Over the border line
At the new MGM Springfield, Connecticut customers make up a substantial portion of the Massachusetts casino’s customers. That could have a major impact not only on this state’s existing casinos, but any plans to build a new one.
Pushing 11 p.m. on a Friday night in the packed parking garage of the new MGM Springfield casino, Josh Jericho had to settle for a shrunken spot alongside a structural support. Not where he wanted to place his red Corvette on a date, but hardly a surprise.
It was less than a 40minute drive from Simsbury to the urban gaming mecca carved into downtown Springfield. “I go to Foxwoods and Mohegan Sun all