Cross-posted from CFO Blog
Repeat after me .. inevitable, inevitable….
The casino developers behind the Mashpee Wampanoag are trying to hypnotize us into believing that casinos are inevitable. This has been part of their campaign first at the local level in Middleboro and now at the state level. The reality is that unless Massachusetts legalizes class 3 gambling, or enters into a compact with the tribe that allows them to have slot machines, the Middleboro casino will never be built. The tribe is putting on a poker face and trying to bluff the state into allowing class three gambling – particularly slots – trying to create the belief that a casino is coming one way or the other so we might as well play ball. So long as Governor Patrick plays it smart – there will be no Indian casino in Middleboro.
But what about the Pequots and the Seminoles?
When the myth of casino inevitability is floated, they always hold up the case of the Mashantucket Pequot(Foxwoods) of Connecticut and the Seminole of Florida – both started off with class two bingo halls that turned into highly profitable class three casinos. The case of the Mashpee Wampanoag and their casino dream is different for these reasons:
- The other tribes already had reservation land
- The other tribes grew their casinos gradually without any regional competition
- The other tribes eventually got(or will get) slot machines because slots were legal in the state. It’s the slots, stupid.
- Neither had an agreement with the town that required them to pay $7-9M dollars per year and $220M in infrastructure improvements for a class two facility
Back in July, a key person involved in the Middleboro IGA told me that the casino could be stopped at the state level – that if class three gambling was not legalized, then the tribe would not build a class two facility.
Slow growth Chernobyl
Even if the Mashpee are allowed to have table games such as blackjack, poker, etc … without slots the profits just aren’t there. This is especially true when you factor in the required payments to Middleboro. Consider that Foxwoods made a profit of only $2.5M in it’s first year of operation in 1986 as a bingo hall. In 1992, the Pequot built a casino via a $60M investment from a Malaysian developer. At this point, the facility looked like this:
The new Foxwoods High Stakes Bingo & Casino opened in February 1992, offering poker, blackjack, roulette, and other games at 170 game tables. In addition to the 46,000 square-foot gaming casino, the facility included three restaurants, a museum, and a piano bar.
It was a small facility compared to what it is today and only required about $60M to bring on line. A similar facility in Middleboro would cost $220M for infrastructure plus construction costs of who knows what. Let’s say $400M. Now you’re up to $620M for a fairly small facility that can’t possibly compete with Foxwoods and Mohegan Sun. It wasn’t until 1993 when the Pequot tribe signed a compact with the state of Connecticut and added slot machines that Foxwoods became the socio-economic Chernobyl it is today.
No slots = No ROI = No Casino
Without slot machines, the profits just aren’t there for a class two facility due to:
- Competition from real CT and RI casinos
- The $7-$9M payments to Middleboro cutting into profits
- The $220M in infrastructure improvements that will be required as part of their agreement with Middleboro
Folks, I was hoping this was obvious to everyone – CasinoFacts.org has been saying it all along. I still see the pro-casino head cheerleaders taking every news article and Mashpee press statement as “proof” that the tribe will build a class two casino. This is pure fantasy. The Mashpee are still playing the old “sign or else” strategy that worked so well for them but so badly for Middleboro.
I hate to be the one to break this to my pro-casino neighbors – but the return on investment is just not there. This will be class three or nothing … and “nothing” is looking more and more likely as Patrick’s legislation continues to die a slow and painful death in the press and in the legislature. So long as Patrick is smart about giving slots to the Mashpee Wampanoag, there will be no casino in Middleboro. If you listen to political wonks like Scott Ferson, the casino is inevitable. If you use a little common sense, you’ll see the reality.
This is what I had thought, but given all the misinformation thrown around in the casino debate, perhaps someone can correct me.
In Connecticut, Class 3 gaming wasn’t illegal, except for charity monte carlo nights. Since those were legal, Foxwoods sued to be able to have Class 3 gaming and won. In Florida, slots were illegal, but Bingo nights were not. The Seminoles installed Bingo slot machines, and went to court over their right to have slots (and won?).
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p>It seems to me that the state would have to shut down church Bingo nights if they wanted to prevent a tribe from installing slot machines, if my understanding is correct.
is that: (1) the question whether “bingo slots” constitute class II rather than class III gaming hasn’t been definitively resolved — even if they were upheld in FL (and I don’t know if there’s a court ruling), that ruling wouldn’t be binding here. I don’t know whether the question has been litigated with respect to Twin Rivers in RI — I don’t think it has.
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p>I don’t know the history of class III gaming in CT.
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p>So MA has two ways of preventing bingo slots: outlaw bingo (ain’t gonna happen), or go to court seeking a ruling that bingo slots are class III rather than class II.
