Market will support multiple-casino plan, state officials say
Officials in Governor Deval Patrick's administration said yesterday that they are confident that developers will be willing to pay $200 million to $300 million each for the right to build casinos in Massachusetts, citing studies that say the state is full of seasoned gamblers and casual tourists ready to try their luck close to home.
The governor's big gambling initiative hinges on gaining at least $600 million for the state in fees for 10-year licenses for the casinos, one in each of three regions of the state.
Officials and specialists said they do not know exactly how the increased supply of casinos would affect the bidding, but they do not believe that three new casinos would saturate the New England market.
Daniel O'Connell, Patrick's economic development secretary who led an administration task force that studied the best ways to wring gambling dollars out of the state, said in an interview yesterday that the administration is confident in its projections and hopes they are actually too conservative.
He added that Massachusetts will be looking for investors with deep pockets to jump-start the state's gambling industry quickly. He cited one possible project, proposed by casino developer Sheldon Adelson, who wants to invest $3 billion in a casino, hotel, convention center, and stores in Boston's western exurbs near the intersection of the Massachusetts Turnpike and Route 495. Adelson is a Boston native who became one of the world's richest people building and operating casinos in Las Vegas; Macao, China; and Singapore.
"These casinos in Massachusetts are going to require huge capital investments, because they will have to compete with the Connecticut casino on the day they open," O'Connell said.
Besides the licensing fees, which will promise regional exclusivity for 10 years, the state plans to tax the Massachusetts casinos at 27 percent of gambling revenues, compared with 25 percent on slot revenues that Connecticut receives from Foxwoods and Mohegan Sun.
For the Connecticut Indian tribes who pioneered big-time casino gambling in New England, something new looms on the horizon: competition. One of the biggest factors driving the current casino extravaganza is the estimated $900 million now spent annually by Massachusetts residents in the Connecticut casinos. For Connecticut, that represents about $120 million contributed to the state treasury by Bay State residents.
If approved by the state Legislature, Patrick's casino plan would immediately tip the market balance.
"For Foxwoods and Mohegan Sun, this will hurt them to no end," said the Rev. Richard McGowan, a Boston College economist, gambling researcher, and author.
"But if I am the governor of Massachusetts, I don't care," McGowan said. "I'm reclaiming revenue for my state, thank you very much."
At one Connecticut casino, executives were not ready to comment on how the Massachusetts plan would shake up the market. "It would be premature to predict the fate of the governor's proposal," said John A. O'Brien, president of Foxwoods. "We continue to operate what we feel is the best gaming resort to be found anywhere."
Is there enough market in Massachusetts and the rest of New England to support all these casinos?
Probably, said specialists. Metropolitan Boston is one of the most attractive gambling markets in the world, because of the size of its population and the amount of personal income of its residents, said Eugene Christiansen, president of the New Gloucester, Maine, research firm Christiansen Capital Advisors.
Last year, Christiansen produced a study for state Treasurer Timothy P. Cahill that predicted $1.1 billion in revenues within three years of putting 8,000 slot machines in play at the state's four racetracks. Foxwoods and Mohegan Sun each have almost that many slot machines.
Adelson recently projected that a casino in Marlborough could gross almost $1 billion in gambling revenues by 2011, about $700 million of which would be taken away from Foxwoods and Mohegan Sun.
The casino business plan recently filed by the Mashpee Wampanoag and their development partners pegged the unmet gambling market in New England at $1.5 billion per year.
O'Connell said the casino planned for the Boston area might not be as large as the other two, because it will probably have few amenities such as restaurants, hotel rooms, and convention space. Conventioneers in town for events at the Boston Convention and Exhibition Center are expected to be a key source of patrons for a Boston facility, which could land in the Seaport area, O'Connell said. Another proposed city site is Suffolk Downs, a location supported by Mayor Thomas M. Menino.
O'Connell said state officials will encourage the Mashpee Wampanoag and their development partners, Sol Kerzner and Len Wolman, to bid for a license to build a casino in Southeastern Massachusetts. The Patrick plan envisions giving an Indian tribe an advantage in the bidding, but details of how that advantage would be granted were not spelled out in the governor's proposals yesterday.
As a sovereign tribal nation, the Wampanoag could continue their pursuit of a casino in Middleborough, but they must obtain the approval of the US Department of the Interior to create an official reservation before opening a casino, a bureaucratic process that would take years.
If the tribe chooses the reservation alternative over bidding for a commercial license, it risks being the fourth casino to open, after other developers have had a chance to lock up the market.
Sean P. Murphy can be reached at smurphy@globe.com. 