Cover Story

Into the Unknown

All Bets Are Off on the State’s Casino Referendum

COVERl0714aPaul Robbins calls it “casino fatigue.”

He describes this condition as being burned out by the long, drawn-out, often controversial process of bringing casino gambling to the Bay State, to the point where this frustration will manifest itself at the polls in November when state residents will vote on a referendum that will decide the fate of the industry here.

“You may have voters who say, ‘you know what? This was an experiment, it came and went, it’s a mixed bag, there’s a lot of questions … let’s just vote ‘no,’” said Robbins, principal with the marketing and public relations firm Paul Robbins Associates, adding quickly that the amount of casino fatigue that exists now — and will exist come Nov. 4 — is one of a great many unknowns when it comes to what will be perhaps the most expensive and most closely watched referendum vote in the state’s history.

Some others? Here’s just a short list:

• Will the casino operators come together and form an effective coalition to fight the referendum question?
• How hard will Mohegan Sun — which has proposed a casino at Suffolk Downs in Revere, but is the short answer to the question ‘who benefits most if the anti-casino forces prevail?’ because of its operation in Connecticut — fight to win this referendum battle?
• How will area communities (like Longmeadow and Northampton) that are not necessarily happy with MGM’s plans for a casino in Springfield, or the way they’ve been treated by the company, vote come November?
• How will MGM, which has drawn considerable praise for the campaign to win the vote in Springfield and then the Western Mass. license, scale up its campaign and make it statewide?
• How prominently will Springfield, the only community with a casino license, and its story, involving everything from high unemployment to tornado damage, be on display in this campaign? And how will that story be received?
• How will the highly publicized struggles of the casino industry in Atlantic City — several facilities have closed or gone bankrupt in recent months — play into the equation in Massachusetts?
• How will the casino referendum impact the many political races on the ballot this fall, from the governor’s contest to the pitched battle for the Senate seat being vacated by Gail Candaras?
• How will the confusing nature of the question itself — a ‘yes’ vote means opposition to casinos and a ‘no’ vote means you support them — impact the outcome?
• What will ultimately determine how this casino vote will go?

Mike Mathis

Mike Mathis, like Springfield Mayor Domenic Sarno, used the word ‘grassroots’ early and often as he talked about the upcoming campaign concerning the casino referendum question.

Many of these questions are not yet answerable, but BusinessWest put them to a host of key players, including analysts like Robbins and Tony Cignoli, president of A.L. Cignoli Co.; Springfield Mayor Domenic Sarno; Mike Mathis, president of MGM Springfield; and others.

They are, for the most part, predicting a close contest, one where Springfield’s story will get a considerable amount of play, and one where the outcome will likely be determined by how effective the rival camps are at getting their points across and separating fact from conjecture — words that have different meanings to different people.

For example, Mathis noted, casino opponents and some analysts say that economic conditions have changed considerably since the gaming legislation was passed in 2011, and believe there is sentiment that casinos are no longer needed as a stimulus for jobs and economic development. But Mathis said that whatever progress has been made is more or less confined to the eastern part of the state, and conditions elsewhere, and especially Springfield, remain dire.

“In November 2011, the state’s unemployment rate was 7%. Today, it’s about 5.5% across the state, but lower in the east, so clearly the Greater Boston area is in the middle of a recovery,” he explained. “In November 2011, the unemployment rate in Springfield was 10.5%, and today, it’s still 10.5%, and across the region it’s probably 7.5%. It’s great that the rest of the state is recovering, but Springfield still needs this economic injection.”

Cignoli said that sentiment has been borne out in some recent headlines, such as those from North Adams — the mayor there said the fiscally struggling city was “one cycle away from Detroit” — and suggested that a case can, and will, be made that cities and towns need casino revenue.

Tony Cignoli

Tony Cignoli says Western Mass., and especially the city of Springfield, will likely play a big role in the upcoming referendum fight.

“I can see the gaming folks showing up in North Adams and saying, ‘gosh, we realize that you’re about to go under; you’re one year away from insolvency,’” he said. “They can make a case to the people of North Adams — ‘here’s your salvation, here’s that chunk of change you need.’”