…the Wampanoags might still get permission for slots with judicial, but not legislative approval.
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p>That is, there’s a chance that even if the legislature does nothing, the Mashpee will still get their slots.
as you and I know them. Thus, they’ll have less appeal and less interest from developers.
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p>Furthermore, even those semislots will have to get through the judicial process – and as David mentioned, that’s a rather large political minefield.
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p>The fact is that without a Class 3 license, nothing the size of Foxwoods would be built (currently the largest casino in the world, though the Middleboro plan calls for building an even bigger one). I don’t think we could ultimately stop something akin to a Bingo Hall or even Twin Rivers, but such a thing won’t have nearly the effect on the economy.
“Not slots as you and I know them?”
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p>Slots are slots. If people cared what they stuck their money into, they’d be buying things from vending machines instead.
They’re not the prototypical slot machines where you need three cherries in a row to hit the jackpot, or something of that like.
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p>Maybe once people put their coinage into the unusual and different slots, they wouldn’t care, but it would be a harder sell to get them there. (Just ask my sister, who thinks Twin Rivers is “stupid.”) People do, after all, like what is familiar to them. Furthermore, I’ll say this, despite the fact that Twin Rivers is much, much closer to many in Massachusetts and offers the same benefits (free booze, etc.) as a Foxwoods, where are more residents of this state more likely to end up, if they’re willing to make a trip to gamble? If the kind of slots didn’t matter, why bother taking a longer commute?
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p>Furthermore, this is all moot, because a) we don’t know if they’d go that route (the Bingo Hall that used to be Foxwoods didn’t) and b) we don’t know if it’s legal: that question is still facing us and I think the tribal casinos are going to have a heckuva time proving their case in court, if challenged here.
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p>Finally, as I’ve said here and many other places, developers just aren’t going to invest in a 1.5 Billion dollar casino without Class 3 gambling. It just ain’t happening, no matter what way you slice it and no matter how lucky the Wampanoags think they can roll here. It’s just not happening.
Rep Bosley answered your point far greater than I ever could down thread.
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p>Particularly relevant,
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The Seminoles did quite well with Bingo slots – they look and feel like regular slots. Foxwoods had just bingo and eventually class 3 table games. They were given slots by virtue of a compact with CT. The Seminole have also just signed a compact with FL and gave a way millions so they could have “real” slots.
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p>However – in both cases they didn’t have to give their host community 200+ million dollars like the Mashpee do. So long as MA doesn’t give them “real” slots – there is no ROI for class two – even with bingo slots. By the way, the NIGC is looking to alter the behavior of bingo slot machines so they can’t be used as an end-run around class 3 regulations.
…is that there may well be a Middleboro casino, which will pay nothing to the State, and is out of his hands as a Federal matter.
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p>Your bullet points?
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p>The other tribes already had reservation land – so do the Mashpee; it’s in Middleboro.
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p>The other tribes grew their casinos gradually without any regional competition – Which is what the Mashpee propose; Gov. Patrick is the one proposing the doomed 3-casino plan.
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p>The other tribes eventually got(or will get) slot machines because slots were legal in the state. It’s the slots, stupid. – Maybe, maybe not. But Texas HoldEm and blackjack can take in a lot too, especially when you don’t have to share wit greedy legislators bu only easily led selectmen.
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p>Neither had an agreement with the town that required them to pay $7-9M dollars per year and $220M in infrastructure improvements for a class two facility – With the state out of the deal, do they have to do the road improvements any more?
The Mashpee do not have a reservation in Middleboro. Investors have purchased land in Middleboro and there is an application to have the land turned into reservation land.
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p>The mashpee do not want to grow gradually – they want a fully grown 1.5B dollar casino right out of the gate – to capture market share.
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p>They will still be liable for the 220M in roadwork. That is part of their IGA with middleboro and has nothing to do with the state.
and are therefore illegal in MA absent a change in law. I’m not sure about Texas hold ’em or other poker variants.
in either Florida or Connecticut. Both states entered into compacts to allow the tribes to have them. Matt Viser wrote about this in the Globe a few weeks back.
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p>You are right, however, in saying ‘its the slots, stupid.’ I have my doubts that there will be anything akin to a Bingo Hall without slots legalized, but even if there is, it won’t be anything on the scale of a Mohegan Sun or Foxwoods – and thus doesn’t represent nearly the same kind of danger to our economy and communities.
…in 1985, when we were on a whirlwind tour of Europe (we weren’t sure whether or not mother-in-law would keep possession of the house over there, or sell it and stay in the US) we went to Monaco for a brief stopover. We went to the Loews Casino–lots of noisy slots. We also went to the Casino at Monte Carlo, extremely elegant. We walked around inside.
