Abstract
Introduction
Tip O'Neill, a famous Massachusetts politician and former Speaker of the U.S. House, coined the adage, “All politics are local.” When the advocates of casino gambling ignored O'Neill's sage advice, they soon put their goal of bringing casino gambling to any locality into jeopardy. Massachusetts is a classic example, a case in point. Now these “locales” were not necessarily geographical but local centers of power in the state that managed to block various measures. In terms of geography, the western and southeast sections of Massachusetts were hoping that casino gambling would provide an economic boost, the Boston area saw no need for casino-style gambling and opposed it. While the majority of the legislature was in favor of casino gambling, powerful Speakers of the House and presidents of the state senate stood in the way of any legislation that would legalize casino gambling. Finally, although the powerful Massachusetts unions were firmly in favor of casino gambling, the small but very influential anti-gambling groups would stymie the frequently resurrected measures to bring casino gambling to the Bay State. In order to understand the interaction of the various “local” forces, the four “eras” of Massachusetts casino gambling will be analyzed. Hopefully, the lessons learned in trying to bring casino gambling to Massachusetts will forecast the difficulties that will be encountered when advocating other forms of gambling in the future.
Era I: 1994 to 2006 (Catching Up with the Neighbors)
In 1993, the state of Connecticut and the Pequot tribe negotiated the first casino gambling site in New England. The Native American casinos were incredibly successful, and it was estimated that nearly 33% of the patrons came from Massachusetts. Given the success of the Native American casinos in Connecticut, the Republican Massachusetts governors (William Weld, Paul Cellucci, Jane Swift, and Mitt Romney) of this era were searching for ways to introduce casino gambling as a revenue source and to reclaim revenue from Connecticut. At this time, Massachusetts was operating the most successful lottery (and it still does!) in the U.S. The proceeds of the lottery went to local towns and cities of Massachusetts. Hence, the primary opponents of any casino expansion were the Democratic mayors of the 351 towns and cities. They were afraid that casinos would cut into state lottery revenue that went to towns and cities. The Democratic Speaker of the Massachusetts House, Sal DeMasi, agreed with these local officials and was able to stymie any progress of casino legislation. These local officials, along with Speaker DeMasi, persuaded the state representatives and state senators that represented these towns and cities to oppose a casino initiative even though the majority of the Massachusetts population was in favor of casino gambling. With overwhelming Democratic majorities in both houses, Republican governors did not have the votes to ensure passage of any casino proposal.
It was also somewhat surprising that even with strong union support of the casino bills Democratic legislators would not back casino proposals during this era. Finally, Mitt Romney made a proposal to Connecticut that he would not back any casino gambling initiative if the state of Connecticut would give Massachusetts a share of casino revenue ($50 million/year) coming from the Native American casinos in Connecticut. The proposal was one that Connecticut would reject outright. It was a rejection that Connecticut would dearly regret in the long run.
Era II: 2006 to 2015 (The Great Compromise)
Much as it took a Republican president, Richard Nixon, for the U.S. to recognize Communist China, it required a Democratic governor, Deval Patrick, to gain approval for casino gambling. With the worst recession since the Great Depression, the finances of Massachusetts were in dire need of any sort of revenue increase. Governor Patrick had indicated that while he himself was against gambling he would allow the people of Massachusetts to decide whether they would permit casino gambling. The referendum to allow casino gambling was approved overwhelmingly. The Massachusetts legislature then had to establish the parameters for this casino gambling initiative.
The bill that was passed by the Massachusetts legislature required an effort worthy of Henry Clay. There were to be three casinos: one in the western part of the state, one in the Boston area, and a Native American casino in the southeast part of the state. One racino was also permitted to be operated in order to rescue the one remaining racetrack in the center of the state. Revenues were to be shared between the state and cities to satisfy the concerns that the lottery would be diminished due to the onset of casino gambling. Finally, no casino could be located in a town tor city without a referendum whereby the town or city approved the casino project.
The legislature also established the Massachusetts Gaming Commission (MGC). There were to be five commissioners: one appointed by the governor, one appointed by the Speaker of the House, one appointed by the president of the state senate, and two independent commissioners. The chief task that the commission initially faced was to determine what firms would receive the three licenses. The two major criteria were financial ability and an outstanding reputation free of any legal or socially unacceptable issues. This later requirement would be severely tested in the future.
