3. CASINO COMING??
• Gaming Impact on Communities
• Who Benefits?
• Who gets Hurt?
• SNEAPA Annual Conference 2012
Sept 2012
R.J. Birmingham former Director of Planning & Community Development
Mashantucket Pequot Tribal Nation
Principle, B&S Consulting, & Impact Analysis
Realtor, Hunter, Moore & Stearns
4. THE INDUSTRY TODAY
*AMERICAN GAMING ASSOCIATION 2010
• World Wide 2.2 Billion People gamble; 1.5 Trillion Dollars
• America has 566 Casino’s in 22 states
• 42 States have lotteries & 37 racetracks, Indian gaming or
other games, Only 2 states have none of it: Utah and
Hawaii.
• Revenues are 55 billion in “Direct” revenues and up to 125
billion, indirect , (1% of GDP)
• 350,000 direct jobs & 820,000 indirect jobs.
• Gaming (Gambling) is here to stay
5.
6. HISTORICAL NOTES
• Native Occupancy of S/E CT 10,000 YBP
• Trade conflict between English & Dutch
• 1637 English & allies attack Mystic fort.
• 1790 Congressional Non-intercourse Act
• 1983 MTP Lands Settlement act - grants Tribal sovereignty
• 1985 High Stakes Bingo,
• 1988 National Indian Gaming Act
• 1992 Foxwoods
• Mohegan Sun Casino 1995
7.
8.
9. MGM GRAND AT FOXWOODS
COST: $750,000,000
(NOT INCLUDING: CAPITIALIZATION, OR UTILITY PLANTS)
•
19. INEQUITIES
• Connecticut 2007 “Pequot=Mohegan fund” $437,000,000
• Distributed to Municipalities: $158,000,000
• Calculated by pre-existing PILOT formula for State aid to
Municipalities.
• Balance to State Programs or Surplus
• Three Adjoining towns have been provided a $500,000
supplement to PILOT formula
20. ECONOMIC MITIGATING FACTORS.
• Some studies show, up to 2/3 of customers live outside of the
County.
• 33.7 million people live within 4 hour drive.
• 61 % of frequent customers live within a 2 hour drive.
• Economic impact is Positive for the County, but draws its dollars
from the larger NE region with no benefit.
21. FOXWOODS & MOHEGAN REVENUE
2007 & 2012 COMPARED
Foxwoods 2007 Mohegan Sun 2007
• Pd to State fund: • Pd to State Fund:
• $229, 095,455 • $201,580,751
• To est. slot gross X 4 = • Est. Gross X 4 =
• 916,318,780 + 25%= 1.2 Bi • 806,121,028 + 25% = 1.1 Bl
• Total Gross Over 2.3 Billion in 2007
Foxwoods pd toState:2012 • 2012 Sun pd to State;
$165,547,090 X4 + 25% = • $178,783,321 X 4 +25% =
882,917,843 or net -27% • 953,511,045 or net -12%
22. NEW LONDON DAY AUGUST 2012
• Casino official blames part of decline on popularity of new
Resorts World at New York’s Aqueduct
• Slot machine revenues, the main barometer of the local casinos’
financial health, told a sorry tale in July.
• At Foxwoods Resorts Casino, the slots “win” — the amount of
wagers the casino kept after paying out prizes — totaled $51
million, down 15.8 percent when compared to the same month in
2011, the steepest decline since December 2008, when
Foxwoods’ win tumbled 19 percent.
• Mohegan Sun’s July win of $60 million was down 10.4 percent.
• “We thought it was going to be a tough month,” Scott Butera,
Foxwoods’ president and chief executive officer, said
23.
24. Massachusetts
Gaming Commission Educational Forum
June 14, 2012
• Facilities would open Jan 1, 2014
o First Stabilized Year-2016
• Of the seven scenarios analyzed, Scenarios 4 (A) and 5(b)
are nearest to the final bill:
o Both scenarios assumed one Destination Resort in each of 3 regions.
