Ameristar Casinos has dropped its yearlong effort to build a gambling resort in Springfield, the company announced Friday, because its officials believed their proposal was not likely to survive a city-run contest among casino developers.
Ameristar’s sudden withdrawal leaves MGM Resorts and Penn National Gaming in competition for the support of city voters and Mayor Domenic Sarno.
Ameristar does not expect to compete for a license at any other site in Massachusetts, but did not rule it out.
Troy A. Stremming, an Ameristar senior vice president, said in an interview that he was confident that the company’s $900 million plan for Springfield, the priciest of the three proposals, would have stood a strong chance of winning a casino license from the state gambling commission in Boston.
The problem was that the city’s local contest put expensive demands on the company with no guarantee that its project would ever reach the commission, he said.
“To do all of this and not know if you will even get an audience [before the gambling commission] in Boston — that really has to make you think,” Stremming said.
Ameristar has been considered a long shot in Springfield, based in part on the perception that the Sarno administration preferred a downtown location for a gambling resort.
Ameristar’s 41-acre site on Page Boulevard was several miles from downtown, on the eastern side of Springfield. MGM and Penn have proposed downtown resorts.
To sort out the multiple proposals, Sarno set up a local competition. He initially said he would pick just one winner to put forward to the gambling commission as the city’s choice, eliminating the other projects, but later softened his position and said he may choose more than one winner.
The winning company, or companies, will be invited to negotiate an agreement with the mayor to set the terms by which the city would agree to host a gambling resort. Such a host agreement is required by state law before any casino can be licensed by the state. City mayors and town executives can block casino developments by simply refusing to negotiate. Each project must also receive the endorsement of the host community in a referendum.
Stremming said Springfield required casino developers to pay a $50,000 application fee and imposed another $250,000 fee for developers to cover the city’s consulting costs. Each developer must also pay a nonrefundable $400,000 application fee by Jan. 15 to the state gambling commission to be considered for a state license. These fees are in addition to millions of dollars in design costs for such a large-scale development, he said.
“Before you get too deep into a commitment like this, you have to be confident you can make it to the decision-maker,” he said.
Sarno said the city is “very disappointed” Ameristar pulled out of the competition. “Ameristar made a strong proposal for an exciting project that would have given our voters a clear choice as to the type of location that would best serve the city,” he said. “Nonetheless, I am confident that the proposals of MGM and Penn Gaming will create a robust competition resulting in a project that will not only revitalize Springfield, create thousands of good paying jobs for our residents and significant opportunities for our business community with sustainable economic benefits for our great city, but also for Western Massachusetts and the state.”
Ameristar had planned a resort with 3,300 slot machines, 110 table games, a 500-room hotel, parking for 4,300 cars, plus restaurants, a spa, pools, and meeting space. The company paid $16 million for the Page Boulevard property, closing on the purchase in January.
Stremming said the company will market and sell the real estate.
Under the casino law, the state gambling commission can issue up to three licenses for resort-style casinos, no more than one in each of three regions of the state. The panel also controls one license for a slot machine parlor, which can be issued in any region.
Western Massachusetts has this year seen the strongest competition for its one casino license. In addition to the companies pursuing development rights in Springfield, the operators of the Mohegan Sun casino in Connecticut are planning a resort in Palmer.
On Friday, two developers made advances in Holyoke. Paper City Development Group, proposing a casino at Wyckoff Country Club, and Eric Suher, who wants to build a casino at Mountain Park, each submitted $25,000 grants to the city to cover the cost of evaluating their proposals. Mayor Alex Morse, who recently reversed a long-held anticasino position, had outlined a six-week process to weigh the proposals.
Ameristar’s announcement comes two days after Las Vegas casino builder Steve Wynn toured a potential casino site in Everett, raising the prospect of a battle of titans for the Greater Boston license. Suffolk Downs and partner Caesars Entertainment are already proposing a casino at the horse track in East Boston.