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p>The most interesting thing that we noted was the pawn shops outside. People driving up in elegant limos would pawn their stuff so that they could continue to gamble. These were probably very wealthy people. Easy come, easy go.
There are a couple of things I am confused about:
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p>1) Why is there all this “If we have X we have to have Y”? Isn’t the state legally competent to enact very specific laws to say what we will and will not allow here? Once it is decided what’s allowed can’t the state also use discretion to limit the number of licenses issued, to whom, and in which places?
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p>2) Does or does not federal law pre-empt state law with regard to the native tribes? It seems they should be subject to the same considerations, no more or less, as anyone else seeking a gaming license. Of course I think we should stop this game of pretending tribes are somehow “sovereign”, but I suppose that is another issue.
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p>I’m not 100% sure what you mean, but I can say this: a lot of what people are talking about has more to do with federal law than state law. When a tribe seeks to build a casino, they often do it through a federal (not state) process.
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p>The way federal law works is that a tribe can set up a casino using any kinds of gambling already legal in the state. The feds break those kinds of gambling into different flavors. We’ve been talking a lot about the “Class 3” variety here, which is focused on slots (since that’s a casino’s bread and butter), but also includes Black Jack and Roulette, as David notes above.
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p>The way I understand how the law works – and correct me if I’m wrong, anyone – if the state were to allow certain varieties of a particular class, such as Roulette but not slots, a tribe could still build a casino using anything already included in the Class 3, since Roulette is included in Class Three gambling… and the tribe would be seeking federal approval for the land, not through the state.
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p>Yes it does and no it doesn’t. The tribes go through a federal process, so yes federal law does trump state law in this case. That said, the way federal law works is to take into account what kind of gambling is legalized in the state that would be effected. So while federal law trumps state law, it does so in a fairly benevolent way. Personally, I think it’s a fair way to do things: it bans states from banning tribal casinos merely because states don’t want them (be it racist reasons, or to prevent competition from state-sanctioned casinos), but also takes into account the culture and overall wishes of the state. All that said, the system can be and is often abused – and it takes a lot of hard work to make sure that developers and other parties don’t take advantage of the voters and citizens of a state.
Ryan,
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p>Your points have been right on. Let me add this: the difference between “bingo slots” and slot machines are that the bingo slots actually have to play game of bingo. In other words, they are still bingo games and as such are slower than slot machines. Second, you are playing against the rest of the players and not against the House, so the amount of players determines the size of payouts. Since they are less lucrative and slower than slot machines, I would question whether they will be as popular as other venues for those who have choices over where to gamble. Also, the National Indian Gaming Commission is actively considering changing the rules to ensure that these machines are only legal where slot machines are legal and that could change the outcome of this issue.
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p>The issue of inevitability is, in my opinion, the fallback position of those who have run out of legitimate arguments on the economics of gaming in the Commonwealth. I also agree that Casino Gambling is not inevitable in the state. The Wampanoags do not have a reservation in Middleboro. The federal government will have to make a determination as to whether to give them land in trust in that area and that is not a slam-dunk. The state and surrounding towns will weigh in on this issue. Second, the tribe will still need backing if it is to construct a casino. If the state doesn’t allow slot machines (which are between 67-70% of a casinos take on average), will a financial backer come forward on the hopes that the legislature will legalize these in the future given that they have not in the past and the market may be saturated in the near future? Third, the use of bingo slots would have to stay the same and not change as the National Indian Gaming Commission is deliberating. Fourth, the state has the option of challenging all aspects of this in court. That means that it will take many years just to get to any action by the tribe. If I were a betting man, I would bet that all these things will not go in the tribes favor.
I’m glad you’re still engaging with the BMG community, Rep Bosley, you’ve made a fantastic (and clearly tireless) leader on this issue for the state.
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p>Thanks especially for clearing up the Bingo Slots question. I thought that the Bingo slots had to be bingo games, but wasn’t 100% sure. Furthermore, I didn’t know that they were far less efficient in making profits for casinos, more the reason why an invester won’t be willing to develop a casino that will cost well over a billion to build.
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p>Casinos are far from inevitable and I’m glad you’ll be holding hearings and other efforts to make sure the people of Massachusetts understand that, as well as the many unwanted impacts casinos will have on our communities and economies.
If the Wampanoag stick with the BIA route of receiving land in trust, they technically have control over their sovereign land. If the Class III supplies are flown onto the reservation (keeping the supplies in the air — federal jurisdiction) from another state, say Connecticut, then they can open up blackjack without the state’s permission.
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p>No, the only way to stop this is if Deval lobbies the BIA hard, and he doesn’t have what it takes to do that.