In addition :
4(A) assumed 750 slots at each of 4 racetrack locations
5 (b) assumed only 1,500 total slots (split between two racetrack locations).
o Gaming Revenue ranges $1.74 Billion-$2.07 Billion
o Total Direct & Indirect job creation between 16,600-19,800TIG Engagement-
Key Assumptions/Conclusions
25.
26. INDIRECT EMPLOYMENT EFFECTS
• CERC Inc: Spin Off effect factor : 1.107 non casino Jobs for every
Casino Job. State wide spin off Factor: .74
• Total 2005 Casino employment: 20220 x 1.1.0 = 42603 total jobs
within the County
• State wide additional jobs: 20220 x .74 = 14963
• Total Job Creation: 57,566 (2005)
• 2012: Estimate 25% - 35% reduction from peak, or about 7,500 –
7,000 employees.
• High job turn over: Foxwoods Badge numbering now at 80,000; or
about 3100 employee departures (turnovers) per year.
• Current 2012 estimate: 15,000 X .1.1 + sum = 31,500 employment
27. WHO BENEFITS:
• Corporate Entities & Native Tribes
• 2007 New England operations reaped over $3 billion in gross
revenues
• Potential Market estimated (ERA) at $ 6 billion (2008)
• State and Local governments.
• Taxes (New Jersey 8%, CT 25% slots)
• Transfer Payments (0peration payments)
• Employment
• Reduced Welfare & health costs
• Gaming Operators
• 537 Federally recognized Tribes/100 operate gaming
28. WHO GETS HURT?
• Motoring Public: Less so as gaming becomes ubiquitous
• Neighbors: noise, intruders, decreased property values.
• Towns with unfunded burdens:
• Emergency Service Providers.
• Roads, water/sewer
• Social Service Agencies: Homeless workers & “problem
gamblers”
• Low Income Families
• Gaming in larger percentages that other groups
• Increasing scarcity of affordable Housing
30. SOUTHEASTERN CONNECTICUT COUNCIL OF
GOVERNMENTS: 2005
• Issues
• Change of Employment Centers
• Housing Gap: 5000 housing units.
• I-95 congestion (CT Trans Strategy Board)
• Limited Air & Rail or Bus alternatives
• Increase in Tourist travel
• Choices
• Highway improvements (Long term limited $)
• Intermodal Pilot System
• No Action: Increasing congestion
31. CONN. ROUTE 2 TRAFFIC VOLUME TRENDS
PRE CASINO VS POST CASINO
30000
25000
20000
15000
1980
1991-1992
10000 1993-1994
1997-1998
5000
0 Rt.2(95 to 184)
Rt.2(184 to 201)
Rt.2(201 to 214)
Rt.2(214 to 164)
35. PROBLEMS?
*”NAT’L COUNCIL ON PROBLEM GAMBLING”
• 2% - 3% of gamblers are “problem gamblers or 6 – 9 million
Americans
• 50 % of Young people gamble in some way.
• People 65 and older are twice as likely to gamble as compared
to others.
• Areas near casinos experience higher levels of economic
decline.
36. EXPERIENCE VS. EXPECTATIONS
• Local street crime has not increased, on campus crime has.
• Wave of embezzlement: town halls to doc’s offices
• Employment is declining: Current Foxwoods FTE’s about 7500 from 11000
at peak, about same at the Mohegan Sun
• Gaming has a high employee turn over rate and at Foxwoods about 3000 on
average or 10% - 20% of the labor force per year
• Spin off business serving the “drive” or primary market has been limited,
minimal growth of local business.
• Low cost Housing is in short supply
• Gaming is trending to be a ubiquitous activity: slots in bars to on line
gaming. Eroding revenues for large casinos.
• As revenues erode, Gaming Managers will seek to evade local mitigation
funds if allowed:
• Quarterly Revenue will be increasing concern for Gaming Managers &
Gov’t Officials.
38. CONSTRUCTION MANAGEMENT PRACTICES
• Natural Resource & Archeological Assessment
• Potable Water: Memcor Water Filtration of well water
• Waste Water Processing: Sequencing Batch Reactor
• Reuse Water for Golf Course Irrigation
• Natural Gas usage for all heating & cooling
• Co Generation: Off grid Electricity & Steam from CNG
• Storm water management : small basin detention
• Open Space & wild life corridor retention
• Wetland Creation: mitigation and management
39.
40. Expanded Gaming Act (St. 2011,
c.194) signed by Governor Patrick
November 2011
Full text can be viewed at:
http://www.malegislature.gov/Laws/
SessionLaws/Acts/2011/Chapter194
41. Gaming legislation (St. 2011, c. 194) overview
What are the rights of a host community?
What are the rights of a surrounding
community?
How does the license application process work?
The Money Trail: How are funds distributed
under the Act?
42. The Expanded Gaming Act
expands current legal
gambling (i.e., State
Lottery; Horse and Dog
Racing; and Simulcast
Gambling) to include table
games and slots.
43. New Gaming Commission Statute (c.23K)
New Money Laundering Statute (c.267A)
New Enterprise Crime Statute (c.271A)
Repeal of Greyhound Council (c.10)
Repeal of State Racing Commission (c.13)
44. New G.L. c.268A, §5(b½)
Violation for a municipal employee, who
participated as such in the implementation,
administration or enforcement of chapter 23K, to
later become an employee or officer of, or acquire
a financial interest in, a gaming license applicant
or licensee within one year after the public
employment ceases
G.L. c.23K, §46
Prohibits an applicant and its affiliate from making
gifts to municipal, county or state officials or
candidates for such office and political parties
45. Five (5) Commissioners:
Stephen Crosby, former UMass Dean and Sec’y of
Admin. and Finance
Gayle Cameron, former Lt. Col. New Jersey State
Police
Enrique Zuniga, former Exec. Dir. Mass. Water
Pollution Abatement Trust
James McHugh, retired Appeals Court Judge
Bruce Stebbins, former Business Development
Administrator and City Council member, City of
Springfield
46. Contract with persons and government
Issue Licenses
Conduct Adjudicatory Proceedings
Determine surrounding community status
Set election parameters
Assist in negotiating an Indian Tribe Compact
Administer pari-mutuel/simulcasting gambling
Adopt Regulations
Enforce Requirements
47. Category 1 License
An establishment with
table games and slot
machines.
Category 2 License
An establishment with no
table games and not more
than 1,250 slot machines.
48. 3 Regions (by counties):
A: Suffolk, Middlesex, Essex, Norfolk and
Worcester
B: Hampshire, Hampden, Franklin and
Berkshire
C: Bristol, Plymouth, Nantucket, Dukes and
Barnstable (Compact with Mashpee
Wampanoag Tribe)
50. Only three Category 1 licenses; Only one per
region; Good for 15 years (G.L. c.23K, §19)
Only one Category 2 license (slots only); Good
for 5 years (G.L. c.23K, §20(a) & (f))
No Region C License will be issued, in light of
Compact with Mashpee Wampanoag Tribe
(Gaming Act, §91)
Note: Federal Court of Appeals cast doubt on the
constitutionality of this preference under the
Equal Protection Clause. KG Urban Ent. v. Patrick,
-- F.3d -- (1st Cir., Aug. 1, 2012)
51. Category 1 License (G.L. c.23K, §19)
Applicant must satisfy all eligibility criteria
Must provide convincing evidence value will
be provided to region and Commonwealth
Category 2 License (G.L.c .23K, §20)
Applicant must satisfy all eligibility criteria
Must provide convincing evidence value will
be provided to Commonwealth
52. Federal Law:
Indian Gaming Regulatory Act, 25 USC 2701
Indian tribes have the exclusive right to
regulate gaming activity on Indian lands if the
gaming activity is not specifically prohibited by
federal law and is conducted within a State
which does not prohibit such gaming activity.
53. State Gaming Act:
$5 million appropriated to negotiate a compact
with a federally recognized tribe
Governor authorized to negotiate, but the
compact is subject to approval by the
Legislature (Gaming Act, §91(a))
The land must be owned or under agreement
by the tribe (Gaming Act, §91(c))
54. Compact With Mashpee Wampanoag Tribe:
City of Taunton to be Host Community
15-year term with automatic renewal
21.5% of gaming revenues to State (to be
distributed pursuant to Act, including mitigation
to affected communities)
Tribe accedes to State jurisdiction/enforcement
State will support Tribe’s Land in Trust application
55. Host community:
One in which a gaming establishment is located
or in which one is proposed.
