Bay State glow may fade for casino developers

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Massachusetts may no longer represent a cash bonanza for casino developers.

Industry experts are lukewarm about the future of gambling in New England as the market grows increasingly crowded. Meanwhile, old heavyweights in Connecticut and Rhode Island are moving to counter expected competition in Massachusetts, a development that threatens to further diminish the pot.

Signs of trouble abound. MGM recently announced scaled-down plans for its project in Springfield while Plainridge Park Casino, the Bay State’s first expanded gambling outlet, reported declines in revenue in August and September. Legal battles continue to dog Wynn Resorts’ plans for an Everett facility and state officials are sorting through dueling proposals for casinos southeast of Boston. And amid all of that, the company that runs the Twin River casino in Lincoln, Rhode Island, pressed forward with plans this week for a new venue 300 feet from the Massachusetts state line in Tiverton, near Fall River.

“Right now the market is well-served to saturated, but if the existing casinos make the defensive moves they are trying for, it will get over-saturated,” warned Alan Woinski, president of Gaming USA Corp., which tracks industry developments across the country.

Still, developers are continuing to vie for new locations in southeastern Massachusetts, where the state has yet to award the third and final license for a full casino in the state – one with table games as well as slot machines. Mass Gaming & Entertainment is angling for that third license with a plan for a $677 million resort in Brockton. Simultaneously, the Mashpee Wampanoag tribe, which doesn’t need Beacon Hill’s approval to open a casino, is moving ahead with a $500 million project in Taunton.

Taken alone, three state-licensed casinos could do well, Woinski said. Even with the addition of a fourth, the Mashpee Wampanoag project, there might be enough of a clientele to go around.

But the issue is complicated by developments south of the state line, he said.

A joint venture between the Mohegan and Mashantucket Pequot tribes, known as MMCT, is examining Connecticut site proposals for a new casino likely to be in direct competition with MGM’s Springfield project, the MassLive website has reported. Potential locations include East Hartford, East Windsor, Hartford and Windsor Locks.

“Even if the Southeastern Massachusetts casino and the tribal Mashpee property would both open, they may be able to co-exist, but changes in other states will cause problems for all existing and future casinos,” Woinski said.

The competition remains intense despite a grim outlook for the regional casino market across the country, delivered last month by Fitch Ratings analyst Alex Bumazhny at the Global Gaming Expo in Las Vegas. According to columnist Howard Stutz of the Las Vegas Review-Journal, Bumazhny predicted flat growth for regional casinos or even long-term declines.

“With few states having limited or no gaming, new casinos in established markets and casino alternatives make cannibalization of existing casinos a real possibility, particularly in the Northeast,” Bumazhny told the Review-Journal.

Bumazhny’s fears are thrown into sharp relief in a market study for Twin River’s Tiverton proposal. Alone, a gambling facility in the coastal community would rake in more than $147.9 million in its first year of operation in 2020, the study projects. Gamblers from Massachusetts’ South Shore would make up the bulk of the clientele, generating about $64.9 million in annual revenue.

Toss in the Taunton casino and Tiverton’s facility makes only $112.1 million a year. With a competitor in Brockton, but none in Taunton, the annual haul is expected to be $127.5 million.

If both competitors open, the Tiverton casino’s revenue drops to $103.8 million, according the study.

Political and legal troubles also have beset the groups behind Massachusetts’ proposed casinos. MGM momentarily invoked the ire of Springfield Mayor Domenic Sarno after announcing a nearly 14 percent reduction in the size of its more than $800 million downtown project. The company replaced a 25-story glass-skinned hotel tower with a six-story building. Other changes reported by MassLive include a downsized bowling alley, shrunken movie theater and a reduction of retail space.

MGM Springfield cited several factors leading to the revised plans. Those include directives regarding historic property use, trends in the construction market and discussions with Sarno and other city officials, according to spokeswoman Vanessa Krawczyk.

But the redrawn plans definitely reflect MGM’s shifting view of the market, according to the Rev. Richard McGowan, an associate professor of Boston College’s Carroll School of Management and expert on the gaming industry. The drop in size directly reflects the threat of increased competition, he told NewBostonPost.

“The Springfield casino is now viewed by MGM as a regional casino and not a destination casino,” he said by email.

Closer to Boston, Wynn Resorts is facing multiple legal challenges from local officials attempting to block construction of a $1.7 billion casino in Everett. The 33-acre facility will include more than 600 hotel rooms, ballroom, meeting space and a luxury spa.

Boston city officials have challenged Wynn in court in part over concerns about how the facility will affect the environment and what effects it might have on Charlestown, the city neighborhood that sits next to the Everett site. The most recent attempt to derail construction – like the MGM Springfield project, the expected completion date is in 2018 – centers around approval of a state environmental certification for the project, including the traffic it will generate.

If and when the Wynn operation opens, “all of the other New England casinos will suffer,” predicted McGowan.

One potential threat that experts agree casino developers do not have to worry much about is online fantasy sports. Though Massachusetts is home to one of the rapidly growing industry’s heaviest hitters – Boston-based DraftKings – analysts say it is unlikely that casino gamblers will give up slot machines and table games in favor of day-to-day lineups on a website or even online slots games.

“Online gaming is the classic convenience gaming,” Woinski said. “The customer that goes to Plainridge Park five times a week for a couple of hours may decide to only go twice a week as they can play the slots online, but it is the low rollers that will do that, not the higher-stakes table games or even slot players.”