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Competition expected to be fierce for Mass. gaming license26 October 2011
By Howard Stutz
And, he owns a small percentage of the National Basketball Association's Boston Celtics.
Loveman's background leads to a question being batted about among the investment community: Are his Bay State connections enough to win Caesars Entertainment the license to operate one of three resort-style casinos expected to be approved in Massachusetts?
Analysts said the state would be one the most highly sought-after gaming markets in recent history.
Union Gaming Group Principal Bill Lerner told investors that a single Las Vegas-style casino in metropolitan Boston could generate up to $1.5 billion annually in gaming revenue. The two other hotel-casinos are expected to be in southeastern Massachusetts and western Massachusetts. A slot machine-only casino is also part of the planned expansion.
State lawmakers signed off on similar casino bills in the House and Senate this month. Legislators will now meet in a conference committee to reconcile any differences. Gov. Deval Patrick has expressed support for the plan and is expected to sign casino expansion into law by the end of the year.
"While no issue is certain until it becomes an actual law, we do place the odds of passage as fairly high at this point in time," Janney Montgomery Scott gaming analyst Brian McGill said.
With the casinos' gaming revenues taxed at 25 percent (40 percent for the slot machine parlor), there is too much money for cash-starved Massachusetts to leave the gaming plans on the table.
Macquarie Securities gaming analyst Chad Beynon said both Democratic and Republican lawmakers were not going to deny the potential creation of some 12,000 to 15,000 jobs and the generation of an estimated $150 million to $300 million in tax revenues.
"At a time when both parties are deeply searching for job creation and increased state tax revenues, we believe state legislatures have never been more closely aligned regarding the legalization of gaming," Beynon said.
Under the Massachusetts plan, casino developers would be required to pay $85 million for one of the three licenses and invest at least $500 million into their projects. The tax rate is reasonable, compared with Pennsylvania's 51 percent gaming tax that covers 10 casinos.
Those requirements seem to fit Caesars, one of the few casino companies active in the growth market.
Caesars is the half owner and operator of two Ohio casino projects in Cincinnati and Cleveland, which are expected to open next year. The company recently submitted a bid to build a slot machine-only casino in downtown Baltimore.
New England and other parts of the East Coast market have attracted the company's interest in the past. Caesars tried to push through a gaming expansion referendum in Rhode Island a few years ago, only to be turned down by voters. The company was also a bidder for the contract to operate a casino at New York City's Aqueduct Racetrack, which eventually was awarded to Malaysia-based Genting.
Caesars also operates four casinos in Atlantic City, more than one-third of the market.
Caesars is spending $550 million on the Strip to build the nongaming Project Linq, an outdoor retail, dining and entertainment development anchored by the world's tallest observation wheel.
Loveman has said Las Vegas doesn't need any more casinos in the near future. Regional markets, however, are vastly underserved. A downtown Boston casino would also give Loveman a showcase in his own backyard.
Beynon told investors "almost every major casino company will most likely be in the hunt" for the Massachusetts licenses.
"Jockeying for position has been going on for some time now," he said.
Deutsche Bank gaming analyst Carlo Santarelli told investors that he does not believe Las Vegas Sands Corp., whose chairman Sheldon Adelson is a Boston-area native, was interested in Boston.
The company is making a push for a lone hotel-casino project in Miami that is now being debated by the Florida Legislature.
Las Vegas Sands is also seeking other opportunities in markets outside the United States, such as Spain.
"That said, we do expect Wynn Resorts to be interested," Santarelli said. "We view Penn National Gaming as one of two likely candidates in the Western region."
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Competition expected to be fierce for Mass. gaming license is republished from Online.CasinoCity.com.