Putting a Casino in Southeastern Massachusetts Turns Out To Be a Huge Disaster

I’ve been trying to think of a good metaphor for how big a disaster the state’s attempt to put a casino in southeastern Massachusetts has become. Here’s what I came up with:

In truth, that might be underselling things. The state’s casino law split Massachusetts into three geographic zones, with each one to be awarded up to one full-fledged casino license. Right now, the eastern zone, around Boston, and the western zone are featuring robust competitions for their licenses. The southeastern region, though, is complicated by the existence of the Mashpee Wampanoags. The law carved out a special exception for the tribe, giving them an exclusive first shot at the region, provided they were able to acquire land for their casino, have that land designated by the federal government as a reservation, and come to an agreement with the state—called a “compact”—on how casino revenues would be taxed. From the start, we knew getting land put into trust as a reservation was going to be extremely difficult. Under normal circumstances, the wheels of the federal bureaucracy grind slowly. But a 2009 U.S. Supreme Court Ruling, barring the federal government from granting land into trust for tribes federally recognized after 1934 (which includes the Mashpee Wampanoags), makes the task even more difficult.

Not surprisingly, the Mashpee missed their deadline—by a lot. The tribe still does not have its land into trust. The casino law stipulated that, should that happen, the state gaming commission could open up the southeastern region to commercial bidders, which it did last month. But because of the delay, the process for awarding a casino license there has fallen months behind the other regions, creating a big disadvantage for whatever casino does eventually open there. So far, the region has only drawn interest from a couple of second-rate groups. The big boys, like Wynn, Caesars, MGM, Foxwoods, and Mohegan Sun have all focused on the eastern and western zones, where they don’t have to worry about the Mashpee Wampanoags getting preference.

The Globe has a story today updating the great southeastern casino clusterfuck, and there’s one paragraph that stood out:

But the commission will not consider awarding a commercial license in the southeast until well into 2014, and if the Mashpee show significant progress over the next year or so—as the tribe has predicted—the commission is not obligated to award the commercial license.

So basically, we’re asking commercial operators to come in and bid on a casino license without any real guarantee that the license will even be awarded. Just submitting a bid to the gaming commission costs $400,000, to say nothing of the small fortune it costs to conceive a plan for a casino. No wonder the region is drawing scant interest.

But wait, there’s more! According to the compact negotiated by the Mashpee Wampanoags and Governor Deval Patrick, should the state allow a commercial casino to open in the southeastern region, if and when the tribe finally opens a casino of its own, the Mashpees wouldn’t have to pay a penny in revenue to the state. They’d basically get to operate tax free … which would be a disaster for the state. If you’re an investment group looking at a potential bid in southeastern Massachusetts, do you think the gaming commission is going to take that risk? It might or might not, but that question has got to be part of your calculus.

So, to reset the situation: The Mashpee Wampanoags likely remain years away from opening a casino. Even if the federal government works around that Supreme Court ruling to grant them land into trust, a flurry of lawsuits is sure to follow, likely tying development up. The Cowlitz tribe in Washington State, which is caught in a similar situation, has already faced years of delays (go ahead, I dare you to read the most recent update on the Cowlitz situation—the legal wrangling involved is almost indecipherable). Meanwhile, with good reason, serious commercial casino operators remain hesitant to invest in the region. So the choices right now are wait and wait and wait for the Mashpee Wampanoags—while the region falls behind—or grant a license to a subpar commercial bidder. At this point, it’s fair to say that the only thing more disappointing than how screwed up the chase for a casino in southeastern Massachusetts has become is how predictable it was.