Despite tough times, casinos bullish on expansion in New England

27 September 2010
UNCASVILLE, Conn. — The running joke at the first New England Gaming Summit last week was the front-page headline announcing that the recession was over in that morning's USA Today.
With the gaming industry still reeling from revenues far below numbers seen a few years ago, and the announcement a week earlier that the summit's host casino, Mohegan Sun, was laying off 475 people, it hardly seemed that the economy was growing again to most of the 200 people in attendance .
But in spite of the rough patch that the industry is facing, speakers at the summit generally seemed very bullish on expansion of the industry, most notably in Massachusetts.
"We strongly believe that the current setbacks in our industry not withstanding, we need to continue to plan for growth that will occur as the economy eventually rebounds and spending increases," said Mitchell Grossinger Etess, president and CEO of Mohegan Sun.
While the Massachusetts House, Senate and Governor Deval Patrick were unable to reconcile differences in proposed gaming legislation before the legislature went on recess prior to the November elections, all three were on board to expand gaming — including resort casinos.
"In 2011 we will revisit the issue because we have to revisit the issue," said Sen. Stan Rosenberg.
Palmer appears to be the most attractive site to Mohegan Sun, with recent polls revealing that residents of the small town less than 90 minutes from Boston and just off the Massachusetts Turnpike support bringing a resort casino to the town by a 2-1 margin.
"We've been studying and deliberating this issue since 1996," said Paul Burns, the town's council president. "We welcome the opportunity to develop this project. The biggest concern in my community is when is this going to happen? We've debated it for 15 years; we're comfortable with the issue, and we understand both the costs and the benefits."
"Palmer is without question the premier site for a casino resort in the Commonwealth," said Etess. "More than 11 million adults are within two hours of Palmer throughout New York and New England. Its central location makes it ideal to draw significant out-of-state business."
Indeed, drawing out-of-state business — and keeping in-state gamblers from leaving the state for other jurisdictions — was another major theme at the summit. With Massachusetts on the brink of approving casino gaming, New Hampshire legislators have also been discussing the idea.
"(New Hampshire's) strategy is really geared to pillaging Massachusetts," said Clyde Barrow, the director of the Center for Policy Analysis at UMass Dartmouth. "They make that very explicit even in the bill that passed (in the Senate). Part of the criteria for awarding licenses is how much revenue would come from Massachusetts, so three of the four facilities that they talked about were all literally within five steps of the Massachusetts border."
While Sen. Lou D'Allesandro has brought up gaming legislation in the New Hampshire Senate in each of the last 12 years, and it's passed four times, it his never passed in the House. Some think that may change if Beacon Hill lawmakers are able to pass legislation next year in Massachusetts.
"If gaming does come to Massachusetts, it strengthens the case and I believe it's only a matter of time before it comes to New Hampshire," said Rep. David Campbell.
Many of the speakers, however, cautioned that expansion must be done at the right size and scope. While Mohegan Sun and Foxwoods are enormous resort casinos, the region isn't likely to be able to support more similarly-sized operations.
"We all need to be prepared to manage the next wave of expansion," said Rodney Butler, chairman of the Mashantucket Pequot Tribal Council. "In this new era, it's not as simple as 'If you build it, they will come.'"
And just like would-be homeowners trying to find a mortgage, those who wish to build huge resort casinos may find it's a lot harder to find financing than it was a few years ago.
"We continue to be pretty cautious on gaming," said Andrew Zarnett, managing director of Deutsche Bank Securities. "We believe that the head winds are still fierce against the sector."
And if casino gaming is expanded in New England, the impact will certainly be felt by the casinos in Connecticut.
"You'll have cannibalization of existing businesses," said Zarnett. "Atlantic City is a perfect example. Pennsylvania killed Atlantic City. Atlantic City revenues went from $5.3 billion at the end of 2006 to $3.7 billion currently, so they're down $1.6 billion or almost 30 percent from the peak. That's what competition does."
Etess made clear, however, that Mohegan Sun wants to be sure that if there is cannibalization from the property in Connecticut, gamblers will still have the option to play at a Mohegan Sun casino in Massachusetts.
"No one can predict what's going to happen in any state or Commonwealth as far as gaming law timeline," said Etess. "But when Massachusetts is ready, we will be ready."

Aaron Todd

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Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.