Surrounding community:
One in proximity to a host community and
likely to experience impacts from the gaming
operations. Status conferred either by
agreement with the applicant or determined
by the Commission.
56. Governing Body
In a city, the mayor (or city manager) and city
council;
In a town, the board of selectmen.
Impacted Live Entertainment Venue
A “not-for-profit or municipally-owned performance
venue designed in whole or in part for the
presentation of live concerts, comedy or theatrical
performances,” determined to experience or be
“likely to experience negative impacts from the
development or operation of a gaming
establishment.”
57. No gaming license shall issue unless:
The governing body of the host community
signs an agreement with the applicant that sets
out mitigation by the applicant, including
impact fees (G.L.c .23K, §15(7), (8) and (14));
The host community votes by affirmative ballot
to permit the gaming operation; and
The gaming operation complies with all local
by-laws, including zoning. (Most proposals
would need zoning changes.)(G.L. c.23K, §15)
58. Infrastructure and Equipment Needs
Public Safety (note special requirements re: public safety
arrangements)
Traffic Impacts
Housing Needs
School Impacts
Impacts on Local Businesses
Cross-Marketing (local restaurants, hotels, shops,
entertainment venues, etc.)
Environmental Impacts
Process Costs (elections, town meetings for zoning changes,
consultants, publication and mailings, etc.)
Local Preferences (jobs, construction contracts, etc.)
Design Considerations/Aesthetics
59. Public Process
Public Notice
Public Hearings
Studies and Analyses
Commission early, as they can be time-consuming
G.L. c.23K, §15 requires $50K of each $400,000
license application fee to be set aside to reimburse
host and surrounding communities for the costs of
studying impacts and negotiating mitigation
agreements. However…
60. Don’t rely on the c.23K, §15 money!
Its paid only upon application for the license and
negotiations should be well underway already
$50,000 likely would not cover even the host
community’s expenses - let alone the expenses of the
surrounding communities
So, request early in the process that the applicant
fund a gift account under G.L. c.44, §53A to cover
expenses of consultants and attorneys to review
impacts and negotiate an agreement
Request replenishment of the account well before it is
depleted. If an applicant walks away, make sure your
expenses are covered by collecting the funds before
costs are incurred!
61. The ballot question for the host community to vote on
would be worded as follows:
Shall the city/town of ____ permit the operation
of a gaming establishment licensed by the
Massachusetts Gaming Commission to be
located at ___________? Yes ____ No ______.
G.L. c. 23K, §15(13)
Not required in surrounding communities.
62. Only in the host community
Only after written agreement signed with the
host community
Only after the applicant requests the election
Happens within 60-90 days after request made
Happens only after signed agreement is
summarized and made public
If a negative vote occurs, then six months must
elapse before a new vote request can be made
and a new written agreement must be signed
63. No gaming license shall issue unless:
The applicant seeks the signature of the
governing body of each surrounding
community on an written agreement
But, if an agreement is not reached within a
specific time frame, then the Commission shall
enforce protocols that ensure “the conclusion
of a negotiation of a fair and reasonable
agreement” G.L. c. 23K, §17(a)
64. Designation is automatic if there is a signed
agreement with the applicant (G.L. c.23K, §17)
If there is not a signed agreement, the
Commission considers the following factors:
The detailed construction plan
Information provided by the public
Population
Infrastructure
Distance from the establishment
65. PUBLIC INPUT MATTERS
See G.L. c.23K, §19(d):
“…in determining which gaming applicant shall receive a
gaming license in each region, the commission shall
also consider the support or opposition to each
gaming applicant from the public in the host and
surrounding communities as demonstrated by public
comment provided by the gaming applicant or directly
to the commission pursuant to section 15 and
through oral and written testimony received during
the public hearing conducted pursuant to section 17.”
