Mix state revenue, economic development, nimbyism, casino tycoons, lawsuits and conflict-of-interest accusations, and what do you get?
Politics as usual in Massachusetts, where the mad scramble for casino licenses has generated a host of intricate, juicy moving parts -- bizarre, even by Bay State standards.
Massachusetts officials hope to generate up to $400 million annually when three regional resort casinos - strategically placed amid a crowded Northeast gambling market - and one slots parlor are up and running.
"The process has become a mess. Also, classic Massachusetts politics," said Boston College professor and casino expert Richard McGowan.
The most profitable region - and most politically intriguing - is Greater Boston (Region A), where Mohegan Sun and Wynn Resorts are competing for the sole license and Caesars Entertainment withdrew amid controversy in October before suing the state's gambling panel, alleging its chairman of conflict of interest because an old friend is a co-owner of the one of the potential casino properties.
Southeast, or Region C, is conditionally reserved for Native American operation and legal complications there may slow the process. The Western Massachusetts, or Region B, situation is clearer. The only remaining contender, MGM Resorts, passed muster with voters and state investigators for a downtown Springfield facility.
Just when is a big question for all regions. Maybe "if" would be more appropriate. Opponents have gathered enough signatures for a statewide referendum for repeal, should the state Supreme Judicial Court sign off on its constitutionality.
The enabling law requires local referenda in affected communities and the results have emboldened casino foes. Voters in East Boston, West Springfield, Palmer and Milford rejected resort proposals, while Revere, Everett and Springfield approved.
Revere faces a Feb. 25 do-over because of complexities related to Greater Boston, considered the most profitable of the three designated regions.
"Most unique to Massachusetts is the requirement for local referenda," said Clyde Barrow, a University of Massachusetts Dartmouth professor.
In Boston, Caesars had partnered with Suffolk Downs racetrack in the original proposal there only to withdraw in October over concerns that it would fail a commission background check. Investigators at the 11th hour red-flagged an investor with reputed Russian mob ties in relation to a Caesars deal with the New York-based Gansevoort Hotel Group to open a hotel in Las Vegas.
Caesars, in a lawsuit against Gaming Commission chairman Stephen Crosby, filed last month in U.S. District Court in Boston, called the alleged mob connection — referenced as the "Gansevoort issue" in court papers — unsubstantiated.
Connecticut-based Mohegan Sun, substituting after Caesars withdrew, wants to build a $1.3 million resort in Revere, on Suffolk Downs-owned land. The 79 year-old horse-racing track straddles Boston's East Boston neighborhood and the city of Revere, but East Boston voters in November rejected the casino plan. Mohegan Sun jumped in, with the commission requiring a follow-up Revere referendum for the new plan.
Suffolk Downs has committed to at least 15 years of continued horse racing should the Mohegan Sun deal materialize.
Denying Caesars "seemed a little harsh to those in the industry," said McGowan, who advised Boston city officials during the Suffolk Downs negotiations.
Meanwhile, Steve Wynn's Wynn Resorts has proposed a 29-acre resort along the Mystic River in nearby Everett, on a contaminated former Monsanto Chemical site.
Caesars alleged Crosby, the founding dean of the McCormack Graduate School of Policy and Global Studies at the University of Massachusetts Boston, had a conflict of interest after Crosby admitted to a longtime business and personal relationship with Paul Lohnes, a co-owner of the Everett site.
A Boston Globe report said Lohnes once bailed out Crosby's faltering cable-TV guide publishing business in the 1980s with "crucial investment money." Caesars also objected to the commission redefining Boston as a "surrounding," rather than "host" facility, calling the move biased toward the Wynn proposal.
"This has now come to a head," said Gregory Sullivan, research director for the Boston-based Pioneer Institute think tank and a former Massachusetts inspector general. Sullivan, citing state public records, said Crosby provided incomplete disclosure by referring to Lohnes as merely an investor and not as corporate treasurer of a merged company.
Sullivan also said Crosby didn't go far enough in recusing himself from a land-transaction review of the Everett deal but not from the licensing decision, which the commission expects to come in May. Sullivan maintained that the State Ethics Commission, which cleared Crosby, did not hold the chairman to a new, enhanced state code of ethics to which commission members were subject.
"What happened to the enhanced ethics code?," he said.
Caesars said Crosby "took it upon himself" to ask Wynn to remain in the licensing process after Wynn told commissioners in October he worried that they would want him to apply Massachusetts law to his other casinos, notably in the Chinese territory of Macau.
