Foxwoods Massachusetts still lacks primary financial backer
Gaming regulators raised questions about the Foxwoods Massachusetts casino project Wednesday, perhaps none more significant than those related to the fact that the project partners have yet to secure a majority owner.
Foxwoods officials, testifying at a Boston hearing that was live-streamed on the Massachusetts Gaming Commission's website, told investigators they were close to reaching a deal with a partner that would provide 55 percent of the equity needed to develop the $1 billion project proposed for Milford.
Foxwoods Resort Casino would ante up 10 percent of the equity while other members of the partnership, formally known as Crossroads Massachusetts, would provide 35 percent, said Scott Butera, Foxwoods' president and chief executive officer.
Foxwoods, the Mashantucket Pequot-owned facility in southeastern Connecticut, would earn management fees for operating the casino.
Butera, who serves as president of the Crossroads partnership, said the partners were dealing with two entities that had made offers, one a private equity firm and the other a publicly traded company that would finance and own the real estate portion of the project, which the partners would rent from them. Deutsche Bank would leverage part of the deal involving the private equity firm, Butera said.
He said a deal could be struck within days.
The commission's Investigations and Enforcement Bureau, which hired investigators to conduct background checks on the partners, flagged the gap in the project's financing in a report released Wednesday, listing it among "concerns regarding the application."
Foxwoods Massachusetts is pursuing the sole Greater Boston casino license the commission is expected to award next year. Wynn Resorts and Suffolk Downs, which are proposing projects in Everett and Revere, respectively, are competing for the same license.
Foxwoods Massachusetts faces a binding referendum Tuesday in Milford and, if the referendum is approved, a Dec. 9 town meeting vote on a required zoning change.
Questioning by the five commission members and their investigators also centered on information in the report regarding the Mashantuckets' role.
The Mashantucket Pequot Gaming Enterprise's management of the casino would be controlled by a three-member board comprising Butera and two members of the Mashantucket Pequot Tribal Council — Rodney Butler, the council's chairman, and Crystal Whipple, the vice chairwoman-elect. No other tribal members would be involved.
Stephen Crosby, the gaming commission chairman, said the management structure appeared intended to "insulate" Foxwoods Massachusetts from suitability issues associated with federal indictments of former tribal councilors.
The investigators' report called attention to the cases of Michael Thomas, the former council chairman convicted in July of embezzling from the tribe; his brother, Steven Thomas, who last month pleaded guilty to theft before resigning as council treasurer; and Anthony Beltran, a former councilor named the tribe's chief of staff earlier this year.
David Mackey, an attorney for the commission, asked Butler about the tribal council's appointment of Beltran, who has felony criminal convictions in his past. As chief of staff, Beltran oversees tribal police and fire personnel as well as other governmental departments.
Butler said councilors were well aware of Beltran's criminal record. But more important to them, he said, were Beltran's qualifications for the job. Butler said that since his appointment, Beltran has been instrumental in negotiating an agreement with state police regarding the policing of Foxwoods.
The commission also questioned the tribal council's support of Steven Thomas.
"Could the council have removed him as treasurer?" Mackey asked.
"Yes," replied Butler, who said Thomas' case was heavily debated by the council, which ultimately felt comfortable with him continuing as treasurer.
Neither of the Thomases nor Beltran is considered a "qualifier" for the purposes of the commission's determination of "suitability."
The determination will be contained in a written decision Crosby, the chairman, said he hoped to issue before Tuesday's referendum in Milford.
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Foxwoods Resort Casino and Mohegan Sun, which contribute 25% of their slots winnings to the state, made August payments of $7.7 million and $10.9 million, respectively.