In a stunning reversal of fortune, KG Urban Enterprises has ditched its $650 million New Bedford casino project, citing financial difficulties. This ends seven years of grinding effort to gain civic 
acceptance, which culminated in a landslide electoral victory earlier this year. It also leaves a Neil Bluhm-backed casino proposal in Brockton as the only one on the table before the Massachusetts Gaming Commission. Said KG Urban Managing Partner Barry M. Gosin, “Despite significant efforts and expenditures on our part, we and our lenders/partners have been unable to create a viable financing package for the project. In particular, both primary and mezzanine financing in the requisite amounts have proved to be significantly harder to obtain than we had anticipated. The reluctance of lenders to provide the requisite financing is due to several factors, including the possibility of competition from a nearby [Mashpee Wampanoag] casino which would pay no taxes or other compensation to the Commonwealth.”
The sudden claim of penury is quite a different tune from the one KG Urban was singing last May. Its supposedly reluctant backers included fast-growing REIT Gaming & Leisure Properties. However, project booster George Leontire fixed the blame on Gosin, characterizing the developer as all-hat no-cattle, adding “You don’t represent that you’re going to do this deal for seven years, and then walk away in the 11th hour. My words are not fit to be printed.” Designated casino operator Foxwoods Resort Casino also found itself without a chair when the music stopped playing.
Another concern cited by investors was New Bedford’s ability to overcome competition from casinos in Connecticut and Rhode 
Island. Stating that he’d been led to believe KG Urban’s project had been on solid footing, New Bedford Mayor Jon Mitchell pronounced himself “understandably upset.” Fall River Office of Economic Development Executive Vice President Kenneth Fiola Jr. was less surprised, saying he’d always been skeptical of the finances, not to mention the $50 million environmental-cleanup tab that came with the project.
Columnist Jack Spillane was fairly unsparing, writing “It’s breathtaking how a developer could long court, cajole, plead and implore New Bedford residents and its leaders to give it a chance to develop one of the most important parcels in the city and then at the last minute say ‘Nevermind.’… It’s indisputable that KG Urban was overstating the viability of its project.”
Brockton co-principal George Carney wasn’t surprised that financiers were skeptical, saying, “When you take a circle around New Bedford, 75% of it is surrounded by water.” Carney also brushed off the — mostly exaggerated — threat of the Mashpee Wampanoags, remarking “We’re not concerned about the Indians. We’ve got a far better location than the Indians have” in Taunton. (The tribe, more significantly, also lacks land-in-trust status and is far from achieving it.)
Bluhm and Carney’s Mass Gaming & Entertainment may be no closer to a casino concession, though. The MGC has already signaled reluctance to award the southeast-Massachusetts license and may well 
balk at giving it to Brockton by default. Grumbles one prominent Brocktonian, “It appears [KG Urban] were the favorite because the number of extensions they got. Who knows what the next roadblock and hurdle will be.” Indeed, Commissioner James McHugh briefly seemed to hint at the MGC intervening on KG Urban’s behalf, but the commission ultimately bowed to the inevitable. Chairman Stephen Crosby (below) couldn’t stop flirting with New Bedford, 
either, saying “If somebody called them up tomorrow … I would say we’d want to consider whether to go forward.” Only Commissioner Enrique Zuniga seemed to be living in the real world, remarking, “I have girlfriends who broke up with me – you just have to accept when they tell you.”
Still, the MGC’s been guilty of indulging New Bedford with ever-moving “This time we really mean it” deadlines. It could also cite the narrowness of the Brockton host-community vote as a strike against Carney and Bluhm. Whatever the case, any new applicant who’d emerge would be hard up against a Sept. 30 deadline for a suitability investigation.
The New Bedford fiasco is already causing much angst over things such as whether requiring a $500 million minimum investment is asking too much and whether Mayor Mitchell took too long to negotiate. One also has to wonder if the MGC will continue to foot-drag on the Region C license. That would, in combination with project delays in Springfield and Everett, push the state’s anticipated casino-tax windfall into the hazy yon. Considering his track record of success in Philadelphia, Pittsburgh and Des Plaines, the MGC ought to think Bluhm and Brockton are a pretty good bet and be done with it.
* Penn National Gaming finds itself picking up the tab for three days of racing at Suffolk Downs, financed with Plainridge Park revenues. Since Suffolk is only proposing to hold three dates of racing, at least one trainer has balked at the plan, says the Boston Globe, “arguing that the industry would be better served by not spending $1.7 million in casino money for such a short season.”
J.P. Morgan analyst Joseph Greff was given a tour of Plainridge Park and told that 60,000 loyalty-program members have already enrolled
and that membership continues to grow by about a thousand players a day. Interestingly, the controversial electronic table games are described as “underperforming” compared to video poker and high-limit slots. A quarter of the player base is from Boston, another 25% from Region C but the biggest donor (30%) is Rhode Island. Unlike the learning curve Penn faced in Columbus, Ohio, its customers are described as “experienced players,” in whom it will “aggressively reinvest.”
Projecting a late-2018 opening for Wynn Everett, Penn figures it has the Massachusetts market all to itself for three years. (No reason to 
doubt that.) Deutsche Bank analyst Carlo Santarelli also got a look at the racino and was “impressed with the quality of the facility and believe management commentary was, at least, in line with current fundamental performance expectations.” Scientific Games dominates the slot product, representing 43% of the floor. Non-gaming revenue was described as “strong” and an upcoming Taylor Swift concert was expected to provide an acid test of Gillette Stadium traffic impact on Plainridge.
Compared to Greff, Santarelli was told that Plainridge had seen “less traffic [20%] from Rhode Island” than expected. A real surprise for 
management was “weaker than expected demand for Asian game offerings.” As for a hotel being added, that would be contingent upon the racino being upgraded to a full casino (i.e., table games plus lower taxes), although that seems very unlikely to happen, given the painstaking way in which Massachusetts’ casino formula was hammered out. It’s way too early in the game for Penn to petition for a change in the rules of play.
* Up in Maine, Penn is crying “Uncle!” from a double-whammy of increased competition and a higher property-tax assessment. Penn wants the value of Hollywood Casino Bangor written down steeply and a $876,849 rebate paid. Business having dipped 13%, “We’re asking that our property tax be revised to reflect the current reduction in our business volumes as a result of continued competitive pressures from Oxford Casino and general softness in the economy,” said General Manager Jose Flores.
* When it comes to foot-dragging, the Massachusetts Gaming 
Commission has nothing on Florida Gov. Rick Scott (R), who still balks at meeting with the Seminole Tribe. The latter is preparing to demand mediation to resolve its blackjack compact, which sunsets in three months. It’s not clear what Scott, a champion procrastinator, wants from the Seminoles. The latter, for their part, have an ace up their sleeve, the state having permitted electronic 21 in private-sector casinos. The Seminoles are threatening to nullify their compact and keep on dealing blackjack until 2030.
* Unprepared to take ‘no’ for an answer, GVC Holdings is outbidding itself in its effort to acquire Bwin.party Digital Entertainment. Perhaps its new, $1.5 billion offer will be too rich for buyer-designate 888 to match, although the latter won once before with a second-best bid. Davy Research analysts wrote, “This is a real statement of intent from GVC. The proposed premium over the accepted offer by 888 is such that the bwin.party board will probably have no choice but to reconsider its acceptance of the 888 offer.”
