\nBy HOWARD STUTZ
\n\tLAS VEGAS REVIEW-JOURNAL
\n\tTwo years ago, Massachusetts was considered a potentially lucrative gaming opportunity.<\/p>\n
\tThe past two weeks, however, have called into question the viability of the Bay State\u2019s incubating casino market.<\/p>\n
\tMassachusetts is moving ahead with a single Las Vegas-style casino in each of three geographically separate regions: Boston, the southeast corridor and the western half of the state.<\/p>\n
\tBut it might become nothing more a second-rate gaming jurisdiction.<\/p>\n
\tRather than creating resort destinations, the state\u2019s casino industry could be viewed as just a deterrent to Connecticut, keeping Massachusetts gamblers and gaming tax revenue in house, instead of across the border in Indian casinos.<\/p>\n
\tInitially, gaming observers thought Massachusetts\u2019 licensing process was moving too slow.<\/p>\n
\tNow, it seems totally out of whack.<\/p>\n
\tChances are none of Nevada\u2019s major casino operators \u2014 despite spending hundreds of millions of dollars in planning and promoting potential billion dollar developments \u2014 will be involved in Massachusetts when the first hands of blackjack are dealt in 2016 or 2017.<\/p>\n
\tCaesars Entertainment Corp. is out of a proposed $1 billion project in Boston.<\/p>\n
\tWynn Resorts Ltd. could soon pull the plug on a $1.3 billion development in Everett.<\/p>\n
\tMGM Resorts International is still seeking state approval for an $800 million resort in Springfield, but city leaders are already asking how the gaming giant would be replaced if found unsuitable by the state.<\/p>\n
\tIt turns out Las Vegas Sands Corp. made the wisest decision. The company never entered the Massachusetts process.<\/p>\n
\tAnger from the gaming industry is directed toward the Massachusetts Gaming Commission, which was formed in 2012.<\/p>\n
\t\u201cWe\u2019re scared to death, not that you won\u2019t pick us, but that you will, and there goes a billion-three, or a billion-five,\u201d Wynn Resorts Chairman Steve Wynn told the gaming commission during a public hearing in Boston on Oct. 17.<\/p>\n
\tWynn was incensed by comments from Commissioner Gayle Cameron, who, according to the Boston Herald, told Wynn, \u201cThere\u2019s never been a casino anywhere in the world that has no criminal activity. You really have some disdain for investigations and law enforcement. That\u2019s my opinion.\u201d<\/p>\n
\tWynn is concerned his company would spend $1 billion on a Boston-area casino only to have the license revoked because of rumors or unfounded allegations.<\/p>\n
\t\u201cNo sane person would ever risk such exposure,\u201d Wynn said.<\/p>\n
\tWynn told investors on Oct. 24 the Massachusetts situation is \u201cconfusing\u201d and he would \u201chave a conversation\u201d with his company\u2019s board to discuss the topic.<\/p>\n
\tCaesars experienced the scrutiny first hand.<\/p>\n
\tMassachusetts gaming regulators, based on concerns raised in a 600-page investigative report authored by an outside consultant, suggested to the Suffolk Downs Race Track that Caesars, its partner in the project, wouldn\u2019t be found suitable. Caesars withdrew and Suffolk Downs is scrambling for a new partner.<\/p>\n
\tFour different concerns about Caesars were raised, most notably the company\u2019s gaming industry-high $23.7 billion debt load and its partnership with the Gansevoort Hotel Group. The New York City-based boutique hotel operator was leasing its name to Caesars for the $185 million renovation of Bill\u2019s Gamblin\u2019 Hall on the Strip.<\/p>\n
\tA Gansevoort investor is alleged to have ties to Russian organized crime. Caesars\u2019 outside compliance committee knew about the allegations, but it wasn\u2019t deemed an issue since Gansevoort was providing nothing more than its name and marketing ideas to the project. Nor did Gansevoort have anything to do with the Boston proposal.<\/p>\n
\tCaesars agreed to cut Gansevoort loose, but that wasn\u2019t enough to satisfy the Massachusetts Gaming Commission.<\/p>\n
\t\u201cI don\u2019t believe (the commission) acted in the long-term best interest of the industry or any particular jurisdiction,\u201d Caesars Chairman Gary Loveman said last week. \u201cThis was a very distant relationship (with Gansevoort). We were simply licensing a trademark. The commission was unwilling to take any remedy, which was, in my view, quite extraordinary.\u201d<\/p>\n
\tLoveman\u2019s disappointment was also personal. He lives outside of Boston, taught at the Harvard Business School, holds a doctorate in economics from MIT and owns a minority interest in the NBA\u2019s Boston Celtics.<\/p>\n
\tCaesars\u2019 massive debt is an issue in any of the 13 states where Caesars is licensed. Gansevoort is not.<\/p>\n
\tNevada Gaming Control Board Chairman A.G. Burnett said he was disappointed his Massachusetts counterparts relied on a \u201cprivate and independent contractor\u201d to practice \u201cgotcha gaming regulation.\u201d<\/p>\n
\tBurnett said Massachusetts makes Nevada, with its 50 year-history of gaming regulation, look the part of a mature jurisdiction.<\/p>\n
\t\u201cWe understand transactions and licensing agreements,\u201d Burnett said. \u201cWe understand how the (Caesars-Gansevoort) relationship worked. Regulators need to be both reasonable and intelligent.\u201d<\/p>\n
\tCaesars spent about $100 million on Boston, including $1 million in licensing fees. None of that money is coming back.<\/p>\n
\tHow strange are things getting in Massachusetts? MGM Resorts was overwhelmingly approved by Springfield voters in July for its proposal. Two days after Caesars was dumped, the president of the Springfield City Council asked the gaming commission if it could replace MGM Resorts should the company be found unsuitable.<\/p>\n
\tMGM Resorts Chairman Jim Murren was more diplomatic in his comments on the Massachusetts process than his counterparts.<\/p>\n
\tHe has no doubt his company is suitable. He said MGM Resorts \u201chas worked hard\u201d and \u201chas a great plan\u201d for Springfield. The final outcome, however, is up to the commission.<\/p>\n
\t\u201cIt\u2019s been a surprising couple of weeks. There is no doubt about that,\u201d Murren said.<\/p>\n
\tThe outside consultants that investigated Caesars are now looking at MGM Resorts. They authored a report on the company\u2019s Macau partnership with Hong Kong businesswoman Pansy Ho two years ago that New Jersey gaming regulators used to force the company out of Atlantic City.<\/p>\n
\t\u201cWe have complied with everything they have asked of us,\u201d Murren said. \u201cOur response to the RFP will about a thousand pages. At the end of day, when you look at all the facts, I see no reason why we we won\u2019t be found suitable.\u201d<\/p>\n
\tMassachusetts gaming was once a vibrant gaming idea. Now, it\u2019s on the verge of becoming an embarrassment.<\/p>\n
\tHoward Stutz\u2019s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com<\/a> or 702-477-3871. Follow @howardstutz on Twitter.<\/p>\n