What's Going on in Massachusetts?

What's Going on in Massachusetts?

4/16/2008
By: Dennis J. Whittlesey Read the newspapers in Boston these days and you will conclude that casino gaming is not coming to Massachusetts anytime soon. The cards are folded, the chips are in storage and New England casino workers are interviewing at Foxwoods for jobs with the Seminole Tribe in Florida. But don't bet your mortgage on that conclusion. The one certainty is that casino gaming is coming to Massachusetts - and sooner than meets the eye. The news reports flow from the fact that the Massachusetts House of Representatives has just rejected a casino proposal developed by Governor Deval Patrick which would have authorized three resort-style casinos within the Commonwealth. The 106-48 vote to send the Governor's casino legislation back to a study committee effectively defeated the bill and ensured that it would not come up for debate until 2009 at the earliest. The outcome was expected by the time the House voted, despite the Governor's efforts to persuade the legislature to approve his plan which would have generated substantial income for the Commonwealth at a time when the state is desperate for new sources of revenue. The Governor's legislation proposed licensing three commercial casinos to be located in different regions of the state, and the Governor estimated that it would generate $600 million in licensing fees, $400 million in annual tax revenue and 30,000 permanent jobs. He had a dream and its color was green. So what went wrong? The major blow to the Governor's dream came when House Speaker Salvatore DiMasi decided to oppose the casino plan, arguing that expanded gaming would drain revenue from other businesses and increase personal bankruptcies, petty crimes and other social ills. In this, DiMasi ignored the reality of gaming activity already being pursued by Bay State residents, who wager substantial sums at Connecticut and Rhode Island casinos. And, he also ignored the certainty of Indian gaming commencing in Massachusetts within the next several years. The money flow from Massachusetts to out-of-state casinos is staggering. The UMass Dartmouth Center for Policy Analysis has just reported in its "New England Casino Gaming Update 2008" that Massachusetts residents wagered and spent more than $1 billion at casinos in the two neighboring states in 2007. This means that the two Connecticut Indian tribal casinos - Foxwoods and Mohegan Sun - are among the largest casinos in the world because of those Massachusetts gamblers leaving their home state. From the outset, there were elements of opposition to the legislation from various sources, including horse racing interests and the "no casino" activists. But the Governor's arguments that the opponents were short-sighted simply fell on deaf ears as Patrick's arguments were undermined by subsequent disclosures. These included an article in the Boston Globe that the 30,000 news jobs estimate was "excessively optimistic" and the revelation that the Governor's estimates were based on a study conducted by Suffolk Downs, a gambling operator expected to bid on one of the three commercial licenses. And an independent analysis conducted by professionals at Moody'sEconomy.com concluded that only 4,000 to 5,000 jobs would be created under Patrick's casino proposal. Public support for the Governor's plan began to erode and the legislature did the rest. Nonetheless, the "casino or no casino" debate continues, but the development of gaming within the state is moving forward. Indeed, the newly-recognized Mashpee Wampanoag Tribe is proceeding with plans to develop a major casino and resort only 40 miles south of Boston in the Town of Middleborough. The Tribe negotiated an agreement with the Town last year for municipal services and infrastructure development, and it was approved on July 28 by what has been called the largest Town Meeting ever conducted in New England. The Town Meeting vote was 2-1 in favor of the tribal casino. The Mashpee Wampanoag Tribe is the tribe that met the Mayflower at Plymouth Rock; however, it was never extended federal recognition until last Spring. By then, the Tribe and its development partners already were planning a casino and in negotiations with Middleborough to locate the planned casino resort within the Town's boundaries. Recognizing that experienced legal assistance was critical in developing an agreement for a casino resort expected to rival the two Connecticut casinos in size, the Town retained the Dickinson Wright Indian Gaming Law group for the negotiations, which resulted in what has been termed the richest agreement between any casino and its host community. Within days of the Town Meeting vote, tribal representatives personally delivered to the Bureau of Indian Affairs an application to have lands the Tribe purchased in Middleborough taken into trust status. At the same time, the tribal team began development of casino plans and an environmental impact statement for the project. The first "scoping meeting" was recently conducted in the Town by BIA officials and by every account the Tribe is moving forward in planning and development, including making payments to the Town to fund mitigation planning, as provided for in the agreement. While Governor Patrick's legislation proposed that one of the three state licenses would go to an applicant with an "Indian component," it was never clear that the Mashpee would agree to participate in a state-licensing process which would have required it to surrender sovereignty and pay fees and taxes not imposed on Indian casinos operating under the Indian Gaming Regulatory Act, 25 U.S.C. § 2701, et seq. Under that scenario, it would appear that the State would be outside of Middleborough, looking in. However, the Governor still would have a well-established course of action that could generate substantial revenues to the State. Governor Patrick likely will still be able to collect substantial fees from the Mashpee property if he works with the Tribe to develop a Tribal State Gaming Compact which is required before any tribe can offer full-blown casino gaming. Tribes don't need a Compact to offer what is called "Class II" gaming, which essentially consists of electronic bingo games and certain table games not banked by the house. Indeed, when previous Florida Governors refused to negotiate a Compact with the Seminole Tribe, the Seminoles simply developed several Class II gaming facilities which quickly became some of the most profitable casinos in the country. After watching the tribal financial success for years, Florida recently negotiated a Compact with the Tribe to allow full casino gaming and - in return - receive substantial payments from the Tribe. So while Governor Patrick's dream of a commercial casino industry has been delayed, a tribal gaming presence within Massachusetts is moving to reality. At this time, it is estimated that the Middleborough casino could be open within a couple of years, and that would in turn open the door for Massachusetts to realize sorely-needed revenue through a Compact with the Mashpee Tribe. It is too soon to predict whether the non-tribal gaming industry will become reality within the state, but the development of the Mashpee casino will put a great pressure on the legislature to revisit some form of commercial gaming legislation. As the Director of the UMass Dartmouth Center, Clyde W. Barrow, recently said, ":I do think [state legislation] is inevitable. The length of time it's getting put off is getting shorter and shorter."
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