Treasurer looks to beat tribe with casino deal

State Treasurer Timothy P. Cahill is to unveil a plan today to beat the Mashpee Wampanoags into the casino business by launching a state-sponsored search for a developer who would build a luxury gambling mecca sooner and with much greater financial benefit to the state's coffers, according to officials familiar with the plan.

Cahill has long expressed concern that an Indian-run casino would drain money from the state lottery, while providing the state only a limited amount of revenue, subject to negotiations with the tribe. By orchestrating its own deal to establish a casino in Massachusetts, Cahill will argue today, the state would gain far more from gambling than Connecticut has from its two Indian casinos.

The Mashpee Wampanoags, who today are celebrating their official recognition by the federal government, have announced plans to open a casino by 2010, but must first go through the time-consuming process of putting land into federal trust. The tribe must also negotiate a compact with the state, which would allow the tribe to open a casino with a level of gambling not now permitted elsewhere in Massachusetts. In other states, tribes have often agreed to pay a certain percentage of revenues in lieu of taxes.

Because any non-Indian casino would not be on sovereign land, it would be subject to all the taxes the Indian casino would be exempt from and therefore would generate more revenue for state and local government. In addition, the state could impose a gambling tax that would far exceed the 25 percent of slot revenues that the Indian casinos in Connecticut, for example, send the state.

Under Cahill's plan, which would have to be approved and implemented by the Legislature and Governor Deval Patrick, the state would issue a request for proposals for one or more casinos that would offer such amenities as five-star hotels, gourmet restaurants, shopping, and event pavilions.

The state would specify criteria for the casino, potentially including such provisions as the amount of land required for development, the level of capital investment, access to transportation, and number of parking spaces.

Developers whose proposals met all the state criteria would then bid for a license. According to gambling specialists, the going price for a 10-year casino license is $150 million.

Cahill, who will unveil his plan before the Greater Boston Chamber of Commerce this morning, was unavailable for comment.

The Legislature has resisted efforts to expand gambling in the past, but could now be more open, given the Wampanoags' aggressive push for a casino and the expected impact on the state lottery.

Lawmakers, who are struggling to balance the state budget, have also expressed frustration that Massachusetts residents spend so much money each year at out-of-state gambling facilities, mainly in Connecticut.

Patrick has said he is open to the possibility of some type of casino gambling, as has Senate President Therese Murray, who reiterated yesterday that the state must explore new ways to raise revenue to help cities and towns and to support social services.

"The Wampanoags are poised to ratchet up the debate with their plans for economic development," Murray said. "We need to start thinking about the best ways to position the state's interests in an industry that is on the brink of expanding within our borders."

While Cahill is launching his proposal to compete with the Wampanoags, it would probably remove one of the key barriers the tribe is facing, according to casino experts. Under federal law, recognized Indian tribes with sovereign land are allowed to pursue any kind of gambling venture that is legal in the state.

In fact, a spokesman for the Mashpee tribe said it would welcome the state's foray into casino gambling.

"This would be fine with us," said spokesman Scott Ferson. "There are two things the Mashpees have needed to open a Class 3 gaming facility: recognition, which they have, and state approval for Class 3 gaming, which is what the treasurer would be calling for.

"It might take a few years, but the tribe would not have to share revenue with the state," he said. "The tribe would keep all the money."

According to the officials familiar with Cahill's plan, the treasurer will say in his speech that growth in the state lottery, the country's most successful, is expected to flatten in coming years. Last year the lottery sent $952 million to communities across the state. But sales so far this year are down a little more than 2 percent, trailing expectations by about $75 million

While the privately owned casino would siphon revenue from the lottery, Cahill plans to argue, cities and towns could ultimately end up receiving significantly more local aid. Under his proposal, all the revenue received by the state would be distributed to cities and towns, though the Legislature could decide that the state should retain some of the money.

There are non-Indian casinos in 11 states, including Nevada, New Jersey, Louisiana, Illinois, and Indiana. According to specialists, most states followed procedures similar to what Cahill will propose: They set up an entity that solicits proposals and regulators to oversee casino operations.

A recent survey by the American Gaming Association found that Connecticut's two casinos, Mohegan Sun and Foxwoods, generated $1.7 billion in revenue from slot machines in 2006. They contributed $427 million last year to the state.

"With commercial gaming, the state has regulatory jurisdiction, taxing authority, and licensing authority," said Clyde Barrow, director of the Center of Policy Analysis at the University of Massachusetts at Dartmouth. "They are subject not just to gaming tax, but all the other taxes including property taxes to the host community."

Alan Meister, an economist with the California-based Analysis Group, said that Connecticut's two tribal casinos, which pay the state 25 percent of their slot revenues, pay more than any other Indian casinos in the country.

"These [casinos] are meant to provide a benefit to tribes because they haven't had good economic development," he said. "The federal government is protective of tribes and won't allow states to try to get an exorbitant amount of money from the tribes."

Sean Murphy of the Globe staff contributed to this report.