Published November 27. 2013 12:00PM Updated November 27. 2013 7:46PM
Hoping to salvage their designs on the Massachusetts gaming market, Mohegan Sun and Suffolk Downs, the Boston-area horse track, announced Wednesday that they've struck a deal to build and operate a $1 billion resort casino on 42 acres the track owns in the small, oceanfront city of Revere.
The announcement came little more than three weeks after voters — most of them, at least — rejected the partners' previous proposals.
In Palmer, in western Massachusetts, voters on Election Day narrowly defeated Mohegan Sun's plan for a resort casino off Exit 8 of the Massachusetts Turnpike. On the same day, East Boston voters soundly rejected a Suffolk Downs proposal that would have incorporated track-owned property in East Boston and Revere. At the same time, voters in Revere endorsed the project.
Suffolk Downs had been seeking a partner since calling on Caesars Entertainment to withdraw from the original Suffolk Downs project after the Massachusetts Gaming Commission questioned Caesars' "suitability" during background checks.
It is not yet clear whether the commission will permit the Suffolk Downs-Mohegan Sun partnership to propose a project located entirely in Revere. The new partners, nevertheless, hailed their alliance.
"This is a historic day for the City of Revere, Suffolk Downs and all of New England," Richard Fields, Suffolk Downs' principal owner, said in a statement. "By choosing Mohegan Sun as our resort casino developer and operator, we bring new energy and excitement to our pursuit of a gaming license — and a leader and premier brand in resort casino gaming that has been hugely successful in New England for 17 years."
In addition to Mohegan Sun, the Mohegan Tribe's flagship property in Uncasville, the Mohegan Tribal Gaming Authority operates Mohegan Sun at Pocono Downs, a casino and race track in Wilkes-Barre, Pa., and Resorts Casino Hotel in Atlantic City. The authority also is involved with developers seeking a gaming license in Philadelphia and is hoping to pursue a casino project in New York's Catskills region.
Mitchell Etess, the Mohegan authority's chief executive officer, said he was excited about the opportunity to create "something truly special" in Revere. "Our planners have only had a short amount of time to look at it, but we're sure we can come up with something that is a regional gathering place and that is also a national and international gaming attraction," he said.
While Mohegan Sun's Palmer proposal called for a 70,000-square-foot water park, Etess said it was too soon to say whether the Revere plan would include a similar feature.
"It's possible," he said. "We're looking at all different designs. We haven't made any determinations about specific amenities, about whether it will have a water park or not. … We have a vision."
Mohegan Sun left some bitterness in its wake in western Massachusetts, where a recount Tuesday of the Nov. 5 referendum certified that the Palmer casino project had been defeated by 94 votes. More than 5,200 votes were cast.
Spokesmen for Palmer business groups and one town official have accused Mohegan Sun of abandoning the town to pursue a deal with Suffolk Downs. They have criticized Mohegan Sun's plan to continue leasing the 152 acres where the Palmer casino was to be built, saying it's a ploy to prevent another casino operator from developing the site.
The Mohegan Tribe, which owns Mohegan Sun, has said it will consider pursuing non-gaming development on the property.
In a letter Monday to the gaming commission, Paul Burns, a Palmer town councilor, complained about Mohegan Sun.
"Mohegan's loss at the polls three weeks ago was not the result of a divided community; rather, it is the result of a conflicted casino company more focused on ensuring their financial viability and protecting their CT property than they were on securing a (casino) license," Burns wrote. "… While I am not sure what the process would be, I think it is important that the commission examine ways to address what I view as a clear betrayal of the commitment so many of us made to this process."
Etess maintained that Mohegan Sun did not engage in talks with Suffolk Downs until well after the Election Day referendum in Palmer. He said Mohegan Sun began negotiations with Suffolk Downs "when it became clear, based on what we were hearing, that the recount wasn't going to change anything."
"The only reason we're not in Palmer today is because the people of Palmer didn't want us," he said. "We spent years and years and millions and millions of dollars in Palmer — but that can't change the outcome of the referendum."
Mohegan Sun and Suffolk Downs still need the gaming commission's approval to submit a Revere casino plan by a Dec. 31 deadline. The commission heard last week from several individuals who testified about the viability of a Suffolk Downs proposal located only in Revere as opposed to East Boston and Revere. Some said the East Boston voters' rejection of the original Suffolk Downs plan prohibits Suffolk Downs from offering a retooled version.
"After listening to that testimony, the commission decided that the best course of action was to have members of our legal team conduct a thorough analysis of the legislation as it pertains to this unique circumstance and to report out its finding to the commission at a later date," Elaine Driscoll, a commission spokeswoman, said Wednesday in an email.
The commission is scheduled to take up the matter when it meets Tuesday in Boston. At issue, potentially, is whether the "host community agreement" Suffolk Downs reached with Revere can still apply to a new proposal.
"We're very comfortable that the host community agreement can be amended," Etess said.
The agreement will call for millions of dollars in annual payments to Revere as well as investments in municipal projects and transportation and infrastructure improvements. The casino project would create 2,500 construction jobs and 4,000 permanent jobs, according to Suffolk Downs.
The gaming commission has granted positive "suitability" determinations to Suffolk Downs and to Mohegan Sun and its financial partner, Brigade Capital Management.
Brigade was to provide 60 percent of the equity financing for the Palmer project, with Mohegan Sun to provide the rest. Etess said the financial structure of the Revere project would be similar. He also said that while no name has been chosen for the Revere resort, it definitely would be a Mohegan Sun-branded property.
The Suffolk Downs project could have to compete for the one Greater Boston casino license the commission is expected to award next year. Las Vegas-based Wynn Resorts has proposed a $1.2 billion project for Everett, a city that borders Revere. Foxwoods Resort Casino, a partner in a third Greater Boston project, was eliminated from contention when Milford voters rejected it in a Nov. 19 referendum.
Mohegan Sun's defeat in Palmer leaves one contender for the one western Massachusetts casino license — MGM Resorts, which has proposed a Springfield project.