Saturday, July 3, 2010

MASSACHUSETTS SENATE APPROVES CASINOS

By Ken Davison
Feather News
Updated

The Massachusetts Senate approved a gaming bill by a vote of 25-15 late last week that calls for three casino resorts in the state but before any plan is finalized the Senate and the House, which approved a bill in April for two casinos and slot machines at the state's four racetracks, will have to work out their differences to arrive at a common bill to give the governor for his signature.

A conference committee of the two legislative bodies - the Senate and the House - will meet next week to work out their differences. Among the differences are that the Senate bill has a casino smoking ban while the House bill permits smoking in 25 percent of the casinos. While the Senate bill includes three casinos in three distinct geographic zone (one in Western Massachusetts where a group that includes the Mohegan Tribe would like to bid on a casino license), the House version only calls for two casinos in the state. The Senate bill does not inlcude slot machines at racetracks while the House bill allows for up to 750 slot machines at the state's four racetracks.

Both bills agree on a 25 percent tax rate but differ on the amount to be invested on building the casino resorts and up-front fees for the casino licenses. The House bill calls for an up-front fee of $100 million for each casino license, the Senate bill has lower license fees of $75 million per casino.

The Senate bill also mandates a minimum investment of $600 million for each casino but prospective casino bidders would likely promise to spend far more than that because of the nature of a competitive bidding process.

In addition to the number of casinos that are finally agreed upon by the legislature and governor, the two federally recognized tribes in Massachusetts still have the right to open casinos on reservation land.

The Mohegan Sun and Foxwoods are already feeling the impact their debt loads without casinos looming over their northern border with Massachusetts. Once casinos in Massachusetts open, both Indian casinos in Connecticut will see sharp revenue declines. It is estimated that about 20 percent of Mohegan Sun's customers are from Massachusetts while about a third of all Foxwoods customers are from Massachusetts.

According to a July 2 Wall Street Journal article, "The Mashantucket Pequot Tribal Nation, which owns and operates Foxwoods Resort Casino in Ledyard, Conn., wants bondholders to wipe out a significant portion of its roughly $1.3 billion in bond debt, in some cases paring the tribe's obligations by at least half, people familiar with the matter said."

In addition to the approximately $1.3 billion in bond debt, about $700 million in bank debt is reportedly due for repayment on July 13. The Mohegan Sun faces about $800 million in bank debt (about half of the Mohegan Sun's total debt) that comes due in 2012.

A final casino bill is expected sometime before the legislative session closes at the end of July.

Note: In a July 2 edition of The Republican, Mohegan officials try to allay the concerns of Palmer residents that cutting its original $1 billion casino plan by about half won't affect the quality of the proposed resort. "Paul I. Brody, Mohegan Sun's vice president of development, said the project includes a 600-room hotel, 3,000 slot machines and 100 table games, an entertainment venue with up to 2,500 seats, and other amenities. Previously, 4,000 slot machines and 150 table games were announced. Brody said they have spent $5 million on Palmer to date, and are still committed to opening a casino here."