{"id":16486,"date":"2015-07-27T12:43:59","date_gmt":"2015-07-27T20:43:59","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=16486"},"modified":"2022-07-16T04:20:05","modified_gmt":"2022-07-16T12:20:05","slug":"shocker-in-massachusetts-successes-and-setbacks-for-penn","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/shocker-in-massachusetts-successes-and-setbacks-for-penn\/","title":{"rendered":"Shocker in Massachusetts; Successes and setbacks for Penn"},"content":{"rendered":"

In a stunning reversal of fortune, KG Urban Enterprises<\/strong> has ditched its $650 million New Bedford<\/strong> casino project, citing financial difficulties<\/a>. This ends seven years of grinding effort to gain civic \"NewBedfordcasino\"<\/a>acceptance, which culminated in a landslide electoral victory earlier this year. It also leaves a Neil Bluhm<\/strong>-backed casino proposal in Brockton<\/strong> as the only one on the table<\/a> before the Massachusetts Gaming Commission<\/strong>. Said KG Urban Managing Partner Barry M. Gosin<\/strong>,\u00a0“Despite significant efforts and expenditures on our part, we and our lenders\/partners have been unable to create a viable financing package for the project.\u00a0In particular, both primary and mezzanine financing in the requisite amounts have proved to be significantly harder to obtain than we had anticipated. The reluctance of lenders to provide the requisite financing is due to several factors, including the possibility of competition from a nearby [Mashpee Wampanoag<\/strong>]\u00a0casino which would pay no taxes or other compensation to the Commonwealth.”<\/p>\n

The sudden claim of penury is quite a different tune from the one KG Urban was singing last May<\/a>. Its supposedly reluctant backers included fast-growing<\/a> REIT Gaming & Leisure Properties<\/strong>. However, project booster\u00a0George Leontire<\/strong> fixed the blame on Gosin<\/a>, characterizing the developer as all-hat no-cattle, adding\u00a0\u201cYou don\u2019t represent that you\u2019re going to do this deal for seven years, and then walk away in the 11th hour.\u00a0My words are not fit to be printed.\u201d\u00a0Designated casino operator Foxwoods Resort Casino<\/strong> also found itself without a chair when the music stopped playing.<\/p>\n

Another concern cited by investors was New Bedford’s ability to overcome competition<\/a> from casinos in Connecticut<\/strong> and Rhode \"New_Bedford\"<\/a>Island<\/strong>. Stating that he’d been led to believe KG Urban’s project had been on solid footing, New Bedford Mayor Jon Mitchell<\/strong> pronounced himself “understandably upset<\/a>.”\u00a0Fall River Office of Economic Development<\/strong> Executive Vice President Kenneth Fiola Jr<\/strong>. was less surprised, saying he’d always been skeptical of the finances, not to mention the $50 million environmental-cleanup tab<\/a> that came with the project.<\/p>\n

Columnist Jack Spillane<\/strong> was fairly unsparing, writing “It\u2019s breathtaking how a developer could long court, cajole, plead and implore New Bedford residents and its leaders to give it a chance to develop one of the most important parcels in the city and then at the last minute say ‘Nevermind.’…\u00a0It\u2019s indisputable that KG Urban was overstating the viability of its project.”<\/p>\n

Brockton co-principal George Carney<\/strong> wasn’t surprised that financiers were skeptical, saying, \u201cWhen you take a circle around New Bedford, 75% of it is surrounded by water.\u201d Carney also brushed off the — mostly exaggerated — threat of the Mashpee Wampanoags, remarking\u00a0\u201cWe\u2019re not concerned about the Indians. We\u2019ve got a far better location than the Indians have\u201d in Taunton<\/strong>. (The tribe, more significantly, also lacks land-in-trust status and is far from achieving it.)<\/p>\n

Bluhm and Carney’s Mass Gaming & Entertainment<\/strong> may be no closer to a casino concession, though. The MGC has already signaled reluctance<\/a> to award the southeast-Massachusetts<\/strong> license and may well \"kg-urban-bedford\"<\/a>balk at giving it to Brockton by default. Grumbles one prominent Brocktonian,\u00a0\u201cIt appears [KG Urban]\u00a0were the favorite because the number of extensions they got.\u00a0Who knows what the next roadblock and hurdle will be.\u201d Indeed, Commissioner James McHugh<\/strong> briefly\u00a0seemed to hint at the MGC intervening on KG Urban’s behalf, but the commission ultimately bowed to the inevitable<\/a>. Chairman Stephen Crosby<\/strong>\u00a0(below<\/em>) couldn’t stop flirting with New Bedford, \"Crosby\"<\/a>either, saying \u201cIf somebody called them up tomorrow \u2026 I would say we\u2019d want to consider whether to go forward.\u201d Only Commissioner Enrique Zuniga<\/strong> seemed to be living in the real world, remarking,\u00a0\u201cI have girlfriends who broke up with me \u2013 you just have to accept when they tell you.\u201d<\/p>\n

Still, the MGC’s been guilty of indulging New Bedford with ever-moving “This time we really mean it” deadlines. It could also cite the narrowness of the Brockton host-community vote<\/a> as a strike against Carney and Bluhm. Whatever the case, any new applicant who’d emerge would be hard up against a Sept. 30 deadline for a suitability investigation.<\/p>\n