66. 30 days notice to host and surrounding
communities
Held in host community, unless the host
community requests a different location
Commission has full discretion to deny
the application (G.L. c.23K, §17(g))
67. First, the Commission requests applications for
the Category 2 License (Slots) (G.L.c.23K, §8)
Second, Commission requests applications for
Category 1 Licenses (G.L. c.23K, §8(a))
Commission advertises and sets deadlines and
requirements for applications (§8(a)&(b))
The Commission’s Enforcement Bureau then
undertakes an investigation into and reports to
the Commission on the suitable of proposed
applicants (G.L. c.23K, §12)
68. G.L. c.23K, §15, lists 16 application requirements (to be
supplemented by Commission’s Rules and Regulations):
1. Agree to be a Lottery sales agent 9. Provide signed Surrounding Communities
agreements
2. Capital investment of at least $500 million 10. Provide signed Impacted Live Entertainment
Venues agreements
3. Own or acquire 75 year lease on land 11. Pay nonrefundable application fee of $400,000
4. Meet licensee deposit requirement 12. Comply with state and local building codes and
local ordinances and bylaws
5. Ability to pay gaming licensing fees 13. Favorable binding ballot vote in Host
Community
6. Address mitigation and impact issues 14. Provide community impact fee to Host
Community
7. Identify infrastructure costs to host/surrounding 15. Minority/women/veteran business outreach
communities and commit to mitigation plan program
8. Provide signed Host Community Agreement 16. Affirmative action program
69. Protect the State Lottery
Promote local businesses
Use existing work force, with training for
unemployed
Partner with local hotels, restaurants and
retailers to promote regional tourism
Create a “green” establishment (LEEDS, Stretch
Energy Code, Energy Star, Mitigate vehicle trips,
10% Renewable Energy, Stormwater Control)
Promote minority, women and veteran
businesses
Promote existing workforce
70. Full investigation (G.L.c.23K, §12)
Character/Reputation
Financial stability
Business ability/history of compliance
Shall be established by clear and convincing
evidence (G.L.c.23K, §13)
Shall be established for applicant and
associates and investors with a greater than 5%
ownership interest (G.L.c.23K, §14)
71. Denial of a license cannot be appealed by an applicant.
Approval of a license can be appealed by a party with standing (G.L.c.30A, §14)
Since G.L. c.23K is new, standing issues will present novel questions.
Right to intervene/participate in administrative proceeding won’t always provide
standing. BOH of Sturbridge v. BOH of Southbridge, 461 Mass. 548 (2012)
BUT, “various aspects of … [gambling enterprises] give rise to a substantial
public concern about the manner in which, and by whom, it is conducted” and
“situations [may arise] where a town might intervene as a party to protect the
interests of its inhabitants and … have standing to seek review” of a gambling
license. Shaker Com., Inc. v. State Rac. Com., 346 Mass. 213, 216-217 (1963).
72. Host Municipality shall either:
If it has accepted G.L. c.43D (Expedited Permitting),
file a proposal with the inter-agency permitting
board to designate the proposed Category 1
facility as a priority development site
or
If it has not accepted G.L. c.43D, have the Planning
Board designate a permitting ombudsman (member
of the Planning Board or municipal planning staff)
“to help coordinate and expedite local permitting of
the category 1 establishment”
73. A quick look at the Fees,
Taxes, and Funds, as well
as the various Commissions
and Committees
established under the
Expanded Gaming Act
74. Category 1 or 2 License
Nonrefundable application fee of $400,000
$50,000 to be set aside to compensate host and
surrounding communities for costs of studying
impacts and negotiating mitigation agreements
Category 1 License Fee: At least $85M
Category 2 License Fee: At least $25M
75. Category 1 Licensees
Daily tax of 25% of gross gaming revenue
Category 2 Licensees (Slots only)
Daily tax of 40% of gross gaming revenue
Daily assessment of 9% of gross gaming revenue
(Race Horse Development Fund)
Category 1 and 2 Licensees
Annual license fee of $600 per slot machine
Assessments to cover any remaining costs of the
Commission
Annual fee of not less than $5 million (Public Health
Trust Fund)
76. Massachusetts Gaming Control Fund (§57)
Public Health Trust Fund (§58)
Gaming Revenue Fund ((§59)
Race Horse Development Fund (§60)
Community Mitigation Fund (§61)
Transportation Infrastructure Development Fund (§62)
Gaming Local Aid Fund (§63)
Education Fund (§64)
Gaming Licensing Fund (§93)
Local Aid Stabilization Fund (G.L. c.29, §2CCCC)
Local Capital Projects Fund (G.L. c.29, §2EEEE)
77. Commission is Trustee
Established to finance operational
activities of the Commission
Funded by initial application fees for
licenses and other appropriations and
funds that are subject to the
Commission’s direction and control
78. Secretary of Health and Human
Services is Trustee
Consists of annual fees (not less than
$5 million) assessed under §56(e)
