Massachusetts inches towards full-scale casino gaming

BOSTON, Massachusetts -- A long-awaited deal that could lead to full-scale casino gaming in Massachusetts may have finally been reached.

The Boston Globe reported this morning that Gov. Deval Patrick and leaders of the state’s House and Senate reached a tentative agreement to expand gaming in the state.

Under the deal, Massachusetts would have three stand-alone Las Vegas-style casinos and a fourth slot machine-only casino with up to 1,250 games.

According to the Globe, the three resort casino licenses would be auctioned for at least $85 million and require developers to invest $500 million in each project. The slot machine casino license would be auctioned for at least $25 million and require a minimum capital investment of $125 million.

The casinos’ gross gaming revenues would be taxed at 25 percent and the slot machine casino would pay the state 40 percent. An additional 9 percent tax would go to a special fund that would subsidize the horse racing industry.

All facilities would be allowed to operate 24 hours a day and be smoke-free.

“While the ball has just started rolling again, we believe gaming expansion this year has a solid chance of passing, as it appears both the governor and legislative leaders are on board,” JP Morgan gaming analyst Joe Greff told investors. “We believe the license fees and minimum investment requirements, as well as the tax rates are attractive and in line with those of other regional jurisdictions.”

Analysts said the news would be a boost for Nevada’s slot machine makers while the Las Vegas-style casinos would draw interest from Las Vegas Sands Corp. and Caesars Entertainment Corp. The company’s leaders, Sands Chairman Sheldon Adelson and Caesars Chairman Gary Loveman, have long-standing ties to Massachusetts.

If the measure passes, the losers could be the two Indian casinos in neighboring Connecticut, which draw roughly 35 percent of their revenues from Massachusetts’s gamblers.

“We believe standalone casinos and/or slots at the racetracks in Massachusetts will likely cannibalize gaming revenues at Mohegan Sun and Foxwoods, as residents will opt to gamble closer to home than drive two hours away to casinos in Connecticut,” Deutsche Bank gaming analyst Andrew Zarnett told investors. “On the flip side, the proposed Massachusetts casinos are likely to be nonsmoking, which is somewhat advantageous to Mohegan and Foxwoods, which permit smoking.”