Wynn said, according to minutes of the hearing: "My nightmare scenario exists when irresponsible investigators start to apply standards that they invent that run afoul of common sense and our ability to comply abroad. ... We're scared to death, chairman [Crosby]. We're scared to death that -- not that you won't pick us, that you will and there goes a billion three or a billion five. Lest someone jumps up later and says did you know that that subjunket operator from Fujian is a bad guy and he got licensed anyway and you didn't catch it and now you're in big trouble in Massachusetts? Oh, my God."
Wynn, in a published report after Caesars filed the lawsuit, denied that a post-hearing conversation with Crosby took place.
The commission called the lawsuit "without merit," adding in a statement that it would not comment further on it, nor on suggestions of conflict of interest on Crosby's part.
"Everything we do is wide open. I've totally been transparent. ... There was nothing before me where the relationship would have any relevance," Crosby told a television station in December.
"Look, politics and business can be a bit incestuous," said Anthony Figliola, the vice president of Empire Government Strategies of Uniondale, N.Y., and a former deputy supervisor of Brookhaven, N.Y. "But you want to make sure there are no conflicts. Perception is everything and you want to make sure you're on the up and up."
According to a McGowan analysis, Boston would clearly be the most profitable region. Suffolk Downs is only three stops from Logan International Airport on the Massachusetts Bay Transportation Authority's Blue Line subway. In addition, McGowan said, proximity to Logan could help Suffolk Downs easily tap into the tourism industry and plans to expand the north-south Route 1A could ease nearby traffic congestion.
State officials, who admit the Massachusetts economic comeback has been Boston-centric, envision casinos as an economic boost elsewhere - Springfield, for instance.
Gov. Deval Patrick and House Speaker Robert DeLeo, D-Winthrop - the latter's district is near Suffolk Downs - envisioned casinos as an employment boost for those who lost manufacturing jobs.
"Massachusetts' policies had provided for employment in areas such as high-tech, financial services and business services. This [casino initiative] was targeted for distressed urban areas such as Springfield, Everett, Taunton," said Barrow.
In Springfield, MGM could target gamblers from Hartford, Connecticut's capital 30 miles south along Interstate 91 and where a parimutuel jai-alai fronton closed in 2001.
"If the Springfield project comes off to pass and there's a casino right along I-91, it could draw up and down that corridor," said Tim Vercellotti, the director of Western New England University's Polling Institute. "Mohegan Sun and Foxwoods in [eastern] Connecticut are not easy places to reach." Vercellotti also said Springfield, with the Massachusetts Turnpike nearby, could intercept some Boston-to-Albany, N.Y., casino traffic. New York State voters approved expanded casino gambling last fall.
According to Moody's Investors Service, the new gambling licenses in Massachusetts pose both a threat and an opportunity for Connecticut's two casino operators, Mohegan Tribal Gaming Authority and Mashantucket Pequot Tribe, which operate Mohegan Sun and Foxwoods Resort Casino, respectively.
Combined gambling revenue for the two declined 10.2% in the 12 months ending June 30 compared with a year ago, Moody's analyst Peter Trombetta wrote in an August report, while neighboring states booked double-digit increases.
Foxwoods has expressed interest in southeastern Massachusetts, the Native American set-aside region. The Mashpee Wampanoag tribe has proposed a casino in Taunton, Mass., 20 miles east of Providence, R.I. The U.S. Department of the Interior on Jan. 3 approved the tribe's contract with the state, but federal officials still must place the proposed casino site into federal trust. Such a move could encounter legal problems.
The local-referenda provision, meanwhile, has spawned a new form of nimbyism in the Bay State - NIMBY is an acronym for "not in my backyard."
Vercellotti said polling results show residents statewide favor casinos - outside their communities.
"It's striking how consistent the results are, in November and every time we ask this question, and always by the same proportions," he said. "I think support for casinos is wide and not very deep. It's a subject that people don't think about very often."
Barrow envisions outside money pumping into Springfield. Countering arguments that a distressed city could not support a gambling facility, he sees Massachusetts essentially recapturing $800 million to $1 billion that residents spend outside the Bay State. "If you're capturing it and keeping it, that's essentially new money," he said.
Elaine Driscoll, the director of communications for the Massachusetts Gaming Commission, said the five-member panel, formed after passage of the Expanded Gaming Act of 2011, anticipates awarding the single slots license in March, and the Greater Boston (Region A) and Springfield (Region B) resort-casinos in May.
"Construction is anticipated to take 18 months to two years," said Driscoll. While she said the Southeast, or Region C, could be ready for a license in November, "the commission will assess the totality of the gaming situation before they issue the Region C."
Timetables, though, are moving targets. The many variables could force further delays, commission inactivity or, in the case of a follow-up statewide referendum, even a recall of the enabling law.
"I've been joking about this, but I'm serious," said Barrow. "It's been going on so long, by the time everything's in place, we'll have another recession."
