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The Boston Globe

Metro

Mohegan Sun may have violated deal with Palmer landowner

The timing of a meeting between executives from Mohegan Sun scheduled and leaders of the Suffolk Downs racetrack is significant as the Connecticut casino giant had an exclusivity agreement with a Palmer landowner.

David L. Ryan/Globe staff/file 2007

The timing of a meeting between executives from Mohegan Sun scheduled and leaders of the Suffolk Downs racetrack is significant as the Connecticut casino giant had an exclusivity agreement with a Palmer landowner.

A day after losing a casino referendum in Palmer early last November, top executives of Mohegan Sun quietly scheduled a face-to-face meeting, for later that week, with leaders of Suffolk Downs racetrack to discuss building a casino on racetrack land in Revere, the Globe has learned.

The timing is significant because Mohegan still had an exclusive agreement with a Palmer landowner at that time, which prohibited the Connecticut casino giant from “engaging in discussions or negotiations concerning the opening of any gaming facility in Massachusetts” other than in Palmer, according to court documents.

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Mohegan Sun’s fidelity to the exclusivity agreement, signed with landowner Northeast Realty Associates, has been the subject of litigation — and a bitter war of words — between the company and Northeast.

The gambling company, currently applying for the sole Greater Boston casino license, sent a notice to terminate the exclusivity two weeks after organizing the high-level meeting with Suffolk Downs, but revelations that secret talks were already underway at the time, and that Mohegan Sun may have broken a deal, could have political ramifications in the ongoing campaign to repeal the state’s casino law.

“This is going to bring up the factor of trust with voters as they think about the veracity of the gaming companies,” said Anthony Cignoli, a Springfield political strategist who has closely followed the development of the state’s casino industry. “If I were the casino opponents, I would run with this.”

State voters will decide in November whether to ban casinos from Massachusetts, three years after state lawmakers authorized up to three gambling resorts and one slot parlor in the state.

Spokespeople for Mohegan Sun and for Northeast declined to comment.

Ten months after the Palmer referendum, Mohegan Sun’s Revere proposal is now one of two finalists for the state’s most lucrative casino license, in Greater Boston. The other applicant is a Wynn Resorts project in Everett. The state gambling commission plans to choose a winner next month.

Mohegan Sun was among the first gambling companies to plant its flag in Massachusetts, signing deals with Northeast in 2008, to develop a casino in Palmer, a town between Worcester and Springfield, three years before casinos were even legalized. But the early front-runner for the Western Massachusetts casino license lost a casino referendum in Palmer by 94 votes on November 5, the same day East Boston voters defeated a Suffolk Downs casino proposal at the racetrack.

Though Mohegan Sun filed for a recount in Palmer, some former supporters in Palmer began to question the company’s commitment to the town.

Northeast filed suit in February, alleging that Mohegan Sun representatives began talking to Suffolk Downs before the Nov. 5 vote, though the lawsuit does not offer evidence. Northeast also accused the gambling company of intentionally running a lackluster referendum campaign for the Palmer project, which contributed to its defeat.

Mohegan Sun, in turn, sued Northeast to recover at least $22 million the company says it spent in its pursuit of a casino in Palmer. The company similarly accused Northeast of breaking the exclusivity deal and of hindering the campaign.

Emails between representatives of Mohegan Sun and Suffolk Downs obtained by the Globe suggest the two sides had contact at least as early as Nov. 6 -- the day after the Palmer referendum -- to organize a confidential meeting in Cambridge on Nov. 8. Top brass from each company were on the guest list, including Suffolk Downs owners Richard Fields and Joseph O’Donnell, as well as Mitchell Etess, the chief executive of the Mohegan Tribal Gaming Authority, and a posse of lawyers, experts and advisors.

“There is no doubt that if this is to fly we will need to go fast,” wrote Etess, two days after the Palmer vote.

The Globe has not confirmed if the meeting took place as scheduled.

Two weeks passed before Mohegan Sun sent a letter to Northeast on Nov. 20 giving notice that the company was terminating the exclusivity agreement.

The Palmer recount confirmed on Nov. 26 that the casino referendum had failed, and Mohegan Sun announced the next day it would propose a casino on about 40 acres of land in Revere owned by Suffolk Downs. The racetrack would be the casino’s landlord if the project wins the license.

Mohegan Sun is part of a coalition working to defend the casino law from repeal, along with MGM Resorts, Penn National Gaming, public officials and other supporters. Penn National has won the right to build the state’s only slot parlor, in Plainville, and MGM has been promised the Western Massachusetts resort casino license, if the casino repeal bid fails.

The state gambling commission has pushed off the award of the final license it controls, for Southeastern Massachusetts, until next year.

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