Wynn casino bid fulfills gambling law’s goals better than Suffolk Downs

The Massachusetts Gaming Commission faces an unusual level of public scrutiny as it decides whether, and to whom, to award the potentially lucrative Greater Boston casino license this week. Voters are watching, and in less than two months they’ll decide in a statewide referendum whether to undo the commission’s handiwork by repealing the 2011 casino law. The commission also faces pressure to award the license to a plan at Suffolk Downs, the struggling East Boston racetrack that lobbied heavily to legalize casino gambling in Massachusetts.

But the public has repeatedly been told that the law’s real purpose was to raise revenue and create jobs, and that its protections for communities that don’t want casinos are sacrosanct. By those standards, a rival proposal in Everett looks much more in keeping with the law’s intent. If commissioners are determined to green-light a site for casino development this week, despite the looming referendum, they should choose the Everett option. It provides an economic and environmental boost to what may be the most downtrodden corner of Greater Boston, and enjoys far greater community support than the rival plan for a Mohegan Sun casino at Suffolk Downs.

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The Everett plan, proposed for a polluted, overgrown parcel along the Mystic River, won overwhelming support from the city’s residents in a referendum last year, with 86 percent of voters in favor and 14 percent opposed. In a city with a faded tax base and few other big-time economic prospects, the casino project has transformative potential. Developer Steve Wynn expects to spend nearly $1.6 billion on the project, compared with the $1.3 billion that Mohegan Sun envisions spending at Suffolk Downs. One of the goals of commissioners has been to leverage casino spending to support other public-policy needs, and the Wynn plan meets that desire in dramatic fashion: Cleaning up the arsenic and lead that laces the former Monsanto site, a major contributor to the river’s pollution, would ensure the whole region enjoys a lasting, tangible benefit. The Wynn plan would also open up a new section of the waterfront to public use, set up a water taxi service connecting the area to downtown Boston, and knit together bike and walking trails nearby.

Ability to deliver on those promises is paramount; gambling is an increasingly uncertain business, as the struggles of Atlantic City demonstrate, and the commission should want a company that has the financial muscle to build quickly and survive the inevitable setbacks. Wynn, known for going through Picassos the way other people go through used cars, does not lack for money. The company has more than $3.2 billion in cash on hand, far more than Mohegan Sun. Wynn’s revenue per gambling position per day, a common metric in the industry, is twice that of Mohegan Sun’s.

Part of Wynn’s success in Las Vegas and Macau stems from his knack for attracting wealthy gamblers — another factor commissioners should consider favorably. The fact that the state-sponsored lottery already derives so much of its revenue from low-income residents rightly causes much anguish in Massachusetts. To the greatest extent possible, casinos should not make that inequity worse. Wynn’s business model revolves, to an unusual degree, on vacuuming money from customers rich enough to lose it. In Massachusetts, the Wynn casino projects similar levels of overall gaming revenue as Mohegan Sun does, but expects that more of it will come from out-of-state and international visitors. If those projections are remotely accurate, the Wynn plan will rely less on proceeds from potentially vulnerable Massachusetts residents.

Of course, the Everett plan has faults, too. Like the Mohegan Sun proposal at Suffolk Downs, it will add traffic to already congested roads. Both developers have submitted mitigation plans. But if independent analysis by the commission suggests those plans are inadequate, commissioners should not be shy about insisting on further improvements as a condition of awarding the license.

Another serious problem in Everett relates not to Wynn himself, but to the current owners of the land parcel: FBT Realty, an entity waist-deep in conflicts of interest and connections to an organized crime figure. But the gaming commission has now secured written assurances from the three owners that there are no hidden partners who will profit from the deal. And, in any case, once the sale to Wynn closes, FBT should be out of the picture for good. One of Wynn’s first major casino deals in Las Vegas was on the site of the Mafia-affiliated Dunes casino, but its prior ownership has not surfaced as a problem.

Wynn’s other major drawback is aesthetic. Architecture may be subjective, but it’s hard to find critics who prefer Wynn’s soulless bronze fortress over the more imaginative design at Suffolk Downs. Wynn’s team, though, scoffs at the criticism; the trademark bronze tower is part of the Wynn brand, they say, and the proof that it works lies in the financial results. Like it or not, if the state really intends to maximize tax revenues from gambling, it has to embrace successful strategies. And if tastefully decorated, low-rise buildings generated massive gambling revenues, Las Vegas would be full of them.

While theSuffolk Downs plan looks better aesthetically, it falls short in more important respects. The financing is shakier, the land-use decisions seem short-sighted, and community support is lacking. The defeat of the initial casino plan at the site last year should have been the end of the proposal, and the hastily revised plan and Suffolk Downs’s new partnership with Mohegan Sun does not cancel out the clear verdict of voters in East Boston last year on a materially similar proposal.

Built during the Depression on the Revere-East Boston line, the sprawling racetrack in the shadow of Logan Airport once hosted huge concerts and packed races. But as the popularity of horse racing has waned, attendance has dwindled. Like other tracks nationally, Suffolk Downs sought salvation in casino gambling and found an ally in House Speaker Robert DeLeo, who represents nearby Winthrop and pushed through the casino law in 2011. The gaming legislation was clearly intended to help Suffolk Downs; first, it devoted a share of casino taxes to subsidize horse-racing purses, and it set up a casino-approval process with special rules that allowed only residents of East Boston, rather than the entire city, to vote on a proposed casino at Suffolk Downs. Winning in Eastie, casino boosters believed, would be a cinch.