Overall, there is no shortage of speculation concerning this referendum and the factors that will determine the outcome. For this issue, BusinessWest takes an indepth look at the many nuances of this critical moment in the state’s history and what will likely determine the fate of the casino industry in the Commonwealth.

Playing the Odds

Mathis told BusinessWest that MGM has not faced a referendum question quite like the one in Massachusetts — where companies that have earned licenses can have them swept away by a vote of the residents — but it has confronted statewide votes on casino issues, such as a recent, hotly contested bid to expand gaming in Maryland with a sixth license in Prince George’s County.

MGM learned a number of lessons from that campaign and others like it, he said, including several involving not underestimating the opposition — and the many forms it takes.

Indeed, he noted that, in addition to in-state opponents to the planned expansion, there were casino rivals in neighboring states that had a vested interest in the outcome, and thus injected themselves into the fray by secretly funneling money to those opposing the measure.

“When the state Supreme Judicial Court ruled that this question could go on the ballot, there were lawmakers and different businesses in Connecticut and Rhode Island that were given a real gift — the possibility that they can keep their operations in full force and Massachusetts would continue to give them hundreds of millions of dollars in tax revenues and tens of thousands of jobs,” he said. “We are very concerned about the outside influences that may impact this campaign and try to protect their own across state lines.

“Foxwoods is looking for a potential license in the southeast part of the state, and Mohegan is looking for a license in Boston, but a facility like Twin River in Rhode Island has no conflict of interest — they clearly want this law to go away so their slots facility can continue to generate the millions of dollars of revenue that they see,” Mathis went on. “So there’s a real potential for outside influence, and I suspect it will come through late financial contributions to casino opponents, and it will come in such a form that you won’t find out where the money came from until after the race is over.”

But outside influence is just one of many factors that those we spoke with believe could possibly determine the outcome of the referendum question. Others range from the amount of money that will be spent to present both sides of the argument to the tone of the messages that are sent, to that aforementioned ‘casino fatigue’ and just how much of it exists.

The most recent polls, including one conducted by the Boston Globe just before the SJC’s decision on the referendum, show there that there is still support for casinos in the state, with more than 50% of those queried backing the licensing of up to three facilities.

But Robbins said the poll numbers can, and often do, change quickly in the heat of campaigns. He noted that the numbers on this referendum are narrowing and that opposition forces have certainly picked up momentum in recent months, in part because of changing economic conditions since the legislation was passed, and also because casinos in other states are struggling.

But there are other factors in play as well, he said, noting that casino operators made a number of mistakes during the licensing-contest portion of this process that have cast the industry in a more negative light. He lists everything from Hard Rock’s proposal to place a casino on the Big E grounds — a plan that drew considerable criticism inside and outside West Springfield — to what he considers Mohegan Sun’s bungling of its plans to place a casino off Turnpike exit 8, a gambit that ended abruptly when Palmer voters narrowly rejected the proposal last November.

Paul Robbins

Paul Robbins says the so-called ‘casino fatigue’ factor is one of many unknowns going into what is expected to be an intense campaign leading up to the referendum question.

“Somehow, Mohegan took a consistent 20-point lead in polling over the past two years and lost a nail-biter — by less than one percentage point,” Robbins wrote in a recent blog post titled “The Massachusetts Casino Wars.”

“Some of this was just bad communications or a lack of communications,” he went on. “Mohegan presented its casino renderings — affectionately called by some opponents ‘the spaceship,’ because it looked like one and it landed in front of voters with no input from the local community. Mohegan also promoted one of the traffic options being a five-lane access road — communicating this proudly on the front of mailers to residents living in a two-lane, rural community. Not terribly smart.”

Robbins said the fate of the referendum may come down to how deep — and effective — a coalition of supporters becomes. And he threw into question, as other analysts have, just how hard Mohegan Sun will fight for this question.

“They’re conflicted, there’s no doubt about it,” he said. “At the end of the day, they’re the ones that stand to benefit most if gaming is defeated.”

