State gambling investigators have flown around the globe to inspect casino operations in China, studied more than 21,000 pages of background information on casino applicants, and spent $5 million — from the pockets of the gambling industry — in an attempt to weed out casino applicants who lack the personal integrity or financial strength to hold a gambling license in Massachusetts.
“It is damn tough to be licensed,” said Gary Green, a Florida-based casino consultant who has worked for several gambling companies, including Trump Hotels & Casinos.
After months of vetting, the first round of investigations is nearly done. In July, the commission is expected to report on the suitability of the four applicants for the state’s sole slot parlor license, while the background checks on the resort casino applicants are expected to be completed in coming months.
The deep dive into the background of company officers, key employees, and investors could result in one or more applicants being bounced from contention for casino development rights, even if they hold gambling licenses in other jurisdictions. Or, more likely, the gambling commission could insist that unsuitable people within the corporation be removed from the project.
“It’s unusual for an entire applicant to get kicked out, though it does happen,” said Stephen Crosby, chairman of the state gambling commission.
In what is often called the most regulated industry in the world, even small sins can raise red flags.
Green recalled a corporate vice president in the industry once being ruled unsuitable in New Jersey for being 60 days past due on a student loan. He remembers an applicant in Colorado being grilled over speeding tickets. In a cash business with millions of dollars changing hands every day, even an applicant’s personal relationships can be the difference between earning a license and being booted from a project.
‘It’s unusual for an entire applicant to get kicked out, though it does happen.’
“The truth is if any of your [applicants] up there know Whitey Bulger, they’re never going to be licensed,” said Green, referring to the Boston mobster on trial in federal court. “It’s just the deal. They can be squeaky clean themselves but it truly is guilt by association.”
Casino companies must pay for the background checks, and the meter is running. The state gambling commission has billed the 11 original casino applicants more than $4.9 million for its investigations.
The total cost of the vetting is expected to be about $9.5 million, according to the commission. The investigations are being performed by State Police, working with teams from two consulting firms, Spectrum Gaming and Michael & Carroll. The consulting teams include former FBI agents and public prosecutors, as well as forensic accountants.
To date, MGM Resorts, which is proposing a casino in Springfield, has received the largest bill for background checks, more than $1.2 million, according to the gambling commission.
That cost is in addition to the original $400,000 application fee to enter the Massachusetts casino bidding process; $350,000 from each of the original payments was for background checks; the rest is for local communities to hire consultants to study casino proposals.
Companies with complicated corporate structures or overseas operations generally will see higher costs for background checks, said Crosby.
MGM is a huge international company with operations in Macau, China. State investigators will explore the company’s partnership with Hong Kong businesswoman Pansy Ho, whose father is alleged to have ties to organized crime. New Jersey regulators have raised concerns about the partnership, which MGM has strongly defended.
Suffolk Downs, which is proposing a casino at the East Boston racetrack, received the next largest bill, $1.1 million. The project team includes numerous financial partners who need to be vetted.
The bill to date for Wynn Resorts, proposing a casino in Everett, is $755,000. Wynn, which also has properties in China, has been engaged in widely publicized litigation with a former partner who accused the company of making a $135 million charitable grant in Macau to gain political favor. Wynn Resorts said in a statement in February that Nevada casino authorities investigated the matter and found the company did nothing wrong.
The gambling commission is considering applications for a resort casino in Greater Boston and another in Western Massachusetts, as well as one slot parlor, which can be built anywhere in the state. Bidding only recently opened for a resort casino license in Southeastern Massachusetts, and there are no applicants yet.
The commission badly wants competition for each of the licenses it controls, but “the integrity of the process is job one,” said Crosby. “Competition is job two, but it’s only job two. Fortunately there are enough bidders that even if we had to kick somebody out there would still be competition.”
Among the other applicants, a Foxwoods resort project in Milford has been billed $370,000 for background investigations; Mohegan Sun, in Palmer, $275,000; Hard Rock International, West Springfield, $328,000; and Penn National Gaming, $99,000. Penn was eliminated from a competition within Springfield and is considering other sites.
The slot parlor applicants include Plainridge Racecourse, billed $184,000; Raynham Park, $234,000; Rush Street Gaming, $275,000; and The Cordish Companies, $102,000. Each slot applicant is licensed to run a gambling business in Massachusetts or in other states.Mark Arsenault can be reached at firstname.lastname@example.org. Follow him on Twitter @bostonglobemark