It has been two years since Massachusetts took steps to become the gaming industry’s next casino development destination, but cards haven’t left the dealing shoes and slot machines remain silent.
Local Massachusetts communities have rejected three casino proposals in the past 12 months. State gaming officials have yet to license a single casino operator.
The events don’t concern Massachusetts Gaming Commission Chairman Stephen Crosby, even as some major gaming industry players, including Caesars Entertainment Corp., have been relegated to the outside looking in.
Analysts predict Massachusetts could surpass other northeastern markets in gaming revenue production. Hearings over the next few weeks involving MGM Resorts International and Wynn Resorts Ltd. may provide a clearer idea of when casinos will open in the Bay State.
During a half-hour telephone interview from his office in Boston, Crosby defended the five-person gaming commission and the 18-month-old regulatory agency amid concerns that it has moved too slowly and has been too stringent against potential licensees.
Crosby also taken to task critical comments leveled at the commission by Caesars Entertainment Chairman Gary Loveman. In October, the company’s partnership with the Suffolk Downs racetrack ended after state investigators found four areas of concern about Caesars’ potential suitability.
“These were fair issues raised by our investigators,” Crosby said. “We offered Caesars an opportunity to come before us and make their case.”
The commission has found only one applicant unsuitable: a realty company that owns a harness racetrack in Plainville, near the Rhode Island state line. The commission allowed Penn National Gaming, which was found suitable this fall, to step in to operate a proposed slot machine-only casino.
“We’ve looked at best practices from other gaming commissions and we have come to understand the process in other jurisdictions,” said Crosby, whose most recent job before being named chairman in December 2011 was as founding dean of the University of Massachusetts, Boston’s graduate school of policy and global studies.
“The Legislature gave us an explicit mandate and our initial goal was to build a state agency,” Crosby said. “That’s what we accomplished.”
He said the commission followed the course set by Massachusetts lawmakers, whose casino expansion bill was signed by Gov. Deval Patrick in November 2011. Gaming regulatory consultants assembled a plan and time line to establish winners of the highly competitive process.
The commissioners all came from outside of gaming.
Crosby had a 45-year career in state policymaking and entrepreneurship. He also served as an adviser to two Massachusetts governors.
The other four commissioners are a former executive director of the Massachusetts Water Pollution Abatement Trust; a retired state appellate court judge; a former state economic development expert who worked in the Office of Political Affairs for President George H. W. Bush’s administration; and a retired deputy superintendent of the New Jersey State Police.
“We have a lot of experience in different areas and I personally knew next to nothing when it came to the gaming industry,” Crosby said. “Our first job was not to regulate an industry, but to oversee the implementation of a complex piece of legislation.”
The commission’s staff directors have experience with gaming agencies in Ohio, Washington and Iowa.
“We’re pulling in a lot of outside expertise,” Crosby said.
LOCAL JURISDICTIONS GIVEN CONTROL
The Massachusetts law created three Las Vegas-style casino licenses — one for Boston, one in the state’s western end and one in the southeast. It also created a and a single 1,250-game slot machine-only casino to be anywhere in the state.
Local communities can reject a hotel-casino. Giving local jurisdictions control over their own destinies is rooted in Massachusetts history, Crosby said. He believes that in the end, Massachusetts’ gaming destinations will be better because of the process.
“Each region will have at least one quality candidate, that is our expectation,” Crosby said. “The Legislature made it very clear that if a community didn’t want a casino, they didn’t have to have a casino.”
In the western Massachusetts city of Springfield, elected officials picked MGM Resorts’ proposal for a $1 billion casino and resort complex in downtown over a Penn National plan. Voters in July overwhelmingly endorsed the decision.
Wynn Resorts has proposed a $1.2 billion gaming and resort development along the Mystic River in Everett, just outside of Boston. Voters signed off in June.
Meanwhile, voters in different communities rejected plans offered by Hard Rock, Foxwoods and Mohegan Sun.
The pruning left MGM Resorts as the only applicant in western Massachusetts, and left Wynn competing with the Suffolk Downs racetrack — which struck an agreement with Mohegan Sun after Caesars was dropped — for the Boston-area license.
Suffolk Downs lost a voter referendum on the casino in Boston, but wants to move the project to neighboring Revere, where voters approved it.
Crosby said the plan is to have all three resort-style licenses in place in 2014. The 1,250-game slot machine parlor operator could be chosen as early as Jan. 10 from among three applicants — the Baltimore-based Cordish Cos., Penn National and the Raynham Park racetrack.
“That application is kind of flying under the radar,” Crosby said. “There are three strong applicants and this shows the process is working.”
HEATED EXCHANGES INVOLVING WYNN
A suitability hearing for MGM Resorts is set for Monday. A commission discussion of Wynn Resorts’ suitability is planned a week later. Crosby won’t participate in the Wynn hearing after disclosing that he is a longtime friend and former business partner of one of the proposed casino site’s owners.
Caesars never got this far. The company was cut loose from its partnership with the Suffolk Downs in a $1 billion hotel-casino project near Logan International Airport. Massachusetts gaming investigators raised red flags on Caesars’ suitability over four issues. And the partnership was dissolved before Caesars could address those concerns.
Crosby said the most troubling issue was Caesars’ partnership with the Gansevoort Hotel Group in the remodel of the Bill’s Gamblin’ Hall on the Strip. Gansevoort had an investor with alleged ties to Russian organized crime. Caesars’ internal compliance committee weighed the matter but allowed the company to proceed with the partnership.
“Our investigators were concerned with the company’s compliance systems,” Crosby said.
But he added that there is a misconception that Caesars was found unsuitable. That wasn’t so. The commission’s Investigations and Enforcement Bureau recommended in an Oct. 18 letter to the commission that Caesars and Suffolk Downs be invited to come before the commission to establish suitability.
“Suffolk Downs apparently decided that they did not want Caesars to pursue the offered opportunity, and elected to ask Caesars to withdraw,” Crosby said. “That was Suffolk’s decision, not ours. To this day, none of the commissioners knows how we would have voted on Caesars’ suitability, had they presented their case to us.”
Crosby expects the suitability hearings for MGM Resorts and Wynn Resorts to proceed smoothly.
However, there have already been heated exchanges between Wynn Resorts Chairman Steve Wynn and commissioners.
Gayle Cameron, a former New Jersey law enforcement official, told Wynn, “There’s never been a casino anywhere in the world that has no criminal activity. You really have some disdain for investigations and law enforcement. That’s my opinion.”
Wynn fired back, saying he was concerned the company would spend $1 billion on a Boston-area casino only to have the license revoked because of rumors or unfounded allegations.
“No sane person would ever risk such exposure,” Wynn said.
Crosby said he didn’t consider Wynn’s comments relevant.
“It really has nothing to do with the quality and integrity of his application,” Crosby said.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.