Yet despite heavily outspending its opponents, Suffolk Downs failed to win over East Boston voters; Revere voters have approved it twice, most recently by a healthy 63-37 margin, but still well below the 84-16 in Everett. Rather than pull the plug after the East Boston defeat, the track found a new partner, Mohegan Sun, to offer a revised blueprint that squeezed all casino facilities onto the Revere side of its property. Mohegan Sun
characterizes the track’s role as its landlord, rather than a development partner, but it’s not the kind of deal most tenants would recognize. Suffolk Downs will receive payments from Mohegan Sun that vary based on the casino’s performance. The differences between “landlord” and “partner,” in this case, come down to semantics, more than substance.

Mohegan Sun’s pursuit of a casino license, like that of Suffolk Downs, carries a whiff of desperation. The Mohegan tribe opened its first casino on its Uncasville, Conn., reservation in 1996, but has been expanding in Pennsylvania and New Jersey in recent years as the Connecticut gambling market stagnates. Casino gambling in Massachusetts will deal another big setback to the Connecticut casinos — indeed, reclaiming gambling money that went out of state was one of the main arguments for the Massachusetts law — and one way for Mohegan Sun to cushion its losses would be to operate one of the Massachusetts casinos themselves.

Still, Mohegan Sun has gamely tried to turn its weakness into an advantage, touting its local roots and its large database of Massachusetts customers. Two decades of operation in New England undoubtedly means Mohegan Sun has a feel for the local market. But the plan’s local roots shouldn’t be overstated: since Mohegan Sun, unlike Wynn, can’t finance its whole plan itself, it will rely on a Cayman Islands investment firm, which will own 60 percent of the venture and control the board. And the proximity of Mohegan Sun’s other properties cuts both ways; it also means a built-in conflict of interest. Mohegan Sun insists the casino at Suffolk Downs would be managed separately, but there’s clearly a limit to how aggressively casinos with the same name can compete against each other. Wynn, in contrast, has no other casinos within a thousand miles and promises to market a Massachusetts casino to the entire Northeast and beyond.

Nor is the Suffolk Downs property nearly as forlorn as the vacant wasteland in Everett. For starters, the site already has a going business. According to the track, it will end racing if the casino does not open. But the commission ought to take the doom-and-gloom warnings with a grain of salt; threats to close may be a pressure tactic. Horse racing interests are already in line to get a generous cut of revenues from the state’s casinos and slot parlor, money that was supposed to save the industry. Defenders of that industry can’t keep upping their demands; the gaming commission already went above and beyond the casino law by considering horse racing as an asset in the successful Plainridge slot-parlor application, but the needs of the horsemen can’t set the state’s agenda indefinitely. As the regulator of horse racing in Massachusetts, the commission should be prodding the track to sell a product that people want to buy, rather than acceding to ever-increasing requests.

But, if the track does fail, the site offers far more opportunities for redevelopment than the Everett parcel. Last year, mayoral candidate Bill Walczak proposed turning it into a center for biotech companies. Should the city’s proposed Olympic bid bear fruit, the land could also be used for a sports venue or housing site.

The commission also can’t ignore unsettled questions about its ownership. Landowners are supposed to undergo background investigations, but Vornado, one of the co-owners of Suffolk Downs, refused and passed its interest to a blind trust. The plan at the time was to sell that stake “as soon as possible,” according to the gaming commission, but that didn’t happen; instead, the commission conducted its background check on the trustee, not the entity that will eventually actually control the stake.

But that lets some of the land’s owners off the hook, and creates a double standard: In Everett, checks into the background of the sellers of the land turned up a troubling association that became the single biggest weakness of the Wynn plan. But some of Suffolk Downs’ owners have avoided the same level of scrutiny, even though they will have an ongoing interest in the casino’s performance thanks to the lease agreement with Mohegan Sun. The commission says it can investigate new co-owners at Suffolk Downs if it receives word that Vornado’s stake has been sold. But the public should know those details now, and it would be bizarre indeed if the commission didn’t hold land-lessors to at least the same level of scrutiny as land-sellers before awarding a license.

The effort to downplay Suffolk Downs exposes the last, most compelling strike against the plan: community opposition. Mohegan Sun has tried to dazzle commissioners by throwing a lot of money into its community mitigation agreements, much more than Wynn has. But the numbers that matter came last November: 56 percent of East Boston voters were against a casino at Suffolk Downs, and only 44 percent favored it.

Mohegan Sun and its backers have spent the better part of the last year trying to finesse their way past those numbers, trying to convince commissioners that theirs is now a Revere-only casino, even if its landlord is a track in Boston, and even if the track remains so intimately entwined with the casino that it threatens to close without it. The commissioners, unfortunately, have gone along with those artifices. Instead of upholding the clear spirit of the law, they
extended deadlines and approved generous legal interpretations to allow the second proposal at Suffolk Downs to go forward.

But community control was a key feature of the state’s casino law, and its single best selling point to a skeptical public. Commissioners shouldn’t undermine it now by consummating Suffolk Downs’s end run around the referendum process. Doing so would only play into the hands of the law’s opponents — at the very moment voters are deciding whether to keep casinos at all.

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