Caesars Bows out of Suffolk Casino Following Report from Gaming Comm.

October 25, 2013
By
No-Eastie Casino supporters celebrate the news that Suffolk Downs dropped Caesars Entertainment as the tracks casino operator Sunday outside Most Holy Redeemer Church. Despite the setback and calls to withdraw their gaming application Suffolk Downs is going forward and looking for a new casino operator.

No-Eastie Casino supporters celebrate the news that Suffolk Downs dropped Caesars Entertainment
as the tracks casino operator Sunday outside Most Holy Redeemer Church. Despite the setback
and calls to withdraw their gaming application Suffolk Downs is going forward and looking
for a new casino operator.

The news over the weekend that Suffolk Downs asked Caesars Entertainment to withdraw as their casino operator shocked many residents in East Boston as they prepare to head to the polls to vote on the Host Community referendum on November 5.

Both casino supporters and opponents spent the weekend digesting the information coming out of Suffolk Downs that Caesars, who had a four percent stake in a casino at Suffolk, was most likely going to be deemed unsuitable for a gaming license after an investigation by the Massachusetts Gaming Commission (MGC)

The news was a public relations nightmare for Suffolk Downs less than three weeks ahead of the vote as ballots have already been printed and the summary of the ballot question includes the ‘Caesars’ brand three times. Secretary of State William Galvin said the vote would go on as planned because absentee ballots have already been cast.

Whether this will prompt anti-casino groups to challenge the outcome of November 5th’s vote remains to be seen. However, legal experts said the vote is on the ballot question and not the ballot summary. The ballot question does not mention Caesars. However, anti-casino groups said that having ‘Caesars’ in the summary is misleading and they would explore their options after November 5.

While Suffolk Downs downplayed the news, anti-casino groups have tried to capitalize on the development and formally asked Suffolk Downs to withdraw its casino license application over the weekend.

“In the wake of the Gaming Commission’s recent finding that Caesars Entertainment is an unsuitable operator for the proposed casino in East Boston—based in part upon its alleged known ties to organized crime—No Eastie Casino demands that Suffolk Downs pursue the only responsible course of action now available to it,” read a No Eastie Casino statement Saturday.

However, the Suffolk Downs team said the only thing that has changed about the proposal and subsequent host community agreement is that the development would not include the name ‘Caesars’ and they are actively trying to find a replacement partner to operate the proposed casino.

The shakeup came Friday evening after Suffolk Downs’ ownership received a briefing from the Mass Gaming Commission’s investigative bureau.

Suffolk Downs COO Chip Tuttle said there were several issues that were raised by the Commission about Caesars that would have most likely made them unsuitable for a gaming license under the state’s very strict vetting process. These included a case stemming out of Las Vegas where a big time gambler or ‘whale’ accused Caesars’’ employees of feeding him booze and pills during an epic losing streak that cost the gambler over $100 million. There was another issue with Caesars partnering with a hotel development in Vegas where one of the developers may have had loose ties to the Russian Mob. Once Caesars was made aware of that issue they immediately cut ties with the hotel development.

Caesars’ finances and debt was also called into question.

“Based on recent information and the briefing we received from the investigative bureau of the Massachusetts Gaming Commission, we are confident that Suffolk Downs will be deemed suitable for licensing as we work to earn a gaming license in the Commonwealth,” said Tuttle. “As a result of the briefing, we have asked our management partner, Caesars Entertainment, to withdraw as a qualifier from our license application. We will immediately begin a public communications initiative to notify our host communities of this change. We look forward to the next phases of the public process to bring to fruition our proposal to develop a world class destination resort casino on our 161 acre property that will be an economic generator for our two host communities of Boston and Revere.”

No Eastie Casino capitalized on the media blitz that had befallen Suffolk Downs over the weekend. The group has long called into question Caesars’ finances, one of the major issues the Gaming Commission most likely had with the casino magnate’s application.

“As recently as two months ago, Suffolk Downs owner Joe O’Donnell stated that Caesars was ‘as professional as they come,’” said No Eastie Casino spokeswoman Celeste Myers. “Clearly, they did not do due diligence in vetting Caesars – a company with which they have had a relationship since 2011 – and only ended the relationship when forced to do so.”

No Eastie Casino also called into question the validity of the Host Community agreement inked between Suffolk Downs’ ownership and the City of Boston in August.

“Caesars’ sudden departure also raises serious questions about the value of the City’s and Suffolk Downs’ host community agreement and shows that the promises in the mitigation agreement were made to be broken,” said Myers. “Many key elements of the mitigation agreement-including key components of the jobs and small business plans-were tied to Caesars’ employee practices and Total Rewards programs.”

On Monday Tuttle said Suffolk Downs had several parties that were interested in partnering with the racetrack’s ownership but may not have a new casino operator before the November 5 vote. In order to make the December 31 deadline for the final casino application Suffolk Downs will most likely partner with one of 11 casino operators that have already been vetted by the Gaming Commission. These could include the Hard Rock, MGM or Parx.

Tuttle said any future partner would be beholden to the Host Community Agreement that includes $5 million spent on goods and services in Eastie per year, a $10 million (up to $20 million) annual payment to the neighborhood as well as road improvements and support of other community programs.

The size and scope of the development also does not change and what the community has seen for the last two years remains the same.

Tuttle added that Suffolk Downs in also committed to continuing a rewards program modeled after the one touted by Caesars.

“We have been talking about a rewards program in 2009 before we ever partnered with Caesars,” said Tuttle. “This would include the ability of our customers to use their points at restaurants and shops throughout the community. These commitments that we have made do not change. They are on us and the agreement between Suffolk Downs and the City of Boston has always been between Suffolk Downs and the City of Boston not Suffolk-Caesars and the City of Boston. We own everything in that agreement and will continue to honor that agreement with another casino operator.”

Tuttle added that a majority of Suffolk Downs supporters have supported casino gaming at the site well before Caesars was a partner.

“It would be like supporting a large hotel development project as a Hilton but then finding out later it was being changed to a Hyatt—would you then pull your support if it included all the same aspects that made it an attractive project?” Tuttle asked. “That’s what is going on here. Everything remains the same—it’s just that the building will not say ‘Caesars’.”

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