Mathis concurred. “What Mohegan is proposing at Suffolk Downs is a $1 billion facility; what they have in Connecticut is a $5 billion facility,” he explained. “They pay an 18% tax rate in Connecticut, and in Massachusetts they would pay a 25% tax rate — anyone can do the math. I think they do want a presence in Boston, and I think they are fighting hard for that license, but at the same time, I don’t think they’d be harmed if, at the end of the day, they didn’t have that license.”

Dicey Situation

Overall, Mathis expects the emergence of a broad pro-casino coalition, one that will involve not only the casino operators, but also labor groups, business and economic-development organizations, convention and visitors bureaus, and elected leaders in communities, like Springfield, that have the most at stake.

“The issue for us it to make it as broad as we can and make sure that all the different supporters who have a stake in this are part of the effort,” he explained. “When most people think about a coalition, they think about MGM Springfield and the other casino applicants, but that’s secondary to us; what we’re attempting to do is build a coalition around Massachusetts stakeholders who are already here.

“We compete for these licenses from time to time, and we understand that we go in not knowing if we’re going to be successful or not,” he went on. “Frankly, we can afford to lose and life will go on for us, and we’ll do it again in another jurisdiction, probably internationally. But what we’ll leave behind is a great gateway city like Springfield that is in the middle of a renaissance partly inspired by what we’re trying to do downtown. Those are the people that the rest of the Massachusetts residents need to hear from.”

Sarno agreed. He expects that the city’s story — all of it, from its economic struggles to its resiliency in the face of natural disasters — will be a big factor in the referendum battle. And he believes the task at hand is to convince those who don’t want a casino in their backyard that there will be benefits — for the state, this region, and especially Springfield — to putting one in someone else’s backyard.

“What’s important for people across the state to know is that, in Springfield, we’re trying to stand on our two feet, and that’s not easy because we don’t get a tremendous amount of unrestricted government or local aid,” he explained. “We have to send out a heartfelt message that, while someone may not want a casino in their community, this is important for our city, it’s an outside-the-box proposal, and it’s woven into the fabric and the mosaic of Springfield.”

MGM’s $800 million casino plan translates to $25 million in direct aid to Springfield each year, he went on, as well as 2,500 to 3,000 permanent jobs, a unique opportunity to revitalize 15 blighted, tornado-ravaged acres in the South End, and a real chance to move the city out of decades of stagnation. And he believes that story will resonate around the Commonwealth.

As they talked about the campaign ahead, Mathis and Sarno made repeated use of the word ‘grassroots.’ They said this was the tone of the initiative that was successful in Springfield, and it will be scaled up and taken statewide.

“The Springfield campaign was door-to-door, and we think that’s the key to a successful campaign statewide,” Mathis explained. “The question is how do you scale it up, and how do you make sure that the rest of the state, which isn’t directly impacted by all the great things that are happening in Springfield, understands at least how important it is to Springfield.

“We’re going to do that in a number of ways,” he went on. “Most importantly, we’re going to go back to our supporters in Springfield and Western Mass. and make sure that they’re engaged and they’re talking to their friends and neighbors and colleagues across the state about how important this industry and this development is to them; it’s as simple as that.”

Elaborating, he said the broad strategy will boil down to two primary missions: educating and communicating.

“This is a new industry in Massachusetts, so what we did in Springfield was educate them about the industry, which is not the old industry,” he told BusinessWest. “What the antis [opponents] want to do is put us in a box and rely on old, tired stereotypes. We at MGM are a Fortune 500, international hospitality company; we got that message across in Springfield, and we need help getting that message out to the rest of the state.”

Bill Mandel, a professor of Political Science at Western New England University who believes that pro-casino forces will prevail come November, said one key for gaming supporters is to drive home all the economic-development aspects of their argument and convince voters in every corner of the state that this is a critical matter for some communities — like Springfield.

“Leaders in Springfield really need to go out and sell this to the rest of the state as something that we need and want,” he explained. They need to go out there and say ‘we want it,’ and explain to the people of Arlington, Belmont, and Foxborough that, while it may seem abstract to them, it’s very important to us. That may be a critical strategy.”

