MGM asks gambling commission to delay awarding casino license
MGM Resorts has spent nearly $40 million on its furious two-year push to win the sole Western Massachusetts resort casino license, but now that the company is finally poised to collect the prize, it wants to tap the brakes.
Company executives are asking the state gambling commission to delay the formal award of the license, now planned for June, because it would trigger roughly $200 million in obligations for the casino giant. MGM does not want to pay the massive sum while the state casino law is under the threat of a possible repeal. Those payments would include an $85 million state licensing fee, which by law must be paid within 30 days of the commission making the award.
“I don’t think anyone would expect our company or any publicly traded company to be in a position to write $200 million worth of checks while that cloud of doubt hangs over us,” MGM Springfield president Michael Mathis said in an interview.
The Supreme Judicial Court is expected to hear arguments next month on an effort to place a repeal question on the November ballot. The court is expected to rule by early July, after the gambling commission is due to award the Western Massachusetts license.
If the court allows the repeal referendum to go forward on the ballot, the fate of the casino law would remain uncertain until voters decide the matter in the November election.
MGM has plans for an $800 million gambling and entertainment complex in downtown Springfield, which would include a hotel, restaurants, a spa, a gambling floor with slot machines and table games, and a number of other amenities. The MGM project, approved by Springfield voters in a citywide ballot last year, is the only proposal still in contention for the western region license, after rival casino proposals failed in local referendums.
Massachusetts lawmakers legalized Las Vegas-style casino gambling in November 2011, establishing a five-member state gambling commission to license as many as three resort casinos and one slot machine parlor.
Casino opponents responded with a signature drive to put a binding repeal of the law on the November ballot. But Attorney General Martha Coakley ruled last year that the petition was unconstitutional, concluding the repeal would “impair the implied contracts between the commission and gaming license applicants,” and illegally take those contract rights.
MGM has asked the gambling commission to go ahead with its review of the Springfield casino project in June and to announce if it intends to award the license to MGM, but to defer the official award until the repeal is settled, either in court or at the ballot box.
“Were hoping it’s a timing concern, and ultimately at the end of the day that’s all it is,” Mathis said.
In the meantime, as the presumptive license holder, MGM would agree to pay its share of the assessments that license holders are expected to pay to finance the gambling commission’s operation.
“We want the commission to be able to sustain itself and do all the business it needs to do throughout this window,” Mathis said.
The commission will discuss MGM’s request Thursday.
State officials had anticipated Massachusetts would receive the licensing fee before the end of the fiscal year in June. If the commission delays the award, “we will take any lost licensing revenue into account as part of our ongoing efforts to track and manage the budget throughout the year,” Alex Zaroulis, communications director for the state Executive Office of Administration and Finance, said in an e-mail.
The commission has already pushed the award of the Greater Boston resort casino license deeper into the summer, because of a dispute over the Boston’s claims that it should have more say over two casino proposals on its border.
The commission awarded its first license, for a slot machine parlor, in February, choosing a Penn National Gaming project in Plainville. Penn paid a $25 million state fee for the slot license.
Penn executives have said the company would campaign against repeal if the issue goes to the ballot and expressed confidence the voters would support the industry.