Thursday, February 20, 2014
More people — make that a lot more people — leave casinos losers than winners. But we felt Northampton made a case that it deserved to be counted as one of the western Massachusetts communities that will suffer financially if MGM Resorts International is allowed to open a casino in Springfield.
On Tuesday, the five-member Massachusetts Gaming Commission denied Northampton’s bid to be classified a “surrounding community” and be eligible for payments to offset what it stands to lose. The city has no right to appeal.
Mayor David J. Narkewicz was shaking his head over this call. We share his sense of bafflement.
Two things seem wrong with the commission’s decision. At one point, members acknowledged that the city is indeed close enough to the casino site in downtown Springfield to be affected by its operation. MGM argued it wasn’t. Holyoke will get money because it is close enough — and, again, some members said they thought Northampton was close enough as well.
Why, then, didn’t these members side with Northampton? According to comments Tuesday, commissioners felt a study done in support of the city’s request failed to look at the good things that could come Northampton’s way.
That’s a bit like asking a prosecutor to suggest alibis to the defense. The city’s outside consultant, Camoin Associates of Saratoga, N.Y., calculated that Northampton businesses could lose $4.4 million to $8.8 million a year in revenue to a Springfield casino. Deeper down, it estimated that when hit with falling revenue, city employers would trim 90 to 180 jobs.
Granted, studies like this are only as good as the questions they pose and data they tap. The outfit used real revenue numbers and calculated the impact of an $800 million entertainment and hospitality industry setting up shop 20 miles south on the interstate. To win its case, Northampton had to convince the commission that it, like Holyoke and other communities around Springfield, will be hurt economically.
After learning Tuesday that MGM had prevailed, the company’s Springfield chief, Michael Mathis, issued a statement saying he believes all of western Massachusetts gains from “a rejuvenated Springfield” and declared: “We have dedicated considerable time and resources to understanding the region and how MGM Springfield fits into it.”
Yes, MGM ran its own analysis. Any MBA will tell you that the question MGM set out to answer was this: How can we make sure our rooms, restaurants and casino floors are as full as possible so we can make money after agreeing to pay surrounding communities millions of dollars a year until the end of time?
MGM has said its hotel staff will pass out brochures suggesting guests explore the region. On Tuesday, the commission’s chairman, Stephen Crosby, said it will be up to regulators to ensure the casino keeps such promises. We seriously doubt the gaming commission will be investigating brochure inventories a few years from now.
Economics of this sort isn’t only a dismal science, it is an inexact one. It’s possible the Northampton study overstates the impact. But the health of the city’s downtown depends in part on its ability to pull customers from other regions, and a big new competitor may be coming to the Valley.
One of the weakest arguments we heard Tuesday was the claim from James F. McHugh, a commissioner, that Northampton didn’t account for money now spent at or near the Connecticut casinos that will be “repatriated” after a casino opens in Massachusetts.
Keeping that cash in Massachusetts was a key argument in favor of legalizing casino gaming. But it doesn’t help Northampton recover money that might shift from one casino to another.
Northampton spent about $42,000 to make its case. Narkewicz fought gamely. In the end, this whole process — created to help make casino gambling palatable in the Bay State — came down to the hunches of five commissioners who must be eager for this to be over.