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Revere’s cut for Suffolk Downs casino might grow

If city becomes a host, its share could hit $40m

This rendering shows a conceptuaal design of the proposed casino on Suffolk Downs’s land in Revere.

Suffolk Downs/Associated Press

This rendering shows a conceptuaal design of the proposed casino on Suffolk Downs’s land in Revere.

The City of Revere could receive a share of gambling profits from a proposed Mohegan Sun casino, in addition to hefty minimum annual payments, if the casino were to become one of the most profitable in the country, according to the new host agreement between city officials and the Connecticut casino giant.

Mohegan Sun wants to build a $1 billion gambling resort on about 42 acres in Revere owned by Suffolk Downs. Plans call for about 4,000 slot machines, 100 game tables, and a poker room.

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The Revere host deal, announced Monday, calls for Mohegan Sun to pay the city up to $33 million upfront, as well as additional payments each year if the project is licensed.

In the first three years after opening, the casino’s minimum payment to Revere would be $25 million, according to a copy of the host agreement available Tuesday on the city’s website. But the deal also includes language that could boost the annual payments if the casino exceeds certain targets for gross gambling revenue, which is essentially the money customers lose on the games in a year.

In other words, if the casino topped $850 million in gambling revenue by just one dollar in any of its first three years, the city’s payment would increase by more than $1 million.

Mayor Dan Rizzo said Revere would use the revenue to improve services and facilities and provide relief of taxes and fees.

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Revere’s share would continue to increase on a sliding scale as the casino made more money.

If the casino generated $1 billion in gambling revenue as the host deal projects, a figure that would make it the most profitable casino in the Western Hemisphere, Revere’s share would rise to $40 million.

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Some casino industry specialists are skeptical that a Boston casino could generate such large amounts of gambling revenue.

In addressing revenue projections from Suffolk Downs casino backers last fall, a gambling specialist from the University of Nevada Las Vegas estimated a Boston casino could see $600 million to $700 million a year in gambling revenue.

But Clyde Barrow, a casino specialist at the University of Massachusetts Dartmouth, is more bullish on the potential of the Boston gambling market. He said in an interview Tuesday that it is possible Revere could see revenue above the minimum payments, though “a prudent budgeter is going to plan for the lower number.”

Under the host deal, the minimum annual payment to Revere in the fourth through the sixth year of the casino’s operation would be $28 million. To exceed that minimum, the casino would have to top $875 million in gross gambling revenue. In the seventh and subsequent years, the minimum payment would be $30 million. The city would receive more only if the casino generated more than $900 million, according to the agreement.

Mayor Dan Rizzo has said Revere would use the revenue to improve city services and facilities and provide tax and fee relief for property owners.

The Mohegan Sun project must survive a referendum vote in Revere, expected for February. If approved by the voters, the project would compete for a casino license with a proposal by Wynn Resorts in Everett.

The state gambling commission expects to award the casino license in May.

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

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