Playing Their Cards Right

Cignoli told BusinessWest that, while there are many question marks concerning the upcoming referendum fight, some things are known.

For starters, it appears certain that the turnout will be high — perhaps record-setting, given the casino question and a number of high-profile races, especially the one for governor. What isn’t known, although there is speculation, is which side gets helped the most by that turnout.

Robbins said conventional wisdom holds that the side that spends the most money benefits from a high turnout. However, Cignoli said a high turnout generally brings out opponents.

What’s also certain is that this will be a lucrative year for the media, with the pro-casino forces expected to spend heavily on print, radio, television, and social media to get their message across, said Cignoli, who projects that $10 million and perhaps much more could be spent on the casino referendum, because of the stakes involved.

“There’s so much on the line, not only for the developers, but all the people around them who will try to motivate this issue,” he explained. “There are the political consultants, the lawyers, the lobbyists — this has been a full-employment bonanza for a lot of these people, especially in the Boston area. So they’re going to double down, no pun intended, and go the full nine yards.”

And he expects the Western Mass. market to get a decent share of that windfall, because he believes this region will play an important role in this contest, even though the vast majority of votes are concentrated in the eastern part of the state.

“It’s going to be close, so that means every vote is going to count,” he explained. “It’s polling 50-50 right now, and in a tight race, you have to pay attention to Western Mass., especially because of the urban base in Springfield, which can turn out a significant vote. You need every single vote you can get in Western Mass.”

And to get votes, in this region and elsewhere, Cignoli believes the pro-casino forces will lean heavily on MGM and the strategy that worked well for it in Springfield — primarily a focus on jobs, economic development, and revitalizing the tornado-ravaged South End — as well as Penn National’s slots parlor in Plainville, which is already under construction.

“MGM ran a fantastic public-relations campaign leading up to Sarno choosing them to move forward,” said Cignoli, “and they ran a very good referendum campaign. So you can use the better elements of that out and about and in the other 350 cities and towns. They were textbook perfect in their campaign in Springfield — can that translate and help them elsewhere? That’s the big question.

“Also, Penn National will be front and center as well,” he continued. “They won a license for slots, and they’re in the ground. They’re pouring concrete, you can see cranes, you can see jobs, you can see economic impact already.”

But while the stories in Springfield and Plainville may sway some of the voters in communities not directly impacted by casinos, the question of ‘what’s in this for me?’ may ultimately decide how this referendum question goes, he went on.

“That’s the big litmus test this year,” he told BusinessWest. “If I live in Pittsfield, North Adams, or Fall River, what’s in this for me? Why should I care if this benefits Revere, Everett, Greater Boston, Springfield, or Plainville? You have to motivate those voters in those other places.

“And if you’re a proponent of casinos, you have to worry about the parochial aspects of this,” he went on. “Longmeadow may be getting a settlement from MGM, but do the people there really want this? This is their first opportunity to vote for or against this. And in Northampton, there’s always been that rivalry with Springfield, and Northampton has been out there very clearly with their concerns about a revival in Springfield and MGM in Springfield and what that means to their nightlife and their entertainment district. Casino proponents have to make a case to everyone and explain what’s in it for them.”

Cignoli told BusinessWest, and several other media outlets, that conventional wisdom suggests that it’s easier to secure ‘no’ votes in such referendum questions, and in this case, ‘no’ is a vote against casinos.

But Mandel said that conventional wisdom may not apply in this case, because of the many factors mentioned earlier, and especially the large amounts of money that pro-casino forces will spend to get their messages out.

“There’s a good amount of time left, and there’s going to be a lot of money thrown into this,” he noted. “Any thoughts right now as to how this may go might well be off the mark.”

No Sure Bets

There is considerable time before November, leaving plenty of opportunities for speculation about the vote and what might drive its outcome.

What’s certain is that this will be a high-profile, high-stakes contest, where, as Cignoli suggested, all the parties involved will be doubling down.

That’s because, when this is over, all the chips will be in the middle of the table, and the winner really will take all. n

George O’Brien can be reached at [email protected]

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