The Massachusetts Casino Lawsuit, Explained

In the immortal words of Senate President Terry Murray, “Ka-Ching!” Massachusetts is now a casino state. Governor Deval Patrick signed the expanded gaming bill into law yesterday, setting the state on a course to license three casinos and a slots parlor. Governor Slots, as former Globe columnist Steve Bailey used to call Patrick, had barely set his pen down before an angry New York developer, KG Urban Enterprises, filed the first lawsuit. So what’s this all about? Please, allow me to explain. Let’s do this in question and answer form, shall we?

Just who are these KG Urban Enterprises people?

KG is a boutique development firm that specializes in turning environmental brown sites and industrial waterfronts into commercial space, especially casinos. And yes, I agree, that may be the most random thing ever.

What’s their relationship to the NBA lockout?

Glad you asked! Andrew Stern, KG’s Managing Director and Principal, is NBA Commissioner David Stern’s son. Obviously, this is a family that knows how to drive a hard bargain.

Why are they suing?

The new gaming law breaks the state into three zones, allowing for one casino to be built in each. In the zone around Boston and the zone in the western part of the state, the casino licenses will be openly bid. Grab a deck of cards and a poker table and you and I could compete (I’ll count on you for the money backing). But in the third zone, in the southeastern part of the state, preference is given to a federally recognized Indian tribe. That means the Mashpee Wampanoag, since the only other federally recognized Indian tribe in Massachusetts, the Aquinnah Wampanoag, traded in their gaming rights years ago. According to the bill, the Mashpee have until July 31, 2012, to secure land for a casino, win a host community referendum, and negotiate a compact with the governor. If they do all that, the casino is theirs. No other bidders will be allowed to submit proposals.

KG wants to open a casino and hotel in New Bedford, which is in the Mashpee zone, and is suing to get a shot at the process.

Why do the Mashpee get such preference? Will they be able to hit their deadline?

Those are your best questions yet! Read all about it here.

So if that’s the law, why is KG trying to build a casino in the Mashpee zone anyway? Why not just go somewhere else?

Well, one supposes that there are only so many urban brown sites or industrial waterfronts in Massachusetts suitable for casino development. More importantly, KG has been working on the site, an old power plant on the New Bedford waterfront, for over four years, dating back to when Governor Patrick first tried to pass a casino bill. As their lawsuit points out, their plans are fairly advanced and they’ve already invested about $4.6 million in this, so no doubt want to see it through.

On what grounds are they suing?

The main thrust of the suit is that the casino law violates the U.S. Constitution’s equal protection clause. KG is arguing that the state is favoring Indian tribes based solely on race, which it cannot do. Defenders of the bill would counter that, because tribes are sovereign nations, it’s actually more like dealing with a foreign government. Speaker of the House Robert DeLeo has defended the law’s constitutionality and says the only place you’d find something more kosher is Rubin’s deli (I paraphrased).

Is there anything else interesting in that 21-page suit that I ought to know about?

KG’s complaint does make a compelling argument about how the Indian preference has been unfair to the southeastern part of the state. The preference has had a chilling effect on developers, as just two besides the Mashpee have expressed interest in the zone (the other, Leon Dragone’s Northeast Group, also is looking at a site in New Bedford). By giving the Mashpee this no bid preference, you may very well end up with something worse than you would have had in a competitive bidding situation. That being said, it’s unclear that this argument would affect the law’s legality.

How firmly rooted in their principles are these KG guys?

If the Mashpee, who are looking for a casino plot themselves, called KG tomorrow and said they wanted to partner on a deal, you could bet this lawsuit would disappear real fast. That seems unlikely, though, since the Mashpee have long coveted resort amenities, like a golf course, that wouldn’t be possible in an urban site like New Bedford.

Will this affect how soon casinos open in Massachusetts?

Maybe. We’re going to have to see how things play out. If the suit is successful, a judge will have to decide what parts of the law stand and what parts don’t. In the meantime, it could well delay the law’s implementation. Stay tuned.