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New England News

Casino Revenue In State Budget Questioned

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Massachusetts Governor Deval Patrick and legislative leaders are betting voters don’t repeal the state’s casino law.   Casino revenue was included in the 2015 state budget, but the impact of the decision appears to be more political than financial.

Gov. Patrick does not see it as much of a gamble to speculate on $73 million in projected casino revenue in a budget that totals $ 36.5 billion. The casino cash may never come if voters repeal the state’s casino law in November.

"Nothing is certain. I do think that at the end of the day the voters will affirm and decide to keep the existing casino law because I think it is a very modest expansion of gaming and it gives local communities an opportunity to make a decision that's right for them.  It is not such a big number that we can't cope if things go in the opposite direction."

Tax revenue, some of it earmarked but most of it for the state’s general fund, along with the promise of tens of thousands of jobs were the major motivations for Patrick and other supporters of the 2011 law to open the state to Las Vegas-style gambling. Now, those judgments will be second-guessed by the voters.

" That's how the system works and that's OK," said Patrick.  " I trust the people to get it right."

$20 million in the state budget is projected revenue from the slots machine parlor Penn National Gaming is building at a harness racetrack in Plainville.  It is scheduled to open next year.  $53 million is a portion of the $85 million license fee that is due from MGM, which got the nod from the Massachusetts Gaming Commission in June to build an $800 million casino in Springfield.

MGM and the gaming commissioners agreed to delay the formal awarding of the casino license until the repeal issue is settled because MGM would be obligated to make $200 million  in payments, including the fee owed the state, once the license is formally awarded.

The $73 million dollars in casino revenue is 0.2 percent of the total state budget and such a shortfall could easily be made up by dipping into the state’s rainy day fund.  But House Speaker Robert DeLeo, a strong supporter of the casino law, warned a vote to repeal it could necessitate budget cuts.

John Ribiero, chairman of the Repeal the Casino Deal referendum campaign, said including casino revenue in the budget had more to do with politics than economics.

" They want you to focus on the idea that we are going to be taking away promised magical revenue that has not arrived yet."

The city of Springfield stands to lose a lot financially if the casino law is repealed by voters.  MGM’s annual tax payments to the city will total $25 million once the casino opens.  But the city has already collected some advance payments under the terms of a development agreement with MGM.

City officials say MGM made a $1 million payment last month and by the end of this month is due to pay $3.2 million for the purchase of two city-owned properties in the footprint of the proposed casino.

Springfield Mayor Domenic Sarno, who is a strong supporter of the MGM casino project, said the company has met all its obligations to the city.

"MGM has been a very good corporate citizen. We know they will continue to do the same thing as we move forward."

Communities surrounding Springfield are to receive payments from MGM to mitigate the casino’s impact on such things as traffic and public safety.         

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