A decade into the Massachusetts Expanded Gaming Act

A decade into the Massachusetts Expanded Gaming Act

  • Ken Adams, CDC Gaming Reports
November 28, 2021 10:52 PM
  • Ken Adams, CDC Gaming Reports

It has been 10 years since Massachusetts Governor Deval Patrick signed the Expanded Gaming Act; to be precise, it was on November 22, 2011.

The Act permitted three casino-resort licenses and one racetrack with slot machines, each to be in a separate region. Ten years later on the 22nd of November, two casinos and one racino are open. The third license has not been awarded.

Since the first property opened in 2015, the casinos have generated $2.8 billion in revenue and the Bay State has collected $920 million in taxes. Whether or not the experiment with casino gambling in Massachusetts is termed a failure or success depends on the perspective. If judged by the original expectations, the Act is a failure. If judged by the current level of employment, associated investment, and post-pandemic monthly tax flow, casino gaming in Massachusetts is a success.

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Success or not, Massachusetts offers a lesson in the implementation of casino gaming. The core of the lesson is simple: It takes longer to implement casino gaming than it did to debate, vet, and approve it. It is not possible to wave a wand and have casinos magically appear. The governor and lawmakers began discussing gambling as a vehicle out of a financial crisis during the Great Recession. Like every other state, Massachusetts was having trouble paying its bills during that time. Casino gambling was thought to be one possible solution. But after a fair bit of political wrangling, an initial bill was defeated in 2008. By the time a bill finally passed in 2011, the economic conditions had improved significantly. However, the Commonwealth still wanted more tax revenue, employment, and economic investment.

When Patrick signed the bill he said, “Expanded gaming in Massachusetts, for me, is about creating jobs, good jobs at good wages for people all across the Commonwealth. It’s really, to me, as simple as that. It’s not the solution to every economic challenge we face and it won’t be the cause of every social ill that we in the Commonwealth together have to deal with.”

The governor and lawmakers expected the gambling to generate between $300 and $500 million a year for the state. They did not expect the tax money immediately, but thought within a year construction might be underway and pumping money into the economy. By 2013, the tax-cash would be flowing, thousands of people would be working in the casinos, and those citizens who wished to do so would be happily gambling.

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That date, 2013 was nearly six years after the darkest days of the Great Recession and the beginning of the discussion. However, even that proved to be overly optimistic by at least two years. The first property to open was the Penn National racino in Plainville in June 2015. MGM Springfield was next in August 2018. The third casino, Encore Boston Harbor, opened in June 2019, eight years after the signing of the Act and 12 years from the worst of the recession.

In the period from 2007 to 2009 when the economy in Massachusetts was struggling, the governor and legislature believed that casino gaming could help the state get back on its feet. That intent was written into the Act of 2011: “Through the establishment of new gaming facilities, the Expanded Gaming Act will create new jobs, generate new revenue for the Commonwealth, and contribute to the economic growth of the local economy.“ Taxes were set at 25 percent on casino revenue and 49 percent on the slot revenue from the racino.

While the politicians were eager for the revenue, they also wanted a gold-standard regulatory system. They were determined to “ensure the nation’s best and most rigorous public safety, regulatory and enforcement mechanisms.” A commission was established to create the best system in the land. Meanwhile, though, the investment, jobs, and tax revenue would have to wait.

Massachusetts could have used one of the existing regulatory models; most states that have established casino gaming since 1988 have used either the Nevada of the New Jersey model. The Massachusetts Gaming Commission wanted to be better and took it is own sweet time in hiring staff, writing regulations, and setting the criteria for the would-be casino operators. The Commission issued a license to Penn National in February 2014 for a racino in Plainville. For Penn, it was a second choice after its bid for a slot-only casino in Tewksbury failed. For Plainridge Park, Penn had to pay a $400,000 application fee and a $25 million license fee and promise to invest a minimum of $125 million in the property. It took Penn nearly a year and half and $250 million in investment to open the doors.

The bar for the casinos was even higher. Besides the application fee, each was required to pay an $85 million license fee and invest at least $500 million. Each licensee also had to find a host community and get the approval of the voters, then reach an agreement on the additional fees and mitigation payments the casino would be required to pay. It took MGM five years after winning voter approval to get a state license, sign an agreement with Springfield, and build a property. MGM spent $960 million on its Springfield casino. Encore Boston Harbor was much more expensive; among other things, there were several legal challenges to overcome. Wynn spent $2.6 billion to build its resort. And then, just when it looked like casinos in Massachusetts were on their way to meeting expectation, along came a pandemic.

In late 2021, the casinos are open again and operating without COVID restrictions. Revenues are hitting all-time records; in October Encore generated $62.7 million and paid $15.5 million in taxes. For MGM, it was $21.4 million and $5.3 million in tax and Plainridge $11.7 million and $7.7 million.

After a decade, a myriad of regulatory hurdles, legal challenges, and a pandemic, former governor Deval Patrick’s vision is becoming a reality. That is the Massachusetts lesson: Casino is easier to say than do.