Goodwin Gaming
July 12, 2013

Two Slots Contenders Move One Step Closer to Hitting the Jackpot

On July 11, 2013, the Massachusetts Gaming Commission held its 71st public meeting. Highlights from the meeting included:

Phase 1 Qualifier Deadline

Following up on the discussion the Commission had at the last public meeting on June 27, 2013, the Commission concluded that rather than imposing a formal deadline for changes to material qualifiers under Phase 1 of the application process, any proposed qualifier changes would be subject to a case-by-case review by the Commission.

Master Schedule

Executive Director Rick Day highlighted some minor changes to the Master Schedule:

July 11-25: The Investigations and Enforcement Bureau (IEB) and the Commission will review suitability reports for Category 2 slot parlor applicants during this period, but these suitability determinations may not be completed until the end of August.

Mid-August: The Commission initially anticipated the submission of Category 1 casino applicant suitability reports in early to mid-August. However, Director Day cautioned that such a timeframe seemed “very optimistic.”  The suitability review periods for Category 1 casino applicants and Category 2 slot parlor applicants currently overlap and the IEB may need additional time to review the suitability reports of all applicants.

August 22:  The first suitability hearing for a Category 1 casino applicant will likely occur on August 22. Suitability hearings conclude the first phase of the Commission’s two-phase application process. In Phase 1, the Commission conducts suitability hearings to evaluate the qualifications and suitability of an applicant and all of its natural person and entity qualifiers. The Commission must find an applicant suitable according to the standards set forth in M.G.L. ch. 23K before enabling the applicant to proceed to Phase 2, which focuses on the applicant’s proposed gaming establishment.

Timing of Suitability Reports

Director Day sought guidance from the Commission on the best approach for reviewing the suitability reports. Director Day offered two options:

  1. The IEB could review suitability reports on a rolling basis as they are completed, or
  2. The IEB could review suitability reports by region.

Director Day suggested that the rolling basis would be preferable given that some applicants will have suitability reports that are more complex than others, which will take more time to adequately review. Additionally, IEB Director Karen Wells suggested that performing the reviews by region, although possibly preferable, could result in problems if one applicant waited too long to submit its materials, which would hold up the process for other applicants in the region.

Commissioner McHugh suggested that as long as the Commission emphasizes that no inference should be drawn from the order in which each applicant is reviewed, then a rolling basis would be preferable. Chairman Crosby pointed out that Phase 2 applications are already available; therefore delaying the suitability reports for certain applicants would not delay those applicants from moving forward with their Phase 2 applications.

The Commission actively seeks comments from applicants and the public on whether a rolling basis review would seem prejudicial in any way. Unless future comments persuade the Commission otherwise, the Commission will adopt a rolling basis suitability review. Chairman Crosby mentioned that reviewing suitability on a rolling basis will likely increase the frequency of referenda held before the suitability decisions. Commissioner McHugh reiterated that the deadline date for suitability reports for Phase 1 applications filed to date remains September 20.

Mass Gaming and Entertainment & PPE Casino Resorts Suitability Hearings

The Commission added Mass Gaming and Entertainment, LLC and PPE Casino Resorts MA LLC to their ongoing list of operators found suitable and ready to proceed to Phase 2 of the application process.   Neither applicant has settled on a site for their proposed slot parlor. Mass Gaming and Entertainment, LLC is interested in a potential site in Millbury while PPE Casino Resorts MA LLC is interested in a location in Leominster.

In finding the two slots parlor contender suitable, the IEB looked at the criteria outlined in Chapter 23K, Section 12 of the General Laws of Massachusetts and accessed the companies’ public and private records to determine whether the applicant:

Per 205 CMR 115.00, during Phase 1, each applicant has the burden of proof to establish their qualifications by clear and convincing evidence. Upon finalizing its review of each applicant, the IEB must submit a report to the Commission with a recommendation on the suitability of the applicant.

IEB Director Wells commented on the difference between conditions on suitability versus conditions on licensure. A condition on suitability would trigger an adjudicatory hearing in which the Commission would hear from witnesses to clarify the issues raised related to the applicant’s suitability. A condition on licensure, however, would occur if the IEB determined that the applicant satisfied the statutory suitability criteria but decided to impose particular conditions on the applicant upon licensure.

Conditions for licensure include requiring the applicant to establish an independent audit committee, requiring the applicant to keep the IEB abreast of any changes to the applicant’s structure and requiring the applicant to keep the IEB informed of any regulatory or compliance issues the applicant may face after the applicant is found suitable.