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Gaming Report: Bridgeport Location Better For Third State Casino

May 3rd, 2017 · 5 Comments · Development and Zoning, News and Events, State Politics

An “independent” report from Union Gaming that analyzes the global gaming industry asserts “We question whether a casino in East Windsor would actually help CT retain gaming dollars or just cannibalize the existing tribal operations,” adding “When considering the Wynn Boston project will also likely cut into Foxwoods and Mohegan Sun, we would expect CT could take a more strategic approach to gambling expansion and open up the process and geography … Considering the proximity to NYC, and the wealth and population centers in and around NYC, we believe there would be notable interest in a potential casino license opportunity in Southern Connecticut.”

As the state legislature examines maximizing revenues to offset financials thick in red ink, debate centers on expansion for a third Connecticut casino. A coalition of the state’s monopoly-driven Foxwoods and Mohegan Sun tribal-gaming entities argue Connecticut must offset MGM Springfield’s presence with a satellite facility. Hold on a minute declares this report, the best way to go is a third casino in southern Connecticut to leverage the wealthy Fairfield County and New York markets with an open, competitive process.

State legislators have been contacted by gaming entities such as Caesar’s and Pinnacle to express interest should the General Assembly approve a competitive process.

Currently structured Connecticut’s casino enterprise operates under a monopoly in which the state receives 25 percent of the slot take. Bring a new entity in and the gaming compact is broken. But Attorney General George Jepsen has cautioned the legislature that the East Windsor site, though tribal managed, is on non-tribal property risking the currently guaranteed payments to the state.

So what’s wrong with a competitive process in which everyone participates?

Union Gaming describes itself as a “boutique investment bank and advisory firm focused exclusively on the global gaming industry.” It has served in an advisory role to MGM’s Las Vegas operation.

From the Union Gaming report:

We have recently visited the MGM Springfield site and met with property management to get an update on the project. The building was topped off at the end of March, scheduled to be completely enclosed by this fall, on track to open in September 2018, and on budget ($865m excluding land).

In our second visit to the site since construction had started, we can begin to see the early days of a transformation in Springfield. Residential development is picking up and more retailers are starting to move in to the city. We expect the revitalization will take some time, anchored by MGM Springfield, but progress is apparent.

While we wouldn’t expect MGM Springfield to hit the ground running out of the gate like its sister property in National Harbor, we do think the opportunity is underappreciated and think the asset could be a sleeper. Being located directly downtown on Main Street in an urban market is advantageous. Not to mention, the over 100,000 cars that travel past the property on the I-91 and I-291 corridors every day. We believe some key fundamentals of the city are often overlooked, including the recent retention of an AHL team, the reopening of Union Station, and the opportunity to yield up the Mass Mutual Center. Further out, with MGP as a capital partner for MGM, we see the opportunity for accelerated returns in a sale-leaseback transaction after the property ramps.

The biggest risk facing the Springfield development today is the threat of a potential casino going up just over the border in East Windsor, CT. However, it is unclear to us today whether the East Windsor project will get approved or if the state will launch a competitive process to award an additional gaming license. We question the viability of a development in East Windsor and if it would be able to grow the market or just cannibalize the existing operators.

Ultimately, we think the state takes the proven path of authorizing a competitive bidding process like nearly every other jurisdiction in recent history. Most recently, New York and Massachusetts have run competitive RFP processes to award casino licenses that have attracted significant interest and levels of investment.

In fact, we believe there are a number of operators watching the legislative developments in CT closely. Given the substantial level of interest in the Orange County, NY opportunity (60 miles from Manhattan) in 2014, we suspect a license opportunity in CT would attract significant attention from operators and developers to the southern part of the state given the proximity to the population and wealth centers in and around Manhattan.

In 2014, Caesars, Full House Resorts, Rush Street Gaming, Penn National, Cordish and Genting had all proposed sizeable casino resort developments located 50-60 miles from New York City. Assuming the tax regime and regulatory framework for a potential third casino in
Connecticut is reasonable, we believe there would be strong interest from major operators, particularly given the limited casino development opportunities in the US today.

…While we are feeling good overall with the progress of MGM Springfield, the prospective third casino in CT remains the primary concern. The legislature has seen three separate bills so far regarding the potential expansion in the state. Two of those bills include opening up a competitive process for a casino license in the state while one bill still focuses on allowing the state’s two existing gaming tribes to open a joint operation in East Windsor along the Massachusetts border. We question the viability of a casino located in East Windsor near the Massachusetts border, particularly facing the competitiveness of MGM Springfield and level of supply in the nearby market when considering drive times to the existing Connecticut casino operators.

We question whether a casino in East Windsor would actually help CT retain gaming dollars or just cannibalize the existing tribal operations. When considering the Wynn Boston project will also likely cut into Foxwoods and Mohegan Sun, we would expect CT could take a more strategic approach to gambling expansion and open up the process and geography. Adding more supply along the MA/CT border would do very little to grow the market, if at all, and create an unfavorable supply/demand dynamic when considering MGM Springfield, Plainridge Park, Wynn Boston, the Twin River project in Tiverton, RI, the existing Twin River property in Lincoln, RI and the two Connecticut casinos, Foxwoods and Mohegan Sun. That said it is unlikely a casino in East Windsor would generate any meaningful incremental revenue for the state.

