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Suffolk Downs casino would give Boston $32m yearly

Menino reaches deal for complex at Suffolk Downs; at least 4,000 jobs promised; referendum is next step

A Suffolk Downs casino would pay Boston at least $32 million annually — and potentially far more — while guaranteeing at least 4,000 permanent jobs and providing East Boston an upfront payment of $33.4 million, under an agreement signed Tuesday with Mayor Thomas M. Menino.

The deal includes provisions that would substantially increase the annual payment to the city if the casino is highly profitable. Under those provisions, the deal could be worth $52 million for Boston annually, based on projections from a city consultant that the resort would gross $1 billion per year in gambling revenue.

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“It sounds like a lot,” Menino said Tuesday in announcing benefits in the host community agreement. “It is. It is also backed up by a strong financial protection and stiff penalties” to ensure developers stay on schedule and create the jobs they have promised, he said.

The long-awaited deal allows the Suffolk Downs proposal to move toward a referendum vote in about two months. It also returns Suffolk Downs and partner Caesars Entertainment to their place as a significant contender for the Greater Boston resort casino license to be awarded by the state.

“It sounds like a lot. It is. It is also backed up by a strong financial protection and stiff penalties,” said Mayor Thomas Menino, detailing the city’s host community agreement with the Suffolk Downs casino developers.

Pat Greenhouse/Globe Staff

“It sounds like a lot. It is. It is also backed up by a strong financial protection and stiff penalties,” said Mayor Thomas Menino, detailing the city’s host community agreement with the Suffolk Downs casino developers.

City officials have not set a date for a referendum, but state law requires at least a 60-day campaign before any casino vote; approval of the host agreement by voters is required as part of the license application process. Suffolk Downs proponents have privately mentioned Oct. 29 as a possibility, just a week before Boston voters go to the polls to elect a new mayor.

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In large cities such as Boston, the state gambling law calls for the referendum to be decided in the neighborhood voting ward, unless municipal officials decide to expand the vote citywide, as Springfield did with an MGM casino proposal.

Menino reiterated Tuesday that he prefers an East Boston-only vote, because residents there would be most likely to feel the effects of the project. Council president Stephen J. Murphy said he does not believe there is an appetite on the council to expand the vote.

The question has become the topic of debate in the mayoral race, with several candidates calling for a citywide vote.

Suffolk Downs partner Joseph O’Donnell said the project would enable a new generation to draw their livelihoods from the track, both by preserving racing and by creating casino and hotel jobs.

“These are real jobs” that “enable people to buy houses, educate their kids and have a better life,” said O’Donnell. “I deeply believe in that.”

Casino opponents immediately attacked the agreement as a cynical ploy to buy support from residents while ignoring the long-term effects.

“The special-interest-driven quest for expanding predatory gambling has been led by Suffolk Downs, hoping to cash in on changing the historic, academic, and innovative character of Massachusetts to a casino culture,” said Celeste Myers, leader of the No Eastie Casino group. “They only talk about the revenues when we all know the costs will be tens of millions of dollars too. We do not want this in our community.”

The agreement ends more than a year of sometimes difficult negotiations, during which Suffolk Downs watched a rival project from Wynn Resorts grab momentum by quickly striking a deal with Everett officials and then winning a landslide referendum victory.

Suffolk Downs is competing for the sole Greater Boston casino license with Wynn and with a Foxwoods project in Milford. The state Gaming Commission is expected to choose the winning proposal early next year.

Even at its floor of $32 million, the arrangement with Boston would appear to be the richest casino agreement in the state. Suffolk Downs would pay more to the city, on a sliding scale, when its gross gambling revenue — the amount visitors lose in a year — tops $800 million, according to the deal.

A model for a proposed hotel and casino at Suffolk Downs.

Wendy Maeda/Globe Staff/File

A model for a proposed hotel and casino at Suffolk Downs.

Caesars chief executive Gary Loveman said the company is confident a Suffolk Downs resort would surpass $800 million in gambling revenue and pointed to independent studies that forecast Greater Boston to be a $1 billion market. A business consultant hired by the city during negotiations arrived at the same figure.

The “tremendous package” of benefits the developers have agreed to give the city “is indicative of the opportunity that exists in East Boston,” Loveman said in a phone interview.

The Rev. Richard McGowan, a Boston College professor and authority on casinos who advised the city during negotiations, said he can imagine Suffolk Downs reaching $1 billion in gambling revenue “in the long run.” But other factors could affect revenue totals, he said, such as new competition from Internet gambling and from New Hampshire, which he expects to follow Massachusetts and legalize casinos.

“There are lots of cards that haven’t been played yet,” said McGowan.

Another specialist said the $1 billion figure seems high.

“I would say $800 million is probably what we reasonably thought to be the most that you could do,” said Carl Jenkins, managing director at the financial firm Duff & Phelps. Jenkins has studied the state’s market.

With Massachusetts planning as many as three resort-style casinos and one slot machine parlor, the four facilities would compete in a statewide market that Jenkins estimates to be $1.8 billion to $2 billion per year. Though the Boston region would get most of the gambling dollars, he said, “I think their chance of going from $800 million to $1 billion is probably pie in the sky.”

Projected annual payments to Boston include property taxes, according to the mayor’s office. All Massachusetts resort casinos will pay a state tax of 25 percent on gambling revenue.

Despite earlier objections, Menino will allow a phased opening of the development,, with stiff penalties if the full project is not finished on time.

Other provisions, according to the mayor’s office, include commitments by the developer to  spending $50 million a year on goods and services in Boston, and $5 million specifically in East Boston and to continue running the race track.

Suffolk Downs straddles the Boston-Revere line, and the track had to negotiate deals with both communities.

Mayor Dan Rizzo of Revere largely completed his negotiations with Suffolk Downs months ago. He said Tuesday that the city has resumed negotiations, “trying to put some finishing touches on our agreement.”

How much Revere would receive from a casino at Suffolk Downs has not been announced.

Mark Arsenault can be reached at mark.arsenault@globe.com. Follow him on Twitter @bostonglobemark.
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