Attention Massachusetts Gaming Commission, Get Ready to Split the Baby in Everett

Friday, September 6, 2013

Two parties have been locked for months in a ferocious contest of wills over whether the City of Boston can lay claim to “host city” status for a proposed casino on some land at the Everett-Boston line once occupied by a Monsanto chemical factory.

This past Wednesday, the Massachusetts Gaming Commission told the contestants: Settle it among yourselves by the end of this week, or we’ll settle it for you.

An amicable resolution of this matter by 12 midnight on Saturday, September 7, is about as likely as my winning the Lottery.  (PS, I never buy tickets.)  Commissioners, I hope you’ll be good in the role of Solomon.

It’s easy to net this out:

Mayor Tom Menino cannot consent to “surrounding,” or “neighboring,” city status for Boston because that would put him in a subservient position to Wynn Resorts.  And Steve Wynn cannot recognize Boston as a host city for his Everett-based casino because that would  give Menino veto power over the project.

Under Massachusetts law, a casino operator first needs to negotiate a host city agreement with a mayor. Then a majority of voters in the community have to approve the agreement.  Once the voters say yes, the operator must go to the surrounding communities and negotiate agreements to mitigate impacts of the casino there. 

The law says neighboring communities cannot refuse to negotiate with a casino operator at that point. And if an operator and a neighboring community cannot reach a mitigation agreement, both parties must submit to binding arbitration.  That means each puts forth a “final and best offer” to a state-appointed arbitrator, who considers both offers, chooses one in its entirety over the other, and declares the chosen one a binding agreement upon both parties forevermore.

So, a host city cannot be forced to make an agreement with anyone who shows up and wants to build a casino there, but a neighboring city can be forced to an agreement with an operator who has a voter-approved casino proposal in hand.

Menino has already signed a host city agreement for a casino at Suffolk Downs that will deliver an annual payment of $32 million to Boston if that casino gets built, and Everett Mayor Carlo DeMaria has already signed with Wynn for a deal that will pay his city $25 million a year, a deal overwhelmingly approved by Everett voters in June.

Menino cannot reasonably hope to get more out of Wynn as a surrounding city than he will get out of Suffolk Downs as a host city, so naturally he’s hoping the Gaming Commission awards the one available eastern Massachusetts casino license to the racetrack. 

Wynn knows that, on top of what he is committed to paying Everett, he probably can’t afford to pay Menino what he’d demand of him if Menino obtains host city status for his casino project.

Rather than settle voluntarily by the end of this week, both sides will almost certainly roll the dice with the Gaming Commission.

Wynn has a strong case that not one inch of his Everett casino will be built on the sliver of Boston land that abuts the old Monsanto site, just across the Mystic River from the Charlestown section of Boston. But Menino has at least a chance that the commission will grant him host city status because of that sliver.   
Stranger things have happened in Massachusetts politics.

Menino is too protective of Boston and too good a politician not to go for a checkmate move via the commission.  Winn is too good a businessman to willingly give Menino anything that resembles checkmate on a billion-dollar project.

EPILOGUE: Within hours of my posting this item, the Boston Globe published an article proving my thesis was way off base: "Boston gives up claim on Wynn casino," Saturday, Sept. 7, 2013.  It hurts to be wrong, but for me it is a familiar pain.

"Mayor Thomas M. Menino's administration has agreed to begin talks with Wynn as a 'surrounding community' under the state's casino law, according to a joint statement Friday from the city and Wynn," the Globe reported.  

The article did not state why Menino had dropped his bid to secure host city status, although it noted that: "The two sides say their appearance Wednesday before the gambling commission helped break the stalemate."

From that, it's fair to infer that Menino realized after the Wednesday hearing that he did not have the votes on the commission to win, and probably would not be able to change the minds of enough commissioners in the limited time available to him.  He thus decided to exploit the inevitable by embracing the surrounding community negotiations, not only because this will make it easier for both parties to negotiate in a professionally friendly manner, but also because he's likely to get a (slightly) better deal by playing nice with Wynn. (Politics is like football in that it's a game of inches.)

Bottom line: this was a big win for the man from LasVegas.


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