David J. Apfel Goodwin Procter LLP 617.570.1970 100 Northern Avenue [email protected] Boston, MA 02210 Roberto M. Braceras goodwinlaw.com 617.570.1895 +1 617 570 1000 [email protected] November 30, 2018 VIA E-MAIL AND HAND DELIVERY [email protected] Massachusetts Gaming Commission 101 Federal Street, 12th Floor Boston, MA 02210 Re: Region C: Response of Mass Gaming & Entertainment to Request for Public Comments Dear Commissioners: We write on behalf of Mass Gaming & Entertainment (“MG&E”) in response to the Commission’s request for public comments regarding MG&E’s request for reconsideration of its application for the award of a Category 1 gaming license in Region C. As we have previously explained to the Commission’s Executive Director Ed Bedrosian and General Counsel Catherine Blue, we are concerned that the questions that the Commission is now asking appear designed to further delay the Region C re-opening process and to create unnecessary roadblocks with respect to reconsideration of MG&E’s proposal. See, e.g., our letter to Mr. Bedrosian and Ms. Blue, dated October 16, 2018, a copy of which is attached as Exhibit A. In this regard, we note that, when the state legislature debated and ultimately passed the Expanded Gaming Act in 2011, a significant factor for many legislators in their decision to vote in favor of the legislation was the fact that the southern border of Massachusetts was already exposed to two Connecticut casinos, which were taking substantial tax revenue out of the Commonwealth. Today, seven years later, matters have taken a turn for the worse. We have approved casinos in greater metropolitan Boston and Springfield and a slot parlor in Plainville, but nothing in southeastern Massachusetts. In the meanwhile, just months ago, a new Rhode Island casino opened in Tiverton, mere steps from the Fall River line. And Rhode Island is about to commence sports betting in its casinos, which will take even more tax dollars out of Massachusetts. Instead of providing protection for our southeastern border, these past seven years have seen erosion. We ask that you stem the tide, and take the long delay that has already plagued Region C into account in determining how and when to reopen the commercial application process in that Region. We also ask that you take public sentiment into account. Over the course of the past eight weeks, we have spoken with several state legislators and other public officials, including Brockton Mayor Bill Carpenter, and we have been approached by a number of Brockton citizens, all of whom have voiced strong support for MG&E’s effort to have its casino license application reconsidered. Based on our discussions, we understand that numerous Brockton citizens, including union representatives, small business owners, teachers, and many others have either signed petitions or sent letters or emails Massachusetts Gaming Commission November 30, 2018 Page 2 directly to the Commission asking for the prompt reopening of the Region C process and reconsideration of MG&E’s application. As far as we can tell, Brockton citizens and many Brockton elected and appointed officials have recognized the potential for MG&E’s proposed resort casino to revitalize and rebrand their city, improve public safety, rebuild Brockton’s schools, and provide thousands of well-paying permanent jobs to Brockton natives and others from southeastern Massachusetts. We hope the Commission will recognize this same potential, listen to the call of Brockton’s citizens for prompt action, and reconsider MG&E’s application without further delay. We address each of your questions directly. As you will see, the answers make clear that there is no financial, equitable, or legal reason to further postpone the reconsideration of MG&E’s Region C application: 1. What is the status of the gaming market in the Northeast and Mid-Atlantic? What are the existing gaming options? What plans exist to increase the number of gaming options, both in states that currently allow casino gaming and states where casino gaming does not currently exist? What revenues have been collected by states that have gaming over the last five (5) years and what are their projected future revenues?1 The Innovation Group notes that, as a general rule, gaming revenue across the Northeast and Mid- Atlantic states was strong in 2017, and has only gotten stronger in 2018 with the introduction of new casinos across both regions, and legal sports betting in New Jersey and Delaware. See 11/18 IG Report (Ex. C) at 1-8, 10-12. The following tables, which were prepared by the Innovation Group, depict, state-by-state, all existing gaming options, in the Northeast and Mid-Atlantic states: 1 Our answers to significant