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MGM Resorts in battle with Penn for lone western Massachusetts casino license10 December 2012
By Howard Stutz
The winner of a lone casino license in Western Massachusetts will be determined on merit and awarded to the company that can best deliver on its promises.
Inundating the Springfield airwaves with millions of dollars in ads, mailing controversial documents to residents and questioning a company's financial acumen or intentions won't be tolerated.
In fact, Springfield leaders reportedly told officials from both MGM and Penn to play nice: The city doesn't want a repeat of what happened in Maryland.
A month ago, Penn National and MGM Resorts spent a combined $90 million and were on opposite sides of what might have been the most expensive and venomous casino expansion campaign ever seen.
Now, they are facing off in Western Massachusetts in what is the most heavily sought after license among the state's three potential gaming regions.
Caesars Entertainment Corp. - in partnership with the Suffolk Downs Raceway - seemingly has a lock on the Boston-area license, although a late entry of Wynn Resorts Ltd. could muddy the waters.
In the southeast, the license appears headed to a Massachusetts Indian tribe, though the process could reopen if the tribe can't get its financing in order.
Western Massachusetts drew six prospects.
MGM Resorts and Penn National are focused on Springfield, which bills itself as a cultural center.
MGM Resorts is planning an $800 million casino on 10 to 15 acres at the city's south side. Penn National wants to build an $807 million casino on the city's north end.
Both companies have released colorful renderings and each is expected to pay the city's $250,000 application fee and a $400,000 nonrefundable fee to the state's gaming commission by Friday. MGM has already paid the state fee, while Penn National Senior Vice President Eric Schippers told MassLive.com the company would submit its payment on time.
Ameristar Casinos, which withdrew from the race Nov. 30, had also settled on Springfield with a $910 million proposal. While the Las Vegas-based regional casino operator thought its plans were "superior," the company didn't believe it would win the license.
Also on the table are separate proposals from two local developers in the town of Holyoke and a pitch by the Mohegan Tribe of Connecticut, operators of the Mohegan Sun Casino, which has a site in Palmer.
The focus is now on MGM Resorts and Penn National.
Springfield could select one proposal to send to the Massachusetts Gaming Commission, or forward both concepts. Additional details on each project are expected to be released after Jan. 1.
Kevin Kennedy, Springfield's economic director, told The Associated Press that Ameristar's exit means city leaders have to evaluate just two plans.
"I see no reason to change the process," Kennedy said.
The companies are sure to come under intense scrutiny.
MGM Resorts operates 10 of the Strip's best-known properties, including Bellagio, The Mirage, MGM Grand, Mandalay Bay and the CityCenter complex.
However, through the first three quarters of 2012, MGM Resorts has reported a combined net loss of $530 million. In fairness, much of the loss has been noncash. Last week, the company announced plans to refinance $4 billion of its more than $13.4 billion in long-term debt.
Penn National, which owns M Resort, operates 29 casinos and racetracks in 19 states and Canada. It is best known for its Hollywood-branded casinos.
Last month, Wyomissing, Pa.-based Penn National said it plans to split into two separate publicly traded companies, an operating business and a real estate investment trust.
Both MGM and Penn have made inroads in Springfield. MGM promises to refurbish a city playground near its casino site and to use the gaming facility to bring additional business to two municipal golf courses.
Penn's Schippers told MassLive.com the company would help bring a large retailer or other potential uses to the now-abandoned 16-acre Ameristar site if the city was interested in the company's help.
Last week's appointment of Bill Hornbuckle as president of MGM Resorts - making him essentially No. 2 in the gaming conglomerate's hierarchy - is part of the company's expansion plans. Hornbuckle has led the push into Massachusetts.
What MGM and Penn need to avoid is another Maryland, where Question 7 passed by a 52 percent to 48 percent vote. MGM Resorts, which supported the gaming expansion measure, is expected to be awarded a license to build a casino in suburban Maryland.
Penn National opposed the measure because the company believed it should be awarded the gaming license. Also, a new casino in Maryland would take customers from the company's West Virginia casino.
Penn spent $42 million on the No on Question 7 effort. The campaign included ads highly critical of the casino industry, although Penn officials have since said none of the company's money went toward anti-gaming messages.
On Thanksgiving Day, Washington Post columnist Robert McCartney named Penn National his "Turkey of the Year" for its "hypocritical" efforts in the campaign.
Springfield doesn't want any Maryland-type issues.
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