For Immediate Release - October 11, 2007

Governor Patrick Files Resort Casino Legislation

Destination resort casinos to create tens of thousands of jobs, spur economic development

BOSTON-Thursday, October 11, 2007- Governor Deval Patrick today filed legislation to authorize up to three destination resort casinos, a proposal that would create more than 20,000 jobs across the Commonwealth and generate millions of dollars in revenue to make critical transportation improvements and provide immediate property tax relief to more than a million homeowners.

The legislation is a key component of the Governor's plan for economic development across Massachusetts, coming on the heels of the administration's Life Sciences Strategy and Readiness Project for education reform.

"These casinos are, ultimately, about new jobs - one part of our overall plan for long-term, sustainable economic growth," said Governor Patrick. "This legislation will help generate good jobs at good wages in the resort casinos and the communities around them. We have taken significant steps, through strong oversight, transparency, and community engagement, to do this the right way. I look forward to working with our partners in the legislature to make that vision into a reality."

The legislation lays out the regulatory and enforcement mechanisms and penalties that will be created to oversee casino gaming and establishes a strict code of ethics to guide gaming activity. It also outlines the application and auction process for would-be developers and sets up new trust funds to be dedicated to public health treatment and prevention, community mitigation, enforcement, the state lottery, transportation and property tax relief.

Under the governor's proposal, the state Lottery would be held harmless to the impact of new gaming to ensure that cities and towns continue to receive critical local aid funds. The legislation sets a benchmark amount of lottery aid and then applies a 3 percent inflation factor per year that the Lottery will have to meet. If it does not, funds from casino revenues will make up the difference.

REGULATION

The governor's proposal establishes an independent seven-member Massachusetts Gaming Control Authority (MGCA) consisting of the state Treasurer, Auditor and five members appointed by the Governor who have experience in the legal, finance, regulatory and accounting experience. An executive director would run the authority. The MGCA would have broad regulatory authority over every aspect of the gaming industry including awarding and revoking licenses, promulgating regulations, collecting fees and assessments, the conduct and auditing of licensees, employment regulation, approving license transfers and annual reporting.

To safeguard integrity and strictly protect against competing interests, the legislation establishes a MGCA code of ethics that includes a requirement that board members and employees have no direct or indirect interests in any aspect of the gaming industry for a period of 3 years before and after their work with the MGCA. We are placing an executive branch ban on employment with the authority or any licensee for a minimum of 3 years following executive branch employment.

The code would have to be approved by the state Ethics Commission. All MGCA employees will be required to file yearly Statements of Financial Interest.

Additionally, the proposal establishes a 12-member advisory committee, including the Secretaries of Health and Human Services, Administration and Finance, Housing and Economic Development, Labor and Workforce Development and Public Safety. The other members would be appointed by the Governor, the Senate President and the Speaker.

ENFORCEMENT AND PENALTIES

The governor's proposal would create a Division of Gaming Investigation and Enforcement within the Attorney General's Office. The division would have broad powers to investigate allegations of crimes, inspect and examine records, inspect devices and equipment, have access to all records of the MGCA, and enforce violations of the law and bring proceedings before the MGCA.

The legislation also enacts tough new penalties for licensing and gaming violations including willful evasion of payment of fees and proceeds, unlicensed controlled gaming, unlawful use or possession of devices to obtain an advantage, unlawful operation of cheating games and devices by licensees and employees.

The legislation also gives casinos authority to withhold past due child support and back taxes from those who win in excess of $600.

APPLICATION AND AUCTION PROCESS

The governor's legislation limits destination resort casinos in Massachusetts to three to ensure the maximum economic benefit to the entire Commonwealth. Each casino would be sited in one of the three identified regions:
 

  • Region 1: Suffolk, Middlesex, and Essex
  • Region 2: Bristol, Plymouth, Norfolk, Nantucket, Dukes, and Barnstable
  • Region 3: Worcester, Hampshire, Hampden, Franklin, and Berkshire

Licenses will be awarded to developers based on applications, minimum eligibility criteria and a bidding process to determine highest and best value to the Commonwealth and its regional economies.

Applications and Eligibility

Interested developers would be required to file with the MGCA applications that include financial disclosures, the location of the resort casino, the design of facilities, the number of hotel rooms and other amenities. The proposed number of employees, total investment, impact studies, tax revenue projections, and tribal partnerships will also be considered. Developers would be assessed a $350,000 fee per application to be reviewed by the MGCA.

Applicants would also be required to demonstrate a financial ability to pay fees and must be willing to commit to at least $1 billion in facility investment. Developers must also secure local approval via a local referendum, pay a host community impact fee, demonstrate a commitment to pay for infrastructure, and obtain a signed agreement with the host community.

Bid Process and Licensing

Once eligibility has been established, the governor's proposal calls for a competitive bid process for each of the three regions, with licenses granted to developers whose proposals would have the highest and best value to the region and the Commonwealth. Proposals would be assessed based on the some of the following:

  • Overall economic benefit
  • A proposal for an initial fee above $200,000,000 and for operating license fee above 27% or $100,000,00 (whichever is greater),
  • Scope of infrastructure improvements,
  • Use of local and small businesses for goods and services,
  • Partnership with federally recognized, eligible Massachusetts native American tribe,
  • Adherence to sustainable development, creation of at least 5,000 jobs, workforce development plans, architectural plans and labor utilization.

The authority, via regulation, would be empowered to weight the bid criteria including whether the developer is partnered with a federally recognized, eligible Massachusetts Native American tribe. No more than three licenses will be awarded through the auction process and no developer may hold more than one license. All licenses will include a requirement that all of the representations made by the developers throughout the license process will be part of the actual license. The licenses are for 10 year periods and subject to renewal by the authority. The MGCA has the ability to revoke a license for non-compliance, and no licenses may be transferred without MGCA board authorization.

TRUST FUNDS

Revenue generated by fees and payments collected from resort casinos will be disbursed to several different trust funds to address a variety of potential concerns with gaming, as well as invest in improvements to transportation infrastructure and help relieve the burden of property taxes across the Commonwealth. The funds include:

MCGA Trust Fund to pay for regulatory and enforcement costs and will be generated by direct assessments on the resort casinos.

License Fee Fund to pay for expenses incurred prior to operation for the regulatory scheme, community mitigation, public health and the remainder split between property tax relief and transportation infrastructure.

Operating License Payment Fund to pay for annual community mitigation, state lottery fund, public health disbursements and the remainder split between property tax relief and transportation infrastructure.

Community Gaming Mitigation Fund to pay for community costs directly related to the resort casino. This fund is set as 2.5% of gross gaming revenue.

Gaming Public Health Fund to pay for social services and gambling addiction costs related to expanded gaming. This fund is set as 2.5% of gross gaming revenue.

Transportation Infrastructure Improvement and Maintenance Fund to pay for transportation improvements to roads and bridges throughout the commonwealth. It's 50% of the residual amount after payments have been made to the state lottery, community mitigation and public health funds.

Homeowners Property Tax Credit program to provide nearly 1 million Massachusetts homeowners with a tax credit equaling approximately 4% of their property tax bill or $200 dollars.
 

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