components of Questions 1-4 & 11 were included in a report by the Innovation Group, dated September 2018, which we provided to General Counsel Catherine Blue and Executive Director Ed Bedrosian on September 16, 2018 (“9/18 IG Report”). A copy of the 9/18 IG Report is attached as Exhibit B to this letter for the Commission’s convenience. After the Commission requested public comments regarding Region C, MG&E requested that the Innovation Group refresh its prior report, and very specifically and comprehensively address Questions 1-4 & 11. The new report, dated November 30, 2018, which the Innovation Group prepared, is attached as Exhibit C, and incorporated herein (“11/18 IG Report”). The answers in this letter to Questions 1-4 & 11 are summaries of the more complete answers provided in the 11/18 IG Report. Massachusetts Gaming Commission November 30, 2018 Page 3 Northeast Casinos by State City Machines Tables Positions Connecticut Mohegan Sun Montville 5,613 350 7,713 Foxwoods Ledyard 4,145 428 6,713 Maine Hollywood Bangor Bangor 921 16 1,017 Oxford Casino Oxford 811 22 943 Massachusetts Plainridge Plainville 1,250 0 1,500 MGM Springfield Springfield 2,550 120 3,270 New York* Saratoga Saratoga Springs 1,782 0 1,782 Springs Monticello Raceway Monticello 1,110 0 1,110 Empire City at Yonkers Yonkers 5,349 0 5,349 Jake's 58 Islandia 1,000 0 1,000 Rivers Casino & Resort Schenectady 1,150 82 1,642 Resorts World Aqueduct Jamaica 5,005 0 5,005 Resorts World Catskills Monticello 2,153 125 2,903 Rhode Island Twin River Casino Lincoln 4,220 80 4,700 Tiverton Casino Hotel Tiverton 1,000 37 1,222 Regional Total 38,059 1,260 45,869 Sources: State Lotteries and Gaming Commissions; The Innovation Group. * Per the Innovation Group, only casinos in the eastern part of New York are included in this chart because those in the western part of New York are not considered relevant to the Massachusetts/New England market. Massachusetts Gaming Commission November 30, 2018 Page 4 Mid-Atlantic Casinos by State City Machines Tables Positions Delaware Delaware Park Wilmington 2,250 39 2,484 Dover Downs Hotel and Casino Dover 2,177 40 2,417 Harrington Raceway and Casino Harrington 1,787 31 1,973 Maryland Hollywood Casino Perryville Perryville 822 22 954 Horseshoe Casino Baltimore 2,200 168 3,208 Live! Casino & Hotel Hanover 3,997 198 5,185 MGM National Harbor Oxon Hill 2,961 180 4,041 Ocean Downs Berlin 888 0 888 Rocky Gap Casino Resort Flintstone 665 17 767 New Jersey Bally's Atlantic City Atlantic City 1,776 164 2,760 Borgata Atlantic City 1,994 268 3,602 Caesars Atlantic City Atlantic City 1,889 132 2,681 Golden Nugget Atlantic City Atlantic City 1,454 99 2,048 Hard Rock Atlantic City Atlantic City 2,063 152 2,975 Harrah's Resort Atlantic City Atlantic City 2,109 133 2,907 Oceans Resort Atlantic City 1,937 107 2,579 Resorts Casino Hotel Atlantic City 1,475 68 1,883 Tropicana Atlantic City Atlantic City 2,476 130 3,256 Pennsylvania* Harrah's Philadelphia Chester 2,450 118 3,158 Hollywood Casino at Penn National Race Grantville 2,170 75 2,620 Course Mohegan Sun Pocono Wilkes-Barre 2,325 89 2,859 Mount Airy Casino Resort Mt. Pocono 1,863 81 2,349 Parx Casino and Racing Bensalem 3,331 190 4,471 Sands Casino Resort Bethlehem Bethlehem 3,073 252 4,585 SugarHouse Casino Philadelphia 1,809 141 2,655 King of Valley Forge Casino Resort 600 50 900 Prussia West Virginia** Hollywood Casino at Charles Town Races Ranson 2,284 90 2,824 Regional Total 54,825 3,034 73,029 Source: State Lotteries and Gaming Commissions; The Innovation Group. * Per the Innovation Group, this chart only includes casinos in the eastern part of Pennsylvania, as those in the west are not considered relevant to the Massachusetts/New England market. ** Per the Innovation Group, the only West Virginia casino deemed potentially relevant, and thus included in the chart, is Charles Town. The Innovation Group has not included the casino in Greenbrier because of its far southern location and lack of relevance to the gaming market in Massachusetts. Massachusetts Gaming Commission November 30, 2018 Page 5 In addition to the above-listed casinos, there are at least six additional casinos that are currently planned or under development that could open within the next two years: Proposed Northeast Casino Locations by State Name Location Proposed Positions Note Connecticut Unprecedented joint venture between tribes East 2,000 Slot Machines operating Mohegan Sun and Foxwoods. - Windsor* 60 Tables Facing legal challenge; undetermined at this time if it will proceed. Massachusetts Reported over $2 Billion property. License Encore Boston 4,250 Total Gaming Everett* currently under review. Scheduled opening Harbor Positions June 2019.