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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Inside Gaming: Winners and losers in the Massachusetts casino scene

13 July 2015

The opening of the $250 million Plainridge Park Casino last month wasn’t exactly the grand unveiling Massachusetts gaming backers envisioned more than four years ago.

We’re not being critical of Penn National Gaming’s newest casino. The all-slot machine facility is attached to the Plainridge Park Racecourse, a harness racing track, in Plainville, a town about 35 miles southwest of heavily populated Boston.

The trouble is Plainridge Park — Massachusetts’ first legal gambling hall — will be the commonwealth’s last casino for a few years. Two of the three Las Vegas-style casinos planned for the state won’t open until 2018. The third will take longer.

That leaves Plainridge Park as Massachusetts’ only game.

Janney Montgomery Scott gaming analyst Brian McGill told investors the delays “keep Plainridge as the closest casino to Boston for three more years. In general, the Boston area is an underserved gaming market.”

Massachusetts casino proponents said the state’s 2011 Expanded Gaming Act was a job creator for construction, hospitality and tourism. It was also a tax vehicle, providing $300 million to $500 million annually in new revenue.

Those projections may still come true — well into the next decade.

MGM Resorts International, which last year earned the right to build the $800 million MGM Springfield in western Massachusetts, wants to delay the opening by a year, into 2018, when an Interstate 91 rebuild is completed.

Wynn Resorts Ltd.’s proposed $1.7 billion casino complex on the banks of the Mystic River in Everett — just outside of Boston — has been slowed by political, legal and regulatory challenges. It may not open until 2018.

The casino license for the state’s southeast region, which was originally set aside for an Indian tribe, is the subject of a tug-of-war between Brockton and New Bedford. The Massachusetts Gaming Commission won’t pick a winner until fall.

The three resort licenses required an upfront fee of $85 million and a promise to drop more than $500 million on the facility. The gaming tax rate was 25 percent.

Penn National paid a $25 million license fee for the slot machine parlor and is facing a 40 percent gaming revenue tax, and 9 percent to the state’s race horse development fund.

The Massachusetts Gaming Commission said Plainridge Park collected $6.154 million in gaming revenue in its first week.

McGill visited Plainridge Park shortly after it opened and came away convinced the casino will provide Penn National $84 million in annual cash flow by next year. Besides drawing from Boston, the casino can draw from Providence, R.I., which is 18 miles south.

“From our perspective, we are confident the initial results will be strong out of Plainridge,” McGill said. “We also think the company’s estimated annual revenue of $250 million could prove to be conservative.”

Penn National pulled out all the stops in launching the 44,000-square-foot casino with its 1,250 slot machines, including video poker and electronic table games. Penn National executives were joined by local dignitaries and two Las Vegas-style showgirls for the June 25 ribbon cutting.

Former Boston College and New England quarterback Doug Flutie participated in opening ceremonies. Doug Flutie’s Sports Pub is one of Plainridge Park’s signature restaurants, and his 1984 Heisman Trophy is displayed there.

More than 10,000 visitors packed the casino in its first 19 hours of operation, a success by most standards.

Plainridge Park’s closest gaming competition is the Twin River Casino in Lincoln, R.I., about a 30-minute commute from Plainville. Twin River has 4,500 slot machine-like video lottery terminals and 80 live-dealer table games. It also allows smoking. Plainridge is smoke-free.

The Indian tribes that own the Connecticut resorts dread Massachusetts’ entry into the Northeast casino fold.

That’s not the case for Massachusetts, which could use the gaming tax revenue. MGM’s delay could cost the state $125 million per year.

MGM Springfield President Michael Mathis told gaming regulators the company could be on the hook for “tens of millions” in additional interest money by pushing back the opening date.

But MGM was willing to bite the bullet because I-91 is a “critical piece of infrastructure.” The highway brings 100,000 cars a day past the property’s site and MGM would rather wait than see its opening disrupted by construction and congestion.

The Massachusetts Gaming Commission has to sign off on the casino’s construction schedule. MGM has already said it would give Springfield an additional $1 million payment in 2017, and its revenue commitments, if the city backs the delay.

So the big winner is Plainridge Park.

Penn National Chief Operating Officer Jay Snowden told MassLive.com that “less competition” is a good thing.

In November, Massachusetts voters overwhelmingly rejected a ballot measure that would have killed the state’s casino industry before it could start.

In coming years we’ll learn whether slot machines and Doug Flutie will be enough to keep Massachusetts in the game until MGM and Wynn arrive.
Inside Gaming: Winners and losers in the Massachusetts casino scene is republished from Online.CasinoCity.com.