Several casino operators competing for gambling licenses in Massachusetts are preparing to file a motion with the state’s highest court, seeking to keep a proposed repeal of the state casino law off the November ballot.
The coalition of gambling companies, which also includes Massachusetts voters who want to protect the casino law, is expected to intervene as early as Monday in a lawsuit already pending before the Supreme Judicial Court, according to people with direct knowledge of the coalition’s plans but who are not authorized to speak publicly about it.
If the casino backers prevail in court, they could quash the repeal effort without a statewide vote and a potentially expensive referendum campaign.
The legal motion expected this week by casino backers reflects a growing concern that the casino operators who are selected to build the state’s first casinos will be soon asked to pay massive — and nonrefundable — licensing fees, even though the threat of casino law repeal still hangs over their pricey projects.
“It would be a gamble” for the companies to pay the fee, said Carl Jenkins, managing director at the financial firm Duff & Phelps, who has studied the local casino market.
The state would also be taking a risk by accepting the nonrefundable fees while the repeal question is unresolved, said Jenkins. “If the law was repealed, I’d wager there would be a significant number of lawsuits against the state,” he said.
One of the companies participating in the coalition against the repeal, MGM Resorts, said that over the past two years the company has invested millions of dollars and enormous staff time into its plans for an $800 million casino and entertainment complex in downtown Springfield. About 58 percent of Springfield voters backed the plan in a referendum last July.
“Our plan was endorsed by an overwhelming majority of voters,” Michael Mathis, vice president of global gaming development, said in a statement. “It would be devastating to roll back all that has been accomplished and take away the promise of what is to come.”
Massachusetts legalized casino gambling in November 2011, establishing a five-member state gambling commission to license as many as three resort casinos and one slot parlor.
Casino opponents, who argue that state voters never had a chance to directly weigh in on whether to open Massachusetts to the gambling industry, responded with a signature drive to put a repeal of the casino law on the November ballot.
“This wasn’t passed by the will of the people,” said John Ribeiro, chairman of the repeal effort, in an interview. “This was the will of a few people on Beacon Hill.”
Last year, Attorney General Martha Coakley of Massachusetts dealt the repeal effort a setback, ruling that the petition was unconstitutional and could not appear on the ballot.
Coakley’s office concluded the repeal would “impair the implied contracts between the commission and gaming license applicants,” and illegally “take” those contract rights without compensation, according to the decision issued Sept. 4.
Opponents appealed to the Supreme Judicial Court, winning the right to collect signatures while the appeal was pending. They collected more than the minimum 68,911 valid signatures necessary to qualify for the ballot.
The case is expected to be argued in court in May, and decided by late June or early July. If the casino opponents win the case, voters would decide the repeal question in November, extending a cloud of uncertainty over the state’s casino industry for most of this year.
In the meantime, the gambling commission expects to award its first licenses. The panel may choose the winning applicant for the slot parlor license by March, and then issue licenses for resort casinos in Western Massachusetts and in Greater Boston by May. The resort casino license created for Southeastern Massachusetts is on a later timetable.
The licensing fee for the slot parlor is $25 million; the resort casino fee is $85 million. By law, the winning bidders are supposed to pay within 30 days.
In their attempt to intervene in the case, the gambling companies will support Coakley’s argument that the repeal would amount to an illegal taking of contract rights, as well as raise the argument that the petition was improperly drafted because it includes an issue unrelated to casinos: an apparent ban on parimutuel wagering on simulcast greyhound races, according to people familiar with the motion.
Stephen Crosby, chairman of the gambling commission, said some applicants have raised concerns over the repeal effort in documents submitted with their applications.
Nothing in the casino law gives the commission the power to return the licensing fees to the applicants if the casino law is repealed, Crosby said. In addition to licensing fees, winning bidders will face other costs, such as commitments to pay millions of dollars to their host communities, as well as land option payments, he said.
The Rev. Richard McGowan, a Boston College professor and casino expert, said he doubts any winning bidders would walk away from the license over the possibility of a repeal.
Based on “every single poll I’ve ever seen, I cannot imagine the state would vote for a repeal,” he said.
Polling performed last November by the Western New England University Polling Institute suggested that 61 percent of Massachusetts adults support the establishment of casinos in the state, and just 33 percent oppose it, which was similar to the results of polls in 2009 and 2010. Support plummeted when the projects got too close to home: just 42 percent said they would support a casino in their own community, while 55 percent were opposed, according to the survey.
Officials at Penn National Gaming, one of three applicants for the slot license, take comfort from the industry’s strong polling numbers.
“We’ve seen these types of [repeal] challenges before and they’ve never been successful,” said Eric Schippers, a Penn senior vice president. If Penn wins the slot license, the company will pay the $25 million fee even if the repeal is undecided, he said.
Ribeiro, the casino opponent, hopes the issue will discourage casino firms from building in Massachusetts. “The opposition is not going away,” he said. “If I were [a gambling company] considering investing in coming to this state, I’d think twice.”