Author: Casino Connection Staff

The U.S. Department of the Interior has asked a federal court to dismiss a lawsuit brought by MGM Resorts International challenging the department’s action in approving amendments to Connecticut’s tribal state gaming compacts.

The amendments would allow the state and its two gaming tribes, the Mohegans and Mashantucket Pequots, to build a third satellite casino in East Windsor, just 14 miles from MGM Springfield in Massachusetts. MGM argues that the approvals were in violation of the Indian Gaming Regulatory Act (IGRA).

The unusual thing about the casino is that it is a tribal casino operating as a commercial casino on non-tribal land. It is also a joint venture of the two erstwhile rivals, who operate the Mohegan Sun and Foxwoods.

The amendments to the compacts were required to prevent the commercial casino from triggering a violation of the compacts, which mandate the tribes to pay 25 percent of their revenues to the state, unless the state allows a commercial competitor. The worry was that they might legally be considered a commercial competitor.

MGM filed its challenge in August. In the Interior’s response, the department’s attorneys argued that MGM sought “to recast these amendments as approval of the commercial gaming facility in order to argue that Interior failed to comply with inapplicable legal requirements.” The document continues “… (T)he amendments merely confirm that the operation of a state-sanctioned commercial facility by a state-charted tribal joint venture does not violate the exclusivity provisions of the tribes’ MOUs with the State.”

MGM has fought a scorched-earth campaign to slow down or halt construction of the East Windsor casino. It was largely successful in delaying the Interior action for longer than a year.

Its lawsuit followed a proposal in the Connecticut legislature that called for the tribes to invest in a commercial casino in the state’s largest city: Bridgeport. MGM had first made a proposal for a commercial casino in city. It argued that, even if the state lost the 25 percent payments from the tribes for breaking the compacts, that the Bridgeport casino would more than make up for that loss in tax payments resulting from tapping the New York City market.

Supporters of casinos in Bristol and Norfolk, Virginia are making moves to expedite developments in the two cities.

In Bristol, a new political action committee (PAC), Betting on Virginia Jobs, donated $311,500 to 50 state Senate and House campaigns in August and
September, according to Virginia Public Access Project data.

The PAC was established by the United Company President Jim McGlothin and Par Ventures Chief Executive Officer Clyde Stacy, who each contributed $50,000 to set up the PAC. Since then, the two men have donated $450,000 to it, individually or through their companies; United Company gave $225,000, Stacy contributed $125,000 and Par Ventures gave $100,000. Also, Bristol Casino Resort has hired eight registered lobbyists.

Earlier, state legislators gave preliminary approval to the $250 million Bristol Resort and Casino, along with casinos in Danville, Norfolk, Portsmouth and Richmond. Each would require a local referendum and the legislation must be re-enacted by the legislature. Legislators also are awaiting the results of an extensive study on the impacts of casino gambling, scheduled to be released in December, which was included in the preliminary measure.

In a statement, the developers said, “We know first-hand the significant challenges our local economy faces. These contributions help make sure our elected officials in Richmond also understand these challenges and the importance of finding solutions to these issues. This project will benefit residents in Bristol and across Southwest Virginia by bringing much-needed new jobs and additional tax revenue to the region. The PAC was formed for those interested in helping advocate for bringing jobs and economic development to the cities contemplated in the legislation allowing for casinos.”

The 90,000-square-foot casino would be located in the vacant Bristol Mall and would provide 5,200 new jobs, the developer said. According to the proposal, the designated cities and surrounding regions would receive additional tax revenue from the casinos. Analysts have estimated the Bristol casino would provide $26.8 million in annual tax dollars to the city.

The developers have projected the casino would generate $150 million in revenue in its first year of operation, with non-gaming revenue at $106 million.

In Norfolk, the city council approved selling waterfront property to the Pamunkey Tribe for a $700 million casino resort. But organizers of a petition drive to reverse that action recently said they had collected 3,500 of the necessary 4,000 valid signatures from registered local voters. The deadline to turn in the signatures was October 25. If the requirements are met, a city-wide referendum would be hld.

Some citizens are concerned about a new website created by the All In for Norfolk Casino organization, supporting the Pamunkey casino. The website seems to have been created by local residents; it lists eight as its “leadership,” including a Pamunkey tribal member. However, the website actually was generated by Richmond lobbying and public affairs firm Capital Results, which has represented the Pamunkey tribe since at least last year. The firm claims it uses “grassroots campaigns ”to “develop credibility for an issue campaign.”

Jay Smith, a partner at Capital Results, said the tribe “has not tried to hide the fact” it’s behind All In for Norfolk Casino. He noted, “The tribe is supporting this project and believes it’s important to have a voice.” Smith pointed out the All In for Norfolk Casino website and the one registered by the anti-casino petitioners NoNorfolkCasino.org both are owned by Contact Privacy Inc., which lists a Toronto address.

The U.S. Federal Trade Commission has given its OK to Caesars Entertainment’s $516.3 million sale of the Rio casino hotel in Las Vegas to a New York-based real estate group.

“The Federal Trade Commission has determined there are no anti-trust issues with the Rio sale,” a spokeswoman for Caesars said.

Caesars hopes to close the sale by the end of the year, pending shareholder and regulatory approval.

The buyer is one of the principals of Imperial Companies, headquartered in Manhattan, a real estate investment, development and management fund focused on mixed-use, residential and hospitality properties nationwide. Caesars will continue to operate the Rio under a multiyear lease of $45 million annually.

Caesars is involved in several other casino sales, mainly to its spinoff REIT, VICI Properties, as it prepares to be acquired by regional gaming giant Eldorado Resorts in a $17.3 billion cash, stock and debt transaction expected to close in the first half of 2020.

The 2,500-room Rio, located on Flamingo Road west of the Las Vegas Strip, opened under private ownership in January 1990 as a tropical-themed destination whose mix of high-end restaurants and adult-focused gambling and non-gambling entertainment exercised a significant influence on much of the Strip megaresort development that followed.

Caesars’ predecessor Harrah’s Entertainment acquired it in 1998 for $880 million in stock and assumed debt. Later, when Caesars bought the World Series of Poker, it sent the tournament there to boost the property’s then-fading fortunes. It’s expected the tournament will remain there for next year but will be moved after that, possibly to the $375 million Caesars Forum, a 550,000-square-foot conference and events center under construction behind the company’s Linq resort complex on the Strip.

Massachusetts House Bill 4070, filed by Rep. Susan Williams Gifford, which would allow the Massachusetts Gaming Commission (MGC) to issue a full casino license or slot parlor license in Wareham, has been condemned by the state senator who also represents the area. A change in Bay State gaming law would be required for the project to happen.

The Notos Group has said it would like to invest $300 million in a mixed-use project there. The development firm is led by the O’Connell family of Quincy, who developed the Marina Bay complex and Granite Links Golf Club in that city.

The state’s 2011 gaming expansion act limited the number of commercial casinos to four, including one slots parlor. The slots license—the kind of license Notos is after—has already been given to the Plainridge Park casino in Plainville.

Notos founder Thomas O’Connell told South Coast Today, “We believe that our proposal is the ideal size for Southeastern Massachusetts, but our only goal in supporting Rep. Gifford’s bill is to be able to compete. The legislation does not favor any specific project or developer.”

The MGC would be authorized by the bill to entertain proposals and accept one of them within Region C, which encompasses the southeastern part of the state.

City officials, including the Wareham Town Administrator Derek Sullivan and member of the town’s Redevelopment Authority Richard Swenson, told committee members the slots parlor would give the economically challenged city a shot in the arm as well as help to revive the state’s moribund thoroughbred racing industry, which gets some money from casino revenues, but has so far not been able to revive after its last racetrack shut down near Boston.

Sullivan declared, “We believe that Region C, and in this case Wareham, deserves the opportunity to put forth a proposal that is the right fit for the region, one that will succeed and one that will be built.” He added, “Wareham deserves the opportunity because such a project would be transformative for our economically disadvantaged community.”

Senator Marc Pacheco, who represents Wareham, disagrees. He told the committee, “We are now having legislation filed to go way beyond what our collective vision was about three destination-based casinos and I don’t want to see Southeastern Massachusetts, Region C, treated differently than the other regions.” He added, “I think this legislation actually corrupts the process and legislation like it corrupts the process until we have completed the vision that we had for the commonwealth.”

He said his office has gotten numerous phone calls from people asking why the Notos group was getting special treatment, or whether lawmakers had cut a deal “to try to change the rules for one developer that wants to come through and not do the full destination-based casino.”

Swenson said studies have shown that the area can’t support a Las Vegas-style casino, but would be able to support a more modest slots parlor.

The commission has had difficulties in issuing a license for Region C, which includes the town of Taunton, where the Mashpee Wampanoag tribe has been trying to get permission to build the $1 billion First Light Resort and Casino, but has been stymied by a federal court ruling in a case brought by residents who opposed it.

When the Wampanoag casino was still viable, the commission declined to issue the state’s fourth license to a developer wanting to build at the Brockton Fairgrounds, which is just a few miles from Taunton, because it didn’t want to saturate the gaming market and hobble the tribal casino.

MGM Resorts International still hopes that it might be able to build a commercial casino in Connecticut’s largest city, Bridgeport.

Several months ago, MGM quietly renewed a contract giving it the option to develop a casino in Bridgeport Harbor on land controlled by the RCI Group. The option was renewed in September.

Two years ago, in the midst of its very public fight with Connecticut’s two gaming tribes, the Mohegans and the Mashantucket Pequots, MGM added spice to the battle by proposing a $675 million casino across the harbor from RCI’s Steelpointe Harbor mixed-use development. The plan included a dock, a marina, a retail quarter, entertainment venues and a residential component.

Renewing the option by itself does nothing except act as a placeholder. But it makes it plain that MGM is not giving up its turf battle with the gaming tribes. Its $976 million MGM Springfield, which opened in August, and the Empire City Casino in Yonkers, which it manages, compete with the Mohegan tribe, which runs Mohegan Sun in Uncasville, Connecticut, Sun and Foxwoods Resort Casino, in Ledyard.

The tribes have always regarded MGM Springfield as an existential threat, and they successfully lobbied the legislature to allow them to build a $300 million satellite commercial casino in East Windsor, 14 miles from Springfield, to blunt MGM’s effect on their bottom line. The erstwhile rivals formed MMCT Venture as a joint authority to build that casino.

MGM used all means available, including legal challenges and political influence, to put roadblocks in the way of that casino development. Currently MGM has a federal lawsuit pending against the U.S. Department of the Interior, challenging the legality of its action that allowed the tribes to amend their tribal state gaming compacts so they could build a commercial casino.

Pushing the Bridgeport casino plan, MGM argued to pay the state more in taxes from that lucrative market than the $240 million the tribes paid last year as their 25 percent of slots revenue.

Connecticut Governor Ned Lamont is trying to act as broker between the tribes and the legislature as they try to come up with an acceptable plan for legalizing sports betting as well as a casino in Bridgeport. So far, that’s gone nowhere.

MGM continues to press for an open bidding process that would allow it a chance to bid for the Bridgeport license. It won the support of the House last year, but did not get any support in the Senate for a vote.

Last week, hoping to spark some movement, Senator Dennis Bradley, whose district includes Bridgeport, wrote a letter to Governor Lamont asking him to call a special session of the legislature to vote on a plan that would allow the tribes to build the Bridgeport casino. Bradley is the co-chairman of the public safety committee, which has oversight on gaming issues.

Commenting on the governor’s recent speech that mentioned the possibility of a casino in Bridgeport, the senator said Lamont “seemed to ignore that fact that we already have legislation that has bipartisan support in both the House and the Senate just waiting for the call of a special session.”

He added, “Since the end of the legislative session, my colleagues and I have had discussions with both the Mohegan and Mashantucket Pequot tribes about the kind of investment that would lay the foundation for real success in Bridgeport. The $100 million direct investment from the tribes, part of a $300 million dollar economic development project, is exactly the kind of new foundation we want to set in our city.”

His letter concluded, “You’ve said from the beginning that whatever agreement is reached is ‘going to have include Bridgeport.’ I can’t thank you enough for advocating so strongly in favor of the interests of our city. I would urge you to support the Connecticut Jobs and Revenue Act so we can bring these plans to fruition.”

Mohegan Gaming & Entertainment (MGE) has disclosed images of its planned integrated resort near Athens, Greece. MGE is facing off with just one other global operator, Hard Rock International, for the right to develop and operate the IR, which will be part of a sprawling €8 billion (US$8.84 billion) development at the abandoned Hellenikon International Airport.

For 18 years, lawmakers have planned and then delayed plans to transform the neglected site. An “urban park” there is expected to include convention facilities and a casino with at least 1,200 slot machines and a minimum of 120 table games, as well as a luxury hotel, entertainment venues and a sports center. The destination is projected to be an economic gamechanger in the area and a linchpin for growth supported by the New Democracy government, which succeeded the former ruling Radical Left Syriza and its anti-foreign business elements.

The two confirmed contenders are Mohegan Gaming and Hard Rock International, both U.S.-based tribal corporations. The new conservative government has promised that the winning bidder will be named next month.

Sounding confident in a recent interview, Mohegan Gaming CEO Mario Kontomakeros said his company’s raring to go. “We’re ready to begin as soon as we receive all the necessary approvals,” he said. “We want to start as fast as possible.”

He said construction of the resort, to be called Inspire Athens, will take 24 to 36 months to complete. Renderings of Inspire show two skyscrapers that bring to mind the Caryatids, female sculptures used to support a temple on Acropolis Hill.

The development is designed to boost tourism growth and economic prosperity for Greece. The iconic design of the building was created by Steelman Partners.

“It is our hope that Inspire Athens would be the catalyst that sparks the entire development of the Hellinikon area into the coveted Athenian Riviera, forever redefining the modern identity of Greece,” said Kontomerkos. “Our overarching design was meant to be iconic in nature, yet characterize Athens’s historic architecture and rich culture while adopting a new stylistic narrative that inspires the region’s future.”

He pointed with pride to his own heritage as a Greek-American and said the project should create more than 7,000 direct and indirect temporary and gull-time jobs in the region.

The casino resort is projected to increase international tourism in the Attica region by at least 10 percent and contribute millions of euros annually to both the government and the people of Greece in the form of taxes, infrastructure improvement, and public services.

Greece, which has been recovering after a multi-year economic crisis, saw record tourist arrivals in 2018 of 33 million people and expects a similar number this year.

The winner of the tender of the Hellinikon casino, to be built at the former Hellenikon airport close to the Greek capital, will be announced in two months’ time, according to Greek Development & Investments Minister Adonis Georgiadis.

“We are aware that we need new jobs, as well as investments. Hellinikon will represent the Greece we want to create, a Greece that produces wealth. Investments of this kind, implemented with respect to the environment and local communities will change the country,” Georgiadis said.

Hard Rock said it’s putting its best foot forward in its bid. “We have been offering our services to the Greeks for three decades and look forward to making this already strong bond even stronger for many more years,” said John Eder, executive vice president and chief financial officer of Hard Rock International.

Chairman and CEO Jim Allen added, ”We have always believed Athens to be one of the world’s great gateway cities and Hard Rock International envisions creating a must see destination that will help draw from the over 120m annual guests across 74 countries, driving year-round tourism and being an economic driver for Greece. This marks another step in the company’s efforts to expand our world-class brand of entertainment and hospitality to Europe.”

The overall project is being led by Lamda Development plans to turn the disused Hellenikon airport in Greece’s capital into a complex of luxury residences, hotels, a yachting marina and a casino.

Four months after opening the $2.3 billion Encore Boston Harbor, the culmination of a five-year effort, Encore Boston Harbor President Robert DeSalvio is stepping down from the Everett-based mega-casino.

His replacement will be Brian Gullbrants, who is stepping up from leading hotel food and beverage operations. No reason was given for DeSalvio’s departure.

Gullbrants, his replacement, led the 2008 opening of the hotel at Encore Las Vegas. He has been in charge of opening the hotels at Wynn Las Vegas and Encore hotels since 2011. He came to Wynn following two decades at the Ritz-Carlton Hotel Company, where he was vice president of operations.

Wynn Resorts CEO Matt Maddox praised DeSalvio’s ability “to both manage a complicated construction process while listening to the needs of key stakeholders was essential to our success.”

DeSalvio led the casino’s construction. He provided a steady hand during the traumatic suitability hearings with the Massachusetts Gaming Commission that followed the rapid resignation and flushing down the corporate memory hole of founder Steve Wynn for alleged sexual misconduct over the decades, including a $7.5 million payoff of one of his accusers. He was also there when the company briefly flirted with selling the Encore Boston Harbor to rival Bay state casino operator MGM Resorts International. He opened the casino on June 21.

Since opening, the Boston-area casino has earned almost universal plaudits. Forbes named it one of the best casino hotels and resorts in its 2019 Travel Guide.

Before joining Wynn, DeSalvio was president of Sands Casino Resort in Bethlehem.

More shuffling was announced at the property: Jenny Holaday has been hired as executive vice president of operations and Eric Kraus will be senior vice president of communications and public affairs. Holaday formerly worked as a senior marketing vice president at Caesars Atlantic City. Kraus is a Boston native and former executive with the Gillette Company.

Since Encore Boston Harbor’s opening it’s recorded “strong” table game revenues and “soft” slot revenues, according to a report that DeSalvio made to the MGC in September. Slots revenue concerns the company, DeSalvio told the commission last month. He said Wynn was exploring ways to up those revenues.

He said in September, “We’re actually adding a few more tables on the casino floor as we speak, but I will tell you the slots business has been soft.”

Encore earned $48.9 million in total gaming revenue in September, three months after opening its doors. Of that, $27 million came from gaming tables and $21.8 million from slots. That is compared to $52 million for August.

Encore’s rival, MGM Springfield, earned $19.8 million total in September, with Plainridge Park Casino following up in the rear with $11.5 million.

The revenue reports given to the MGC do not include profits from restaurants, hotels and other amenities when applicable. So far Wynn Resorts has not shared full earnings reports on the Boston-area casino, although in a second quarter earnings call it indicated that the Encore made $2 million daily the first eight days.

Newport, Rhode Island’s City Council voted last week to apply a six-month moratorium to decisions for developing a site where the Newport Grand Casino operated for decades before being relocated to Tiverton.

This site has been designated as a mixed-use innovation district with a $100 million redevelopment project planned. The developer, the Carpionato Group called the vote “unfortunate” and declared that the delay “hurts this $100 million project, the innovation district and the surrounding neighbors.”

Gregg Perry, spokesman for the group, said many critics feel that the project had been fast-tracked, something he said “is simply not true.”

He told the Patch: “Indeed, we never expected this project to be approved and permitted overnight … The real issue here is that development is happening in Newport, and apparently there are some people who are nervous about that progress, but singling out one area of the city for a moratorium like this is the wrong way to go about addressing those concerns. In terms of next steps, all options are on the table.”

The Newport Grand closed last year. The redevelopment plan includes a 52,000-square-foot resort with two hotels, two six-story apartment buildings, and 65,000 square feet of retail shopping and parking. The goal is to drive tourism to the area during the off-season.

In advance of the Illinois legislature’s upcoming veto session, Chicago Mayor Lori Lightfoot met with state lawmakers from the Windy City to discuss two proposals “to help ensure the Chicago casino is viable,” she said.

One option would make the casino a “public structure” with the city and state sharing the gaming license; the other option would have the casino privately owned and operated. Either proposal would require the state legislature to approve lower taxes than the rate included into the new gambling law Governor J.B. Pritzker signed earlier this year. “We’re looking at two different models, obviously changing the tax structure so that a private operator can be successful and we’ll see what happens,” Lightfoot said.

The mayor said she wants the legislature to reduce the effective tax rate on a Chicago casino from 72 percent to 45 percent, with 51 percent of tax revenue going to the state and the 49 percent to the city. Earlier this month a feasibility study called the 72 percent tax rate “very onerous.”

House Majority Leader Greg Harris said Lightfoot’s proposal to lower the tax rate will face challenges since the same tax structure would apply to the state’s 10 existing casinos and horse racetracks and the six new casinos authorized in the new gambling bill.

“It’s going to be a big lift to get it done this fall,” Harris said. He added setting up a joint city-state entity to hold the casino license would “be a bit leap.”

Several lawmakers at the meeting also raised concerns about the ethics of the city and the state being directly in the casino business, Harris said. Pritzker’s spokeswoman Emily Bittner said the governor “remains open to a number of approaches for making the Chicago casino successful, but with regard to public ownership, our administration would need to ensure that the challenges of public ownership are fully understood and addressed.”

Lightfoot said he wants to reopen talks about public ownership to give Pritzker and legislators options. “We don’t want to just say, ‘Hey here’s a problem, you legislature, you governor, fix it.’ It’s incumbent upon us to take responsibility and we’ve done that I think in a responsible way by giving two options that the legislature can choose from,” Lightfoot said.

State Rep. Bob Rita, the chief sponsor of the new gambling law, said a Chicago casino deal could be accomplished during the veto session. “There’s a lot of time left, even though the clock is ticking. What we need to do is get the stakeholders together and see how we can work through some of the issues we faced in the spring. You propose one idea, it creates three other issues. You have to have the right mix,” he said.

Harris noted, “Everything about casinos is complicated. To the extent that this is also complicated, I wasn’t really surprised. Any casino bill is always a big lift in the legislature. We’ve seen that for years and years. So, we’ll have to wait and see. At least now there is a proposal for people to react to. That’s helpful.”

In a recent radio interview, Lightfoot said a Chicago casino has the potential to become a “structural fix” for under-funded police and fire pensions and become a “transformative way to address” skyrocketing city payments to those funds. But that requires a more reasonable tax on a Chicago casino.

“People recognize that we’ve got to change the structure. Now, we’re just thinking about, how do we do that. We’ve got two vehicles that we’re looking at. They’re very different. But I feel like we’re in a good position headed into the veto session,” Lightfoot said.

The 34th horse to die at Southern California’s Santa Anita Racetrack since December was a three-year-old gelding that stumbled during the fifth race on October 19 and fractured its left front ankle.

The track’s veterinarian euthanized the horse. The Stronach Group, which owns the racetrack, announced that there will be a necropsy of the horse to determine if there was something that might have been done to prevent the accident. The group has also promised to work with the California Horse Racing Board to investigate the death.

The Massachusetts Gaming Commission began work to create a process for renewing the license for Plainridge Park Casino (PPC). The slots parlor, operated by Penn National Gaming, was the first of the Bay State’s gaming enterprises to be approved under the 2011 gaming expansion law, but that law doesn’t give any guidance for renewals. That is left up to the commission.

At last week’s commission meeting Karen Wells, director of the Investigations and Enforcement Bureau asked for a general policy directive from the panel on how to proceed with the renewal. “. . . So we know what we’re expected to do for this renewal.” She added, “And the range could be from the deep dive to do nothing, and, you know, because there’s ongoing suitability.”

The property’s five year license expires June 2020. Wells suggested a process for renewal that would be similar to what the IEB uses for slot and table game manufacturers.

The property had already been a simulcast horse wagering park since 1999. But in 2015 slots debuted. Under state law, the PPC is classified as a Category 2 casino, while the other two casinos are classified as Category 1. PPC is taxed at 49 percent of gross revenue. It has paid $336.93 million to the state since opening. Category 2 casinos must renew their licenses every five years while Category 1 casino licenses are renewed every 15 years.

Wells told the commission: “As we’ve discussed, once license suitability is ongoing and the burden is on the applicant to maintain that suitability and provide information to the commission, there is a continuing duty to report. And our experience with Penn National is they have a very good system of reporting.”

Wells would like to use that system, and the Penn employees whose job it is to keep IEB informed and who work closely with it, to create a renewal plan that won’t be reinventing the wheel.

Commissioners said they would also like to use the slots renewal as a template for when MGM Springfield’s license comes up for renewal.

Chairman Cathy Judd-Stein commented, “I can say more affirmatively, to use these critical resources to really duplicate efforts that have already been done.” She added, “So I would just reiterate that a decision to not do the quote, unquote, deep dive at this time is in no way compromising, or in any way not indicating the importance of our vigilance. It’s that we have been vigilant during the course of the period.”