Top-10 things to note about the Massachusetts casino law
28 November 2011
By Aaron Todd
Last week, Massachusetts Governor Deval Patrick signed legislation that will establish a commission to regulate casino gambling in the commonwealth. As a resident of the state and a journalist who covers the industry, I’m excited to see how it all develops over the next few years, and can’t wait to attend the opening ceremonies when the first facility opens.
I’ve watched the developments with a bit of a closer eye, as it not only affects what I’ll be doing in my job, but also because the new casinos could have a big impact on my life, and the life of every other Bay State resident.
I’ve given the legislation signed by the governor a good read, and here are the top-10 elements of the new Massachusetts casino law that piqued my interest.
10. Five commissioners
Now that the law has been passed, almost every decision about potential sites and who might be awarded licenses will be on hold until the state selects five commissioners for the Massachusetts Gaming Commission. One will be selected by the governor, one by the attorney general, one by the treasurer, and two by a majority vote of the same three officials. The five commissioners will have lots of decisions to make and plenty of power over the future of the gaming industry in Massachusetts. I’m looking forward to seeing who these five individuals will be.
9. Smoke-free environment
Based on my reading of the law, casinos in Massachusetts will be smoke free on the gaming floor. Current Massachusetts law requires employers to “provide a smoke free environment for all employees working in an enclosed environment,” and the law signed by Governor Patrick requires casinos to be in compliance with that law.
8. Locations
The law splits the state into three regions (greater Boston, western Massachusetts and the south coast), and each region may have only one “resort” casino which offers both slot machines and table games. However, if the commission isn’t convinced that there is a suitable applicant, they are not obligated to grant a license for a given region. There may also be one “slot parlor,” which can have up to 1,250 slot machines but no table games, which can be located anywhere within the state.
7. $1.6 billion in investment
Anyone granted a license to operate a resort casino will be required to make a capital investment of at least $500 million. With three licenses up for grabs, and along with a minimum $125 million capital investment requirement for the one available slot parlor, the state could see more than $1.6 billion in capital investments over the next several years. That’s a huge injection of capital, and in the aftermath of the recession, could mean the difference between booming growth and a stagnating recovery.
6. No online component
The bill that passed contains no language that would authorize licensees to offer gambling products online. An early version of the House bill was amended to include a provision requiring the commission to study the effects of online gambling, but the provision was axed in conference with the Senate. Should no progress be made at the federal level, however, and if other states begin to offer intrastate online gambling to their residents, Massachusetts could still opt to offer intrastate online gambling in a separate provision in the future.
5. Free drinks
Current state law allows bars to offer drink discounts only if they do so for seven consecutive days. Therefore, the concept of a “Happy Hour” doesn’t exist in Massachusetts. Some believed that allowing casinos to offer free drinks to gamblers while not allowing local businesses to offer drink specials would put those local businesses at a competitive disadvantage, so they sought to roll back the law banning Happy Hour. While that measure failed, the casino bill signed into law does allow casinos to offer free alcohol to gamblers from 8 a.m. to 2 a.m.
4. Community buy-in
While the state outlines the general regions that may have a casino, the law doesn’t dictate the exact site where they are to be located. That’s up to the licensees and local communities. The law requires public outreach to surrounding communities, and without local support through referendum, a site will not be approved. Mohegan Sun Casino has already taken steps to build community support in the western part of the state, opening an office in Palmer several years ago. The town has already passed several non-binding referendums supporting a casino. The early work done by Mohegan Sun may end up paying dividends now that the legislation has been signed into law.
3. Reinvestment
Massachusetts lawmakers were thinking about the long term when they crafted this legislation. It requires a great deal of investment up front, but will not allow beautiful, grand casinos to be built and then neglected as time goes by. Licensees will be required to set aside at least 3.5 percent of gross gaming revenues toward capital reinvestment. The money will have to be spent annually, or can be set aside as part of a multi-year capital project, if approved by the commission.
2. Dealers will pool tips
Until recently dealers at Foxwoods Resort Casino MGM Grand at Foxwoods pooled their tips, and all dealers received the same portion of tips during a given shift. Earlier this fall, however, the casino changed its tip policy, allowing dealers to keep their own tips. (There are pros and cons to both policies, and a whole column could be devoted to covering the issue.) Massachusetts casinos, however, will have no choice in the matter. Dealers will have to pool tips. However, it appears they will not have to worry about sharing tips with pit bosses, as dealers at Wynn Las Vegas do. The law states that no “gaming official who serves in a supervisory position shall solicit or accept a gratuity from a player or patron.”
1. State revenues
Resort casinos will pay a 25 percent tax on gross gaming revenues, while the slot parlor will pay a 40 percent tax on gross gaming revenues. Casinos will also pay a $600 licensing fee for each slot machine in use. All that adds up to a lot of annual revenue for the state.
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