MGM Springfield Roars out of the Gate
The $960 million MGM Springfield, Massachusetts’s first resort casino to open, experienced a strong “first month,” with almost $9.5 million in gross revenue in August, its first week in operation. For just its first three days the casino drew about 150,000 visitors to the downtown 14.5 acre site.
That breaks down into $7,347,491 in slots and $2,109,485 in table games, according to figures released by the Massachusetts Gaming Commission. That translates into $2,364,244 in taxes. The state collects 25 percent of all gaming revenues.
MGM Springfield President Michael Mathis commented, “While these gaming revenue figures represent less than eight days of operations in August, they demonstrate MGM Springfield’s tremendously successful opening week, when we welcomed more than 150,000 visitors over our first weekend alone.” He added, “We are pleased our efforts to design a resort to complement Downtown Springfield is being so enthusiastically received.”
He later described how “We definitely had some lines and we had some folks that we actually had to send away Friday at about 2 a.m. It was a bit surreal. We had about three, four thousand folks lined up on Main Street at 2-2:30 a.m., bumper-to-bumper traffic and it felt like we were out in Times Square.”
The Bay State’s first casino to open, the slots parlor Plainridge Park Casino, by comparison generated $15,380,183 in gross revenue for the entire month of August. Which translated into $7,536,289 in taxes. It has been in operation since June 2015.
According to Mathis, business has settled into about 50,000 patrons on weekend days and half that number during the weekdays. Which is higher than initial projections of up to 20,000 guests per day made before the casino opened.
He told the gaming commission, “We expect some of those numbers to normalize but there is no question that there is tremendous interest in our resort. I think it’s largely because of the nature of the resort, which is a very mixed-use, downtown, porous design.”
By that Mathis means a design that encourages walk-in traffic from its open air plaza, retail shopping and eventual cinema.
The MGM Springfield has a host agreement with the city in which it pays about $17.6 million a year in lieu of taxes.
The casino’s exciting opening has also spilled over into a positive impact on some restaurants in the area, such as the Raices Restaurant, which stayed open later to accommodate customers who kept streaming in as the normal 7 p.m. closing time approached for several days after the casino opened. The eatery pushed closing time to 10 p.m. as an experiment.
The restaurant’s owner told the Associated Press: “We had a lot of customers. A lot of new customers from other cities. They loved our food. It was great.”
Of course, the opening week of a casino is always big, and it remains to be seen how much of a bump neighborhood restaurants will get once things simmer down. Says the owner, “We have our good days and we have our medium days. Not as crazy as we thought it was going to be.”
Another restaurateur, Nadim Kashouh, who owns the Downtown Mediterranean Grill, told the AP that his place experienced long lines from the exploring crowds, who were often looking for dinner at 11 p.m. “So there are a lot of people walking around the city,” he said. “That is not typical for us.”
He is now looking at staying open until midnight or even later if the business justifies it.
Some restaurants, like the Red Rose Pizzeria, experienced good but not record-breaking business. It has always been open late on weekends. Dine in business increased, said owner Tony Caputo, but take out was down.
The MGM Springfield was designed to be very much a creature of its downtown surroundings, with the casino complex facing out onto the street with a deliberate effort to connect visitors to the historic downtown area. Nevertheless, its function isn’t entirely to direct customers to downtown restaurants. It has several of its own, including the Cal Mare coastal Italian restaurant, Chandler Steakhouse and the South End Market food hall.
The South End Market has been an unqualified success, beating projections by a factor of two or three. The expectation was 1,800 visitors per day; the reality has been 4,000 and growing. The first three days visitors ate 4,500 burgers, 1,200 pounds of lobster and drank 9,500 gallons of soda from a self-serve station.
Mathis told the MGC that the casino has encountered the problem of finding minors on the casino floor. The “porous” design makes it easier for those under 21 to enter: “Which I think we all understood was an opportunity but would create challenges,” he said.
He told commissioners, “We definitely still have some folks that are getting onto the floor that are underage. We’re stopping them and we’re trying to increase our communication around that,” He continued, “We’ve got some parents that are choosing to leave their children in different parts of the resort while they game and we’ve identified that issue and it is a big problem for us and it is a big problem for the experience.”
This prompted the casino to enforce a ban on unaccompanied minors and to extend that definition to anyone in the casino under 16. All must be accompanied by an adult. Moreover, after midnight no one under 21 will be allowed in the building unless they are a hotel guest.
Although some of the minors sneaked onto the gaming floor on purpose, more were “inadvertent” according to Seth Stratton, vice president and general counsel.
Commissioner Bruce Stebbins, who personally witnessed the MGM’s two test nights, said he thought part of the problem “can be attributed to the newness factor of the facility as well as the kind of long-awaited excitement of MGM’s opening.”
The commission had insisted that the casino incorporate many non-gaming amenities and connect directly into the city’s vibrant downtown, said Chairman Steven Crosby. The situation, he said, “is, in part, due to what we asked you to do.” He added, “So we’ll stick with you while you figure out how to fix it.”