To fund programs dedicated to
addressing problems associated with
compulsive gambling
79. Commission is Trustee.
Receives all funds collected from the taxes on gross
gaming revenues of licensees.
Funds to be distributed as follows:
All revenue received from a Category 2 Licensee shall be transferred to
the Gaming Local Aid Fund.
Revenue from Category 1 Licensees is distributed to twelve different
sources. Of particular note to municipalities:
6.5% to the Community mitigation fund
4.5% to the Local Capital Projects Fund
20% to the Gaming Local Aid Fund
10% to the Commonwealth Stabilization Fund (However, up to half of this
amount shall be used to offset any decrease in local aid from the prior
fiscal year)
15% to the Transportation Infrastructure and Development Fund
80. Administered by the Commission
Consists of funds transferred from the Gaming
Revenue Fund—i.e. 6.5% of revenue from Class 1
Licensees
Funds to be expended “to assist the host community
and surrounding communities in offsetting costs
related to construction and operation of a gaming
establishment including,” water/sewer, education,
transportation, infrastructure, housing, environmental
issues and public safety
Funds must be sought through written appropriation
request prior to February 1 of each year
81. Secretary of Transportation is Trustee
Consists of funds transferred from the
Gaming Revenue Fund—i.e. 15% of
revenue from Class 1 Licensees
Not less than half of funds expended shall
be “dedicated for the purpose of
supplementing, and not offsetting, any
expenditures made for the construction
and reconstruction of municipal ways”
under G.L. c.6C, §4(b)
82. Includes funds transferred from the
Gaming Revenue Fund—i.e. 20% of
revenue from Class 1 Licensees
Monies from this Fund are to be
distributed to cities and towns in
accordance with the formula used to
determine the distribution of unrestricted
general government aid and shall be in
addition to the balance of the State
Lottery Fund
83. Includes funds transferred under the
Gaming Revenue Fund—i.e. 14% of
revenue from Class 1 Licensees
Expended by appropriation for
purposes of higher education
84. Receives all licensing fees (not including
initial application fees)
Funds are distributed to nine different
sources. Of particular note to
municipalities:
10% to the Community mitigation fund
11% to the Local Capital Projects Fund
5% to the Local Aid Stabilization Fund
14.5% to the Transportation Infrastructure and
Development Fund
85. Massachusetts Gaming Commission (G.L. c.23K, §3)
5 Commissioners (1 appointed by Governor; 1 by Attorney
General; 1 by Treasurer/Receiver General; and 2 by majority
vote of Governor, Attorney General and Receiver General)
Gaming Policy Advisory Committee [G.L. c.23K, §68(a)]
13 members: Governor or his designee (chair); 2 members of
the Senate; 2 members of the House of Representatives;
Commissioner of Public Health or his/her designee and eight
persons appointed by the Governor.
Advisory only—makes recommendations re: “matters of
gaming policy”
86. Subcommittee on Community Mitigation [under the
Gaming Policy Advisory Committee (G.L. c.23K, §68(b)]
12 members (including representatives from each host
community, the Commission, the MMA, appointees of the
Governor, and others)
Shall develop recommendations to be considered by the
Commission to address issues of community mitigation as a
result of the development of gaming establishments,
including how to expend monies from the Community
Mitigation Fund
Each region may establish a local community mitigation
advisory committee [G.L. c.23K, §68(e)]—May designate
one member to represent the region on the
Subcomittee on Community Mitigation
