MASSACHUSETTS: New England Gaming Summit Special Report
by Paul Doocey
September 1, 2010
A view of the Boston skyline
Everybody in the Bay State Wants Casinos … So What’s the Problem?
An impasse in the Massachusetts Legislature is keeping gaming legislation stymied
Indeed, it appeared all the stars were aligned — polls showed a majority of citizens were in favor of casino expansion; Gov. Deval Patrick, House Speaker Robert DeLeo and Senate President Therese Murray, powerful Democrats in an overwhelmingly Democratic Legislature, pledged support; labor unions pushed for the legislation and its promise of massive job creation; and operators lined up for the chance to develop and manage the properties. When lawmakers crafted a bill calling for the establishment of three “resort” casinos and two slot licenses for racetracks and sent it to Patrick for his signature, it appeared a new age of gaming was about to dawn in New England.
“There was a dramatic change in the state’s attitude toward gambling,” says Paul Watanabe, professor of political science at The University of Massachusetts, Boston. “The debate was no longer about whether to have it or not, but if it should be just casinos or casinos plus other forms of gaming, such as slots at racetracks. That is a significant difference.”
But if there is one thing long-time observers of Massachusetts politics realize, legislative “inevitability” has a hard time flourishing in the state’s rocky soil. Instead of celebrating the birth of a new industry, Bay Staters now find casino expansion at an impasse, thanks to a charged disagreement on racinos between the governor and the speaker of the House, with the odds of passage growing dimmer each day.
The quick downfall of such a well-supported and seemingly popular bill has many asking what happened, and if gaming expansion of any type can ever happen in Massachusetts.
“I think everyone fully expected some form of casino legislation to emerge after Patrick, DeLeo and Murray all said they wanted casino legislation and there seemed to be strong support for the basic outlines of the legislation,” says Jeffrey Berry, professor of political science for Cambridge-based Tufts University. “Now that it appears unlikely, I think there is a perception out there that this is the gang that could not shoot straight.”
This was not the case back in April when DeLeo — whose district is home to Wonderland, a Revere-based greyhound track, and Suffolk Downs, an East Boston thoroughbred track where his father worked for decades as a greeter — introduced legislation calling for the legalization of two resort-style casinos and the housing of 750 slots at each of the state’s four racetracks. In addition to creating an estimated 15,000 new jobs, DeLeo and pro-gaming supporters said the measure would produce $260 million in upfront licensing fees and upwards of $500 million each year in combined tax revenues. After two days of debate, the House passed it.
Project proposals flooded in: Mohegan Sun unveiled plans for a $700 million casino for the town of Palmer with 3,000 slot machines, a 600-room hotel, a convention center and five restaurants. Suffolk Downs said it would totally refurbish its existing facility and create a $750 million entertainment destination with casino gambling and horse racing. New Bedford has been advanced by KG Urban Enterprises as the future home of a $650 million casino with a hotel, conference center and retail shopping, all housed in a closed power plant along the city’s waterfront. Other proposals call for casinos in Milford and Fall River.
Suffolk Downs is one of four racetracks that have been proposed for as many as 750 slot machines each
So a compromise bill had to be crafted, approved and sent to Patrick for his signature before the Legislature recessed for the year on July 31. But finding common ground between the two bills proved elusive and time-consuming. The major sticking point appeared to be slots at racetracks, a provision DeLeo refused to abandon and Murray, along with the governor, were hesitant to accept. As the July 31 deadline approached without agreement, Patrick threw out a lifeline, saying he would sign a bill that included one racino license as long as it was awarded through competitive bidding.
On July 30, the House and Senate came up with new legislation calling for three resort casinos in three different regions of the state. These licenses would be available through open bidding, with the winners paying a fee of $85 million for the licenses. The casinos would be taxed at a 25 percent rate. The legislation also cleared the way for two slot parlor licenses at racetracks, allowing up to 1,250 machines at each in exchange for a $20 million-$25 million licensing fee and a yearly tax rate of 49 percent. The compromise passed by a veto-proof 115-36 vote in the House and by a 25-15 margin in the Senate, two votes short of the two-thirds required to override a potential veto by the governor.
“Over the past few weeks, the House and Senate came together and compromised in a number of areas,” DeLeo told the Cape Cod Times. “Negotiators put aside their differences in the best interest of the citizens of Massachusetts.”