Mathis said most of the hiring targets it set it is exceeding, such as hiring at least 35 percent of its workforce from Springfield. The actual figure is 38 percent. It has not achieved its goal of hiring 50 percent women. The reality is 46 percent, but they are still working on that, he said.
Meanwhile the casino revealed that the luxury Regal Cinema at MGM will begin screening films on September 23, with a grand opening set for September 27. Customers will get $3 movies, popcorn and soft drinks as part of a charity fundraiser for Square One and Head Start, charities based in Springfield. Movies will be shown in high definition and 3D.
The three-screen theater will operate on the second floor of the complex. Besides watching in luxurious comfort on 650 plush recliners, patrons will be able to buy alcoholic beverages and gourmet food.
Mathis looks forward to Regal moving the resort towards its goal as “New England’s first truly integrated entertainment destination. Regal’s unique product offering and luxury amenities are a phenomenal complement to our first-in-class service and style, setting the stage for world-class excitement on and off the screen at MGM Springfield.”
MGM has also announced that it will open the Roar! Comedy Club inside the old Springfield National Guard armory next January.
Unlike some towns that are near the MGM Springfield, the city of Northampton has hired consultants to help it market itself in DEFENSE of the casino. The Rhyme Digital marketing plan revolves around creating a marketing website to promote special events and attractions in the city.
The city paid for the study using some of the $100,000 in mitigation funds that it was awarded last year by the Massachusetts Gaming Commission. Businesses, organizations and residents were interviewed for the plan. The remainder of the money will be used to fund the website and digital marketing plan.
The website will market the town’s dining, nightlife, entertainment, retail and arts offerings, using photos and submissions from local people. They would, in essence be able to do their own marketing using the platform.
The platform would target millennials and young professionals earning more than $50,000 a year. The city will apply for follow-up mitigation funds to further expand the program if it proves successful.
Encore Boston Harbor
Wynn Resorts last week was sued by one of its erstwhile rivals for the Massachusetts gaming license: Sterling Suffolk Racecourse.
The 37-page $1 billion civil lawsuit claims that Suffolk Downs and its partner Mohegan Sun Casino suffered financial damages and that Wynn Resorts and founder Steve Wynn violated the RICO Act. It also names current CEO Matthew Maddox, who took over in February and former general counsel Kim Sinatra and FBT Everett Realty, which sold the Everett property to Wynn Resorts. Under the RICO act the damages could be tripled to $3 billion, however it is rarely used in civil cases.
Referring to the RICO statute the lawsuit says, “While certain bad actors have been forced out of the Wynn organization, and Steve Wynn’s name has been wiped from its casino in order to appear to ‘cleanse’ the Wynn entities so as to attempt to retain the Region A License, this does not change the fact that the license could not have been awarded to the Wynn Defendants in the first place but for the RICO predicate acts which include those described herein.”
The MGC awarded the casino license in 2014. Sterling Suffolk claims that its proposed casino had been endorsed by the then mayor of Boston and alleges it had the superior proposal, but that the superiority of the project was trumped by illegal doings on the part of Wynn. It calls the racetrack site “by far the best suited location” comparing it to the former Monsanto chemical plant site in Everett that Wynn spent millions of dollars to clean up.
The lawsuit states, “The Wynn defendants were granted a license to operate their casino on a toxic waste site loaded with levels of arsenic still so high that a child day care center would not be permitted to be housed there, even after the site was remediated and the regulations amended to countenance higher levels.”
Wynn et al “conspired to fix the application process, circumvent laws in place to prevent the infiltration of mob elements, and interfere and eliminate various regulations aimed at protecting the public at large,” according to the lawsuit.
Among the illegal acts alleged are actions to suppress voter turnout at a referendum Suffolk held on its own casino proposal, lying about alleged mob ties with the property owner, and illegal campaign contributions.
In the brief Suffolk alleges: “The Wynn defendants should have been denied a license for each of those reasons and would have been denied the license but for the misconduct alleged herein,” which includes Wynn’s “pattern of sexual abuse and its cover-up.”
Wynn Resorts issued a statement denying any wrongdoing. “This lawsuit was brought by Richard Fields, an unsuccessful applicant for the license awarded to Wynn Resorts. His claims are frivolous and clearly without foundation.” Fields is the principal owner of Sterling Suffolk Racecourse, whose 161 acres was sold last year to an investment group to be repurposed into a commercial, residential and retail development.
The suit notes that this sale was for $155 million, which it calls “dramatically less than what a casino would have paid.”
This is the second such lawsuit to be filed against Wynn. The first was brought by the Mohegan Sun, another jilted suitor for the casino license, which also alleges unfair doings on the part of Wynn to win the license.
Whether these lawsuits will materially hurt Wynn is unknown. Clyde Barrow, an expert on the New England gaming market, told the Boston Herald, “Their revenues are coming from Macau. This doesn’t make or break Wynn financially as a company.”