The New Bedford fiasco is already causing much angst<\/a> over things such as whether requiring a $500 million minimum investment is asking too much and whether Mayor Mitchell took too long to negotiate<\/a>. One also has to wonder if the MGC will continue to foot-drag on the Region C license. That would, in combination with project delays in Springfield<\/strong> and Everett<\/strong>, push the state’s anticipated casino-tax windfall into the hazy yon. Considering his track record of success in Philadelphia<\/strong>, Pittsburgh<\/strong> and Des Plaines<\/strong>, the MGC ought to think Bluhm and Brockton are a pretty good bet and be done with it.<\/p>\n

* Penn National Gaming<\/strong> finds itself picking up the tab for three days of racing at Suffolk Downs<\/strong>, financed with Plainridge Park<\/strong> revenues. Since Suffolk is only proposing to hold three dates of racing, at least one trainer has balked at the plan, says the Boston Globe<\/em>, “arguing that the industry would be better served by not spending $1.7 million in casino money for such a short season.”<\/p>\n

J.P. Morgan<\/strong> analyst Joseph Greff<\/strong> was given a tour of Plainridge Park and told that 60,000 loyalty-program members have already enrolled
\nand that membership continues to grow by about a thousand players a day. Interestingly, the controversial electronic table games are described as “underperforming” compared to video poker and high-limit slots. A quarter of the player base is from Boston<\/strong>, another 25% from Region C but the biggest donor (30%) is Rhode Island. Unlike the learning curve Penn faced in Columbus<\/strong>, Ohio<\/strong>, its customers are described as “experienced players,” in whom it will “aggressively reinvest.”<\/p>\n

Projecting a late-2018 opening for Wynn Everett<\/strong>, Penn figures it has the Massachusetts market all to itself for three years. (No reason to \"Penn<\/a>doubt that.) Deutsche Bank<\/strong> analyst Carlo Santarelli<\/strong> also got a look at the racino and was “impressed with the quality of the facility and believe management commentary was, at least, in line with current fundamental performance expectations.” Scientific Games<\/strong>\u00a0dominates the slot product, representing 43% of the floor. Non-gaming revenue was described as “strong” and an upcoming Taylor Swift<\/strong> concert was expected to provide an acid test of Gillette Stadium<\/strong> traffic impact on Plainridge.<\/p>\n

Compared to Greff, Santarelli was told that Plainridge had seen “less traffic [20%] from Rhode Island” than expected. A real surprise for \"Penn<\/a>management was “weaker than expected demand for Asian game offerings.” As for a hotel being added, that would be contingent upon the racino being upgraded to a full casino (i.e., table games plus lower taxes), although that seems very unlikely to happen, given the painstaking way in which Massachusetts’ casino formula was hammered out. It’s way too early in the game for Penn to petition for a change in the rules of play.<\/p>\n

* Up in Maine<\/strong>, Penn is crying “Uncle!” from a double-whammy of increased competition and a higher property-tax assessment<\/a>. Penn wants the value of Hollywood Casino Bangor<\/strong> written down steeply and a\u00a0$876,849 rebate paid. Business having dipped 13%,\u00a0“We’re asking that our property tax be revised to reflect the current reduction in our business volumes as a result of continued competitive pressures from Oxford Casino<\/strong> and general softness in the economy,” said General Manager Jose Flores<\/strong>.<\/p>\n

* When it comes to foot-dragging, the Massachusetts Gaming \"rick-scott\"<\/a>Commission has nothing on Florida<\/strong> Gov. Rick Scott<\/strong> (R), who still balks at meeting with the Seminole Tribe<\/strong>. The latter is preparing to demand mediation to resolve its blackjack compact, which sunsets in three months. It’s not clear what Scott, a champion procrastinator, wants from the Seminoles. The latter, for their part, have an ace up their sleeve, the state having permitted electronic 21 in private-sector casinos. The Seminoles are threatening to nullify their compact and keep on dealing blackjack until 2030.<\/p>\n

* Unprepared to take ‘no’ for an answer, GVC Holdings<\/strong> is outbidding itself<\/a> in its effort to acquire\u00a0Bwin.party Digital Entertainment<\/strong>. Perhaps its new, $1.5 billion offer will be too rich for buyer-designate 888<\/strong> to match, although the latter won once before with a second-best bid. Davy Research<\/strong> analysts wrote,\u00a0“This is a real statement of intent from GVC. The proposed premium over the accepted offer by 888 is such that the bwin.party board will probably have no choice but to reconsider its acceptance of the 888 offer.”<\/p>\n","protected":false},"excerpt":{"rendered":"

In a stunning reversal of fortune, KG Urban Enterprises has ditched its $650 million New Bedford casino project, citing financial difficulties. This ends seven years of grinding effort to gain civic acceptance, which culminated in a landslide electoral victory earlier … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[26,117,36,166,190,58,37,147,112,91,71,69,95,111,25,160,32,31,20,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/16486"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=16486"}],"version-history":[{"count":5,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/16486\/revisions"}],"predecessor-version":[{"id":31406,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/16486\/revisions\/31406"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=16486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=16486"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=16486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}