Friday, December 21, 2007

Massachusetts Lawmakers Question Tribe's Contract with Trading Cove

By Ken Davison

Massachusetts Governor Deval Patrick, casino and race track owners and others spoke to state lawmakers of the economic benefits that Patrick’s casino plan would bring to the state. The governor is asking lawmakers to authorize three casinos in the state because of the jobs and state revenue casinos would provide.

The hearing was not held by the committee charged with the casino plan but by the commission on bond issues and capital assets and was designed to begin discussions on the plan.

The hearing was the governor’s first high-profile appearance to push his casino plan since he announced it in September. His plan calls for three mega-casinos in the state: one in the western part of the state, one in the southeast and one in the Boston metropolitan area. He said the tribes from his state would have preference in the selection process.

The Mohegan Tribe’s tribal council chairman and the CEO of the Mohegan Tribal Gaming Authority, Mitchell Etess, spoke to the group of their vision for a casino in western Massachusetts but found that most legislators were more interested in the Mohegan’s contract with its former casino management company, Trading Cove Associates.

Trading Cove is backing the Mashpee Wampanoag Tribe for a casino in Massachusetts, a project that some see as having spurred the governor to announce his own casino plan. The Mashpee’s casino is being done under a federal law that grants a federally-recognized tribe the right to operate the same games of chance on their reservation as those allowed under state law. Massachusetts allows charities to run casino games, a right which must be extended to tribes.

The principal partners of Trading Cove, Sol Kerzner and Len Wolman, also operate one of the two Rhode Island racetracks permitted under state law to operate slot machines. Twin River has 4,500 slot machines and draws customers from Rhode Island and southern Massachusetts.

Control of the Casino Regardless of its Cost?

The Mohegan Tribe bought out the last three and a half years of Trading Cove’s 7-year management contract to allow the tribal council under then-chairman Roland Harris to control the Mohegan Sun casino and a $1.2 billion (Sunburst) expansion.. In return for this control, the Tribe pays Trading Cove 5% of every dollar taken in at the casino for a 15-year period. The Tribe is expected pay Trading Cove in excess of $1 billion before the contract expires on December 31, 2014.

Sheldon Adelson of Las Vegas Sands Corporation said that Trading Cove’s partners were the "envy of a lot of people in the industry" for their deal with the Mohegans. Adelson, also the third richest man in America added, "I'm shocked that IGRA, that the BIA, allowed them to get away with it," Adelson said.

According to the Boston Globe, Trading Cove has spent almost $1 million since 2002 for lobbyists, including $495,000 since 2003 for lobbyist A. Bradford Card, the brother of President Bush's former chief-of-staff Andrew Card.

Adelson said he may not be interested in bidding for one of the licenses if the state allows more than two casinos.

The Mohegan Tribe and their partners announced their desire for a $1 billion casino resort complex in western Massachusetts that would include 4,000 slot machines, a 600-room hotel and a giant retail center.

The Tribe signed an exclusive agreement with Northeast Realty and Pennsylvania Real Estate Investment Trust, a developer of residential and office establishments, to seek one of the state’s proposed commercial casino licenses for a casino on 150 acres of land in Palmer, near the Massachusetts Turnpike in the western part of the state.

Governor Patrick, trying to stem opposition to his plan on moral grounds, argued that the state has always been involved in gambling "In 1762, John Hancock raised lottery money to rebuild Faneuil Hall after a fire. Lottery funds were used to finance the Revolution."

Patrick hopes that lawmakers vote on the casino bill before next July.

See Sean Murphy's article "Casino Jackpot Went To Investors" in the Boston Globe at: