Casino Industry News and Analysis

Massachusetts Casinos: Forward Momentum

Despite the recession, Massachusetts gaming expert Clyde Barrow sees a good future for casinos in the state.  Barrow noted that “There is still clearly demand for casino gaming in Massachusetts.”  The report also concludes that Mass. residents still spend close to $1 billion on gaming annually in nearby states and the Boston area is a major feeder market for Las Vegas.  

I'm with Barrow on his optimism for Massachusetts gaming.  A few well-placed casinos will draw lots of business from southern New England and upstate New York, in addition to Maine & New Hampshire.  Right now appears to be a good time for Massachusetts legislators to move forward, despite the recession.   However, the recent Maryland outcome demonstrates that developers may not be especially eager to put up much capital for new facilities, though Maryland's 67% tax rate and high application fees were big factors.  Massachusetts legislators aren't going to repeat those mistakes.   

In addition, the Carcieri vs. Salazar ruling was highly favorable to commercial gaming expansion in Massachusetts by specifically eliminating the competitive threat posed by the planned Wampanoag casino near Boston and Cape Cod. 

The major appeal of Massachusetts casinos is in their potential -- like Foxwoods & Mohegan Sun -- to be high performers in the realm of non-destination gaming.  Wait, you say, aren't the Connecticut resorts now destination resorts?  Yes-- but they really took off as non-destination resorts in the 1990s: amazingly so, as easier-to-access destinations more attractive from people from New York City to Bangor, Maine than Atlantic City or Las Vegas.  Pennsylvania is a bright spot in east coast gaming because it is focused on non-destination gaming.  On the question of limited slots-only properties vs. full-scale casinos, I favor the latter for competitive purposes. 

Seeing Foxwoods and Mohegan Sun as the major competition for the new Massachusetts casinos, gaming developers would be more likely to invest in properties that could really compete.  As well, momentum is clearly in the direction of adding table games in slots-only states such as Pennsylvania and Delaware -- other competitive states for east coast gaming.  Of course, stars aligning in any given state doesn't mean things will necessarily progress in a productive way for gaming in that state!  (see New York, Maryland, Florida.....)    

Carcieri vs. Salazar: Implications

From a Department of Interior press release, Secretary Ken Salazar is clear on the administration's displeasure with the Supreme Court's ruling on Carcieri vs. Salazar:

 Secretary Salazar is very disappointed by the Court's ruling," said Interior spokesman Matt Lee-Ashley. "Our attorneys are in the process of evaluating the decision. The Department is committed to supporting the ability of all federally recognized tribes to have lands acquired in trust.

 Of course, Salazar is listed as the losing party, but that's just because the Obama administration inherited the case from the Bush administration.  The statement appears to indicate a substantive opposition to the decision and resolve to work around it, most likely through Congressional action.

The decision could have big implications in Massachusetts, where the Wampanoags are hoping to develop a casino in Middleboro, near Cape Cod.  The tribe claims pre-1934 recognition (the crux of the case), though that may not be easy to prove and lead to a lengthy court battle.  Meanwhile, there's substantial political momentum to fix the law in favor of granting land-in-trust for casinos to tribes recognized after 1934.  However, that may take a while-- the committee proceedings are just beginning.

According to a recent article from the Cape Cod Times, the politics have shifted in Washington substantially enough in favor of Indian gaming and policies more favorable to tribes like the Mashpee Wampanoags:

But Steven Light, co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota, said some of the vocal critics of Indian gaming regulations, such as McCain, are no longer in the powerful positions they once held. In January 2008, the Department of the Interior denied casino land trust applications from 12 tribes, including a Wisconsin-based tribe backed by Kerzner and Wolman that sought to develop an off-reservation casino in the Catskills of New York. It was a strong message from the Bush administration about off-reservation gaming. But there is a new administration in Washington, D.C., which made efforts to reach out to American Indians on the campaign trail and in appointing a tribe member to a key White House position in the Office of Intergovernmental Affairs, Jodi Archambault Gillette. "What isn't a test for President Obama these days?" Light said. "All the indicators are that he is supportive of tribal interests, but that doesn't mean in any way that given the political climate, you'd see the President Obama administration say off-reservation gaming is great."

Expect to hear more about the "Carcieri fix" from those who support Indian gaming and more about "reservation shopping" from those who don't in the future.  The CC Times article also brings up the possibility that a legislative "Carcieri fix" could open up a broader review of the statutes with regard to Indian gaming.  This could be welcome -- depending on the outcome -- given some of the sticky situations that have come up recently, such as with Carcieri and the Florida Seminoles.

Carcieri vs. Salazar: Supreme Court Rules Against Narragansetts

The Supreme Court issued a big, big, ruling on Carcieri vs. Kempthorne Salazar earlier this week against the tribe and for Rhode Island (re: Carcieri) on the question of land-in-trust for the Narragansetts.  The case had everything to do with whether a tribe recognized after the 1934 Indian Reorganization Act could gain land-in-trust privilege or the ability to purchase land, have it declared sovereign and then develop a casino.

The Narragansetts are certainly impacted by the case, as are the Massachusetts Mashpee Wampanoags, who were relying on a different decision to develop a casino in Middleboro, MA.  They didn't gain federal tribal recognition until 2007.  The ruling is a big help for Mass. commercial gaming proponents (including the governor) who can put forth their plans without worries over Indian competition -- for the time being. 

I note "for the time being" because the Narragansetts aren't giving this up.  Already, their chief is talking about appealing to Congress to change the law, based on a view that pre-1934 treaties should count for recognition -- even if it wasn't official at that point.  

Given the high stakes of this case and the land-in-trust deals, I doubt this is the end....but for now, a significant victory for state-government entities seeking to reign in the scope of Indian gaming and for commercial gaming interests looking to minimize competition for their projects.  Cornell University has a good,summary of the case here, though it doesn't yet include the Supreme Court's decision.

Update 1: The Boston Globe reports on the decision here.  Included in the Globe's take:

The ruling also eliminates one of the political rationales that had been advanced last year by Governor Deval Patrick and other gambling proponents for approving casinos in Massachusetts. Administration officials had argued that the tribe was likely to win a Native American casino someday, so the state should get in on the action first and control the flow of revenues by setting up its own network of licensed casinos.

This is an interesting take, with its implication that the ruling was unfavorable to the Patrick's goal of gaming legalization in Mass.

To the contrary, I see the ruling as quite helpful for the governor.  Now Patrick and his legislative allies can legitimately argue that the ruling clears away potential Indian competition, thus improving the likelihood that legalized casinos will succeed.  Ironically, the ruling may even benefit the Connecticut Mohegans via the Mohegan Sun, which has already established a location for a commercial casino in Massachusetts-- should the legislature approve.