The NYC market remains underserved and undersupplied. Considering the proximity to NYC, and the wealth and population centers in and around NYC, we believe there would be notable interest in a potential casino license opportunity in Southern Connecticut. Given the limited availability of new casino licenses and opportunities for expansion in the US, coupled with the favorable demographics of the NYC market area, most all major casino operators would need to consider a CT gaming opportunity, assuming the regulatory framework, licensing process and tax regimes all make sense of course. In fact, a number of operators have already indicated they are keeping a close eye on how the Connecticut issue plays out.

Expecting a competitive process to be preferred method of expansion

While the CT state legislature is embattled with how to deal with recent competitive gaming incursions, ultimately we would expect CT to run a formal process to evaluate gambling expansion like nearly every other jurisdiction in recent history. The competitive RFP process has been a proven method for attracting the most level of interest and highest investment levels in recent history, with Massachusetts, New York and Singapore all relevant examples.

Massachusetts had run a licensing process that yielded three premier gaming companies, including MGM, WYNN and PENN, which created a favorable geographic landscape allowing companies to invest big dollars in the state, totaling upwards of $3bn.

We have already heard from a number of casino operators that they would be interested in competing for a gaming license in Connecticut. In fact, 22 companies submitted applications for four available casino licenses up for bid in New York in 2014 during the state’s competitive RFP process. Substantial investment proposals had been outlined for the counties nearest to New York City, but ultimately licenses were awarded to Upstate locations as the state stayed true to its mission of stimulating economic development and tourism to other regions in New York. That said we would suspect many of the same operators that bid for a NY license within striking distance of New York City would likely be interested in a Southern CT license, including Caesars, Genting, Penn National, etc.

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5 Comments so far ↓

  • Mojo

    *** There will never be a casino in Bpt. During my lifetime! Never! ***

  • Jimfox

    I do believe Bridgeport has Blackjack!!!
    If the State is considering a commercial Casino for Mohegan and Foxwoods an off reservation operation in Hartford, Bridgeport better pull up a chair and yell “Deal me in”!
    If Foxwoods & Mohegan Sun wants off the reservation, the next Casino in this State should be in Bridgeport. If the State awards Foxwoods & Mohegan a commercial Casino that would be a direct violation of the compacts and both tribes .”speaks with  forked tongues” !

  • charlie

    The Golden Hill Paugussetts had made a proposal many times knowing the gross revenue would be more than a billion dollars a year and the two illegitimate tribes would be crushed. I say illegitimate because the Mohegan’s disbanded in 1861 and the Pequots did not exist until a woman came over from Rhode Island during the depression and squatted on the old reservation.

    • The Bridgeport Kid

      The Golden Hill Paugusetts need recognition by the Federal Bureau of Indian Affairs. Until that time they have no claim to any real estate here.

  • Jeff Kohut

    With the $Gold Coa$T jealously guarding their development prerogatives — including access to plentiful, cheap Bridgeport labor as well as keeping control of the regional transportation infrastructure for use in these development prerogatives (ready access to labor without the need to go through the expense and lifestyle/sociological accommodations of hosting a huge, working-class labor force) — the only way for Bridgeport to make any economic progress and fight the Gold Coast stranglehold on our development prerogatives is through an alliance with a big-$ Gold Coast competitor… This later entity would, of necessity (per pragmatic/time considerations), take the form of a big-league, gambling-industry player, such as MGM…

    There is abundant empirical data indicating the immense value of a Bridgeport, waterfront location to any gambling enterprise looking to expand in the US… It is totally realistic to court and negotiate with such a legitimate gambling-industry player.

    Bridgeport’s downward (disastrous) socioeconomic momentum indicates the need for us to overlook any esoteric moral issues concerning gambling and encourage all viable gambling-industry entities to create a significant presence in Bridgeport. This is the only way we will be able to jump-start our economy in a timely way, in terms of the creation of a meaningful number of living-wage jobs for Bridgeporters, while also creating significant tax relief for beleaguered Bridgeport home and business owners. Inasmuch as casino money will create a friendlier business environment, in terms of taxes, while also allowing improvements in Bridgeport’s physical and financial environment, a couple of $billion in casino investment is what this city needs, NOW…

    It is clear that meaningful assistance for Bridgeport will not be forthcoming from the state or federal government in any sort of timely way for Bridgeport families and businesses — regardless of who is elected the next governor of Connecticut. It is therefore irresponsible for Bridgeport’s leadership and state delegation to not pursue negotiations with casino interests that have identified Bridgeport as a desirable site for the development of a significant casino operation…

    Why the silence and confused loyalties by Bridgeport’s leadership and state delegation in this regard?

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