The new bill did not sit well with Patrick, however. He immediately found fault with the racino provision, essentially calling it a no-bid arrangement since Suffolk Downs and Wonderland reported they would combine and try to win a casino license, meaning the two slot licenses would default to Plainridge Racecourse and Raynham Park. “I am not going to be a party to no-bid contracts for track owners,” Patrick told The Boston Globe. “We do this over and over again … we yield to short-term interests for a few powerful people, and we set aside the long-term, best economic and social interests of the commonwealth.”
He sent back the legislation, stripped of all slot parlors, including the one license he had himself proposed. However, by the time he did this, August 2, the Legislature had recessed for the year, meaning a special session would have to be called by both the House and Senate to vote on the revised measure and possibly to override a veto if they return the legislation to Patrick with the slot licenses back in place.
But the Massachusetts Legislature very, very rarely calls special sessions and almost never does so during an election year. Anticipating this maneuver, legislators said at the time that a move by Patrick to amend the gaming legislation would act essentially as a type of irrevocable veto. While DeLeo was willing to call back the House to override the governor’s objection, Murray did not see the point, since she did not think the Senate could get the two-thirds vote necessary to cancel a veto.
“I’d never say it’s over … but I’m very doubtful that [the gaming legislation] can happen,” DeLeo told the Boston Herald.
There may be one more chance for gaming legislation this year. There was a remote possibility that a special session could be called in late August or early September to approve $655 million in federal health and education funding for the state. “If the Legislature meets for this, maybe a gaming compromise can be reached,” says financial analyst Bill Lerner, principal for Union Gaming Group, a Las Vegas-based research firm. “For this to happen, I think the Legislature will need to blink on racinos, and accept one license with open bidding as the governor requested.”
Not everyone agrees gaming will be readdressed if this session is called. “Casino legislation is likely dead this year now that the legislative year is over,” Watanabe says. “The legislature may reconvene over other issues, and gaming could perhaps be taken up again, but that is not likely.”
Disagreement over one issue has essentially sentenced Massachusetts gaming legislation to limbo, where it will reside until either a special session is called to address it or the calendar year runs out and it dies. Considering the support this bill has and how close it came to being reality, some wonder why a further compromise can not be reached.
“There is a stereotype of politicians that they are sitting around like balls on a pool table, inert until somebody strikes them and then they move in that direction,” Berry says. “Politicians actually do have principals and care passionately about public policy. While they are always willing to compromise, there are times when they say no, this goes too far. Both share the blame for the impasse, but only if you consider standing up for what you believe in is wrong. I think they both sincerely did what they thought was best for the interests of the state or their district. I think both sides believed ultimately that the other side would compromise in the desired direction. They waited for the other side to blink and it did not happen.”
Whatever the reasons for the impasse, reaction has been rather harsh, a lot of it aimed at Governor Patrick. Labor union officials have been particular vocal. “Our leaders need to come together and get this done,” Robert J. Hynes, president of the Massachusetts AFL-CIO, told the Globe. “It would be a tragedy to squabble over who’s ‘more right’ on a major job creation bill that features far more agreement than disagreement.”
Meanwhile, the various gubernatorial candidates are trying to make political hay. State Treasurer Timothy Cahill, an independent candidate for governor who supports both casinos and racinos, questions Patrick’s motives. “Governor Patrick needs to step up and do what’s right for Massachusetts, not what’s right for his re-election campaign,” Cahill told the Globe.
Charles Baker, a Republican candidate for governor who is calling for establishment of a single casino in the state and slots at tracks, lambasted Patrick’s leadership ability. “[Gaming legislation] is dead for now, and I think you have to pin it on the governor,” Baker told the Herald. “This was an opportunity for a big win, and it didn’t happen.”
The fallout for failing to pass gaming legislation could haunt Patrick this fall. “I think that the upside for Patrick’s re-election came from getting this bill passed,” says Berry. “Getting the bill passed would create some sense of momentum on the perception of job creation.”
From a gaming expansion perspective, an election loss for Patrick could hurt more than it helps. “If Charlie Baker is elected governor, to what degree does an overwhelmingly Democratic Legislature want to help him?” asks Berry. “I don’t see him pulling out a magic wand and, abracadabra, a single casino appears.”
Whatever the election results, gaming expansion will likely be tackled again at the next legislative session, if for no other reason then there seems to be a consensus on the issue. But given the uncertainty of politics, 2010 could very well go down as the last, best chance Massachusetts had to legalize casinos.
“This is as close as [casino legalization] has ever come,” Sen. Michael P Knapik (R-Westfield) told masslive.com. “If it collapses now I think it would be the end for it in Massachusetts.”
Paul Doocey is a New York-based writer and editor specializing in the gambling and betting industries.
is editor of Casino Journal magazine. He can be reached at email@example.com.
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