Era III: 2016 to 2018 (Dividing the Spoils)
The Western Massachusetts license was given to MGM and it opened its Springfield Massachusetts casino in July 2018. Springfield won the contest for the license because two major interstate highways (I-91 and I-90) intersect in Springfield, and there was overwhelming public support for this casino. The local political establishment was in favor of the casino, and hence, MGM Springfield was the first casino to operate in Massachusetts.
The Southeastern casino license has proven to be much more difficult to fill. Since the license was to be initially reserved for a Native American tribe, the chief problem was that none of the Native American tribes in Massachusetts had a reservation in Southwest Massachusetts that was deemed suitable. For example, one tribe has its reservation on Martha Vineyard. Martha Vineyard is hardly the ideal location given the number of visitors that a casino needs to draw to be successful, and the local community howled in protest at the prospect of a casino opening on scenic Martha Vineyard. Other attempts to establish a reservation in other parts of Southeastern Massachusetts have denied by the Department of the Interior. It appears that the establishment of a third casino in Massachusetts has very little chance of coming to fruition due to local opposition.
Meanwhile Suffolk Downs in East Boston was the initial favorite to obtain the Boston casino license. However, the MGC denied its application in one of the greatest upsets in Massachusetts political history. The rationale for this denial was that Caesars, the firm that would operate the Suffolk Downs site, had taken loans that seemed to have underworld connections. The MGC ruled that Caesars would be an unsuitable operator even though Nevada recognized Caesars as being a suitable operator. Clearly, Massachusetts wanted operators with a spotless reputation.
In September 2014, after a protracted battle, the Wynn Corporation won the Boston area license for Everett, a poor community north of Boston. A bitter struggle between Boston's mayor, Marty Walsh, and the Wynn Corporation over casino revenue developed regarding which communities would receive the most benefits. The Wynn Corporation eventually won this battle and Wynn Boston Harbor Casino seemed a certainty.
However, the smooth ride for the Wynn Corporation was about to end in 2018. The many troubles that beset Steve Wynn made the Boston license a controversial issue.
Era IV: 2018 to the Present (The Wynn License Saga)
On January 26, 2018, the Wall Street Journal published an article detailing numerous incidents of workplace sexual misconduct and harassment by Steve Wynn. With the publication of this article, there was hue and cry about the validity of the Wynn casino in Everett.
The first reaction came from Steve Wynn himself. On February 6, 2018, Wynn stepped down as CEO of the Wynn Corporation and divested the entirety of his ownership in the firm. But this certainly did not satisfy the MGC. On May 7, 2018, the MGC launched an investigation that was to cover four areas:
A review of the suitability of individuals who potentially had knowledge of Steve Wynn's activities. A review of the company's actions taken by senior executives. The company's response following the Wynn report. A review of the potential impact of the allegations upon the financial stability of the Wynn Corporation.
The investigation took over 12 months and here are the results:
Steve Wynn declined to participate in the investigation.
A limited number of Wynn employees knew of the allegations against Wynn but disregarded company policy in handling these allegations.
The composition of the Wynn board of directors had drastically changed, including installing a new chairperson from outside the company.
New enhanced training and human resources policies had to be enacted.
So what was the MGC's verdict given what they found about the Wynn Corporation? The following conditions were given on May 6, 2019.
The Wynn Corporation would need to pay a $35 million fine by May 31, 2019.
CEO Matthew Maddox was fined $.5 million.
The Wynn Corporation would have to accept an independent monitor to dictate the Everett casino practices for at least the next three years.
In late June 2019, the Encore Boston Harbor opened with much fanfare. How has Encore fared? In its first eight months of operations, Encore nearly made most of its revenue projections. Encore negatively affected all of the other casinos in the New England region. The two other Massachusetts casinos (MGM Springfield and Plain Ridge) struggled to maintain market share while casinos in both Rhode Island and Connecticut suffered losses. The most interesting aspect of Encore's success was that the majority of its revenues came from table games, so that the future success of Encore would depend upon high rollers to play the table games. Another adjustment that Encore needed to make in order to increase revenues was to entice slot machine players to come to Encore.
In March 2020, with the advent of COVID-19, Encore, as well as all of the other casinos in New England, were shuttered until June 2020. The conditions under which Encore was permitted to reopen were: the number of table games was severely limited and the gambling floor was alcohol free. This is clearly not a recipe for the future success of Encore. With the reopening of Encore, one can once again perceive the reluctance of public policy officials to embrace casino gambling. Whether or not the supposedly lucrative Boston site for the casino will be a success remains to be seen. It would seem, however, that public policy officials will have to make up their minds whether or not they truly want casino gambling in the Commonwealth of Massachusetts.