in February of next year. It is planning to issue a license for a slots-only parlor possibly by October.
The state's casino law sets aside one commercial casino license for Western Massachusetts, one commercial license for Greater Boston and a slots-only license for anywhere in the state. The law permits a Mashpee Wampanoag casino in the southeast part of the state, pending federal approval of a revised compact currently being negotiated by the state and the tribe.
"We will be awarding at a minimum the slots license and we'll be right down to the short strokes on the casino licenses," Crosby said, summing up the commission's outlook for the year.
The process in Massachusetts comes as the gaming industry is continuing a slow comeback following the financial crisis of 2009.
Overall, according to preliminary numbers, national gaming revenues were up about 5 percent for the first three quarters of last year, following an uptick in 2011, according to Holly Wetzel, spokeswoman for the American Gaming Association in Washington.
Massachusetts is the most recent state to legalize casinos. Twenty three states are home to commercial casinos. A total of 38 states have casinos when including Indian casinos, such as the two in Connecticut.