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Date: 7/2/2015
SPRINGFIELD – With the announcement the city is backing MGM’s request to delay the opening of MGM Springfield for one year, questions remain about how this would delay affects its position in the Northeast gaming market and whether or not other changes await in the future.
On June 24, Mayor Domenic Sarno sent a letter to Stephen Crosby, chair of the Massachusetts Gaming Commission (MGC), in support of a one-year delay of the completion of the project with an opening on Sept. 6, 2018. The commission has not yet made a decision on the request.
This opening will be after the renovation of the I-91 viaduct, a project that will close two exits into Springfield and make it more difficult for motorists to access the city.
Chief Development Officer Kevin Kennedy said, “While the reconstruction of the I-91 viaduct has been in the planning stages for quite some time, the detailed schedule has only recently been finalized. The full beneficial use of a reconstructed viaduct is important to economic activity in the region, and it is important that the MGM Springfield development schedule is coordinated with the MassDOT [Massachusetts Department of Transportation] schedule for road reconstruction.”
This is the second delay of the casino project. Work was put on hold until last year’s state referendum on gaming was settled.
Sarno said the Host Community Agreement (HCA) with MGM Springfield has been amended, and if the commission approves the request, according to information supplied by Sarno’s office, the following provisions would be fulfilled:
• MGM Springfield will make an additional payment to the city of $1 million due in the fall of 2017. The payment would be dedicated to public safety.
• MGM Springfield will make an additional pre-payment to the city of 121A payments of $3 million due in the fall of 2017.
• MGM Springfield will continue to make all payments due the city under the HCA according to the original project construction schedule, except for an adjustment to the annual Fixed Community Impact Fee of $2.5 million due on July 1, 2018, and a prorated payment of such fee in the amount of $993,055 due on Feb. 7, 2018. The Fixed Community Impact Fee will be amended to provide for a prorated payment of such fee in the amount of $2 million due at project opening on Sept. 6, 2018 and the first annual payment of such fee in the amount of $2.5 million due on July 1, 2019.
• The other payments to be made by MGM Springfield to the city which will remain the same include but are not limited to the Riverfront Park payment of $1 million (Aug. 8, 2016); the Union Station payment of $500,000 per year for 15 years (commencing Aug. 8, 2016); the Upfront Community Impact Fee of $2.5 million (May 8, 2017); the Community Development Grant of $2.5 Million (payable annually on July 1 beginning July 1, 2018 with a prorated payment due Feb. 7, 2018).
While the city will receive money from MGM, the long awaited jobs the project has promised will be put off.
The statements from Sarno’s office hint at the possibility of other changes to the projects. “The city and MGM continue to discuss various project design changes. In part, project design changes are subject to finalization of certain project design matters by the Massachusetts Historical Commission,” the statement read.
MGM Springfield was the first of the three state casino licenses granted in June 2014 and would have been the first casino completed. The MGC has also awarded a license for Region A (eastern Massachusetts) to Wynn MA, LLC in September 2014. The third license has yet to be determined.
At the time of their licensing, Wynn management anticipated the opening would be in 2017.
The Massachusetts casinos will have overlapping primary markets.
MGM officials have often cited the market for the Springfield casino would be a 100 miles radius of Springfield. This would include Boston, Worcester, Hartford, CT and much of that state, Albany, NY and the capitol district, southern Vermont, southern New Hampshire and Providence, RI.
MGM Springfield’s competition in some of those areas has either been eliminated or may open before it can.
New York State has worked toward expanding gaming there beyond the five Native American casinos and nine slot parlors at racetracks. It has approved one casino license that lies three miles outside of the Springfield radius in Schenectady, NY.
When asked about the timeline for the Schenectady casino, a representative for Rush Street Gaming sent this statement: “Rivers Casino in Schenectady was recommended for a casino license in late 2014 and is currently awaiting licensure from the state. Once a license is granted, our team anticipates we will be open well within the 24-month timeframe required by the state. Rivers Casino will be a $300 million gaming facility and bring approximately 1,200 jobs to the Capital Region of New York, and we’re looking forward to being an economic success for the region and the state.”
While it may not have the scope of the $800 million MGM Springfield entertainment and dining amenities, the questions are how much money will be pulled away from Berkshire County and will this casino be opened first?
A bill to establish casinos in New Hampshire didn’t receive the support it needed in the Legislature and it would appear at this time a bill to bring casino gaming to southern Maine is stalled as well. Vermont officials have not shown any interest in casinos for that state.
The impact of Massachusetts casinos were examined in a report prepared for the Rhode Island Department Revenue in November 2014 by Christiansen Capital Advisors, LLC.
“In all three of the scenarios we examined the advent of casino gaming in Massachusetts has substantial negative impacts on Twin River and Newport Grand. A substantial portion of Rhode Island gambling revenues are contributed by Massachusetts residents (Exhibit 1.2), and, as previously noted, it is rare for the public to drive by one gambling facility to get to another. The end result of expanded gaming in Massachusetts is that a great deal of the spending that currently crosses the Rhode Island border on its way to Connecticut or the two Rhode Island establishments will stay in Massachusetts. In terms of the relative revenue impacts upon the state of Rhode Island, the following section shows that the closer Massachusetts facilities are located to Rhode Island, the greater the impacts on Rhode Island gaming facilities,” the report stated.
If it is indeed “rare” for the public to pass by one casino on their way to another, the strategy by the state of Connecticut has some logic.
On June 23, the first steps to bring a third Native American casino to Connecticut were taken by Gov. Dannel Malloy’s administration. WNPR had reported earlier this year that State Senate Majority Leader Bob Doff said, “Massachusetts has declared economic war on us. We’re going to fight back.”
The goal at this time is to put a casino in East Hartford, East Windsor or Windsor Locks, CT, which would physically intercept Connecticut residents on their way to Springfield.
Whether or not gaming officials can get this casino licensed and operational before September 2018 when MGM opens has yet to be seen. If the new Connecticut casino does open, it will enter what is sure to be a highly competitive gaming market in the Northeast.