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Mass. casinos pose tough new competition in region

By Stephen Singer
AP Business Writer / November 27, 2011
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HARTFORD, Conn.—The race is on for more casinos in southern New England as Connecticut and Rhode Island look to expand to keep up with huge competition expected from Massachusetts, now that the Bay State has jumped into the business.

Connecticut's Mohegan Sun is seeking to build a casino in Palmer, Mass., as other casino developers look at Springfield and Holyoke as competitors for a western Massachusetts site. And Rhode Island voters will be asked next year to approve a ballot question on whether to turn a slot parlor into a casino.

Massachusetts Gov. Deval Patrick signed legislation Tuesday authorizing the greatest expansion in gambling in the state since the lottery was established 40 years ago. The new law authorizes up to three competitively bid casinos and one slots parlor. It caps a five-year effort that backers say will create thousands of jobs and generate hundreds of millions in revenue.

A slot parlor could be operating in two years, while it could be four years before destination resort-casinos are in business, said Massachusetts state Sen. Stephen Brewer, chairman of the Ways and Means Committee and a casino supporter.

Mitchell Etess, chief executive of the Mohegan Tribal Gaming Authority, which runs the Mohegan Sun in eastern Connecticut, praised Massachusetts' foray into casino gambling. It's a double-edged sword for the Mohegan Sun, competing with it while also giving it the opportunity to seek permission to build a casino in Palmer, Mass.

"We're really glad to see this taking place," Etess said. "We believe the New England market can sustain the three casinos and slots in this legislation."

Connecticut officials aren't as certain. State government does not have dollar estimates related to the impact from new casinos to the north, but expects competition to be "negative for Connecticut's casinos," Gian-Carl Casa, spokesman for the state Office of Policy and Management, wrote in an email.

Until details are available about the location, size, and type of entertainment at casinos in Massachusetts, "we won't know the magnitude," he said.

Foxwoods and Mohegan Sun paid $342.3 million in slot machine contributions to Connecticut in the budget year that ended June 30. That was down 2 percent from the previous year due to competition from New York and elsewhere and the weak economy.

Casinos looking to open in the region do so at their own peril, said Connecticut state Sen. Eileen Daily, co-chairwoman of the legislature's Finance, Revenue and Bonding Committee.

"There's a limited amount to go around," she said.

Rhode Island Gov. Lincoln Chafee said the state gets more than $300 million a year -- the third-largest source of revenue -- from its lottery and two casinos. State officials have commissioned an economic impact study to assess "various likely competitive threats" to the two casinos, Twin River and Newport Grand.

A spokeswoman said Chafee will not be specific about what the state could do to improve its competitiveness until after the report is completed at the end of the year.

Patti Doyle, the spokeswoman at Twin River, said casinos in Massachusetts could be a significant competitor if Rhode Islanders switch their allegiance to new casinos nearby. To keep gamblers closer to home, Rhode Island will vote next year on a referendum that would allow table games and dealers at Twin River, which now offers slots.

"If that passes then I think we have a very good shot at a level playing field," she said. "It would be a huge disadvantage if for some reason voters turn it down."

The Massachusetts law calls for spreading the casinos across different regions, with one each in eastern Massachusetts, western Massachusetts and the southeastern part of the state.

Paul Burns, president of the Palmer town council, said residents generally favor a casino as a way to create jobs and pay as much as $9 million a year in property taxes. The new law requires a local referendum approving a casino. The weak economy and disappearance of the town's textile and paper mills over the years have helped strengthen support, he said.

"Part of it is the long, slow loss of jobs," Burns said.

Developers with proposals for Springfield and Holyoke also are vying for the western Massachusetts site, sparking a more local competition. The new law requires casino builders to invest at least $500 million in a gambling facility, providing a huge lure to communities interested in a massive new attraction.

"In this economy, there just aren't that many businesses willing to come into a community and invest hundreds of millions of dollars and employ 2,800 workers," said Troy Stremming, senior vice president of government relations and public affairs at Ameristar, which is buying a 41-acre site in Springfield for a future casino.

Springfield Mayor Domenic J. Sarno said a casino would be welcomed under the right circumstances because the $500 million investment would be a boost to the economy that's slowly emerging from a recession. Large-scale development also may spur construction in areas of western Massachusetts severely damaged by tornadoes in June.

"The economic landscape has changed," he said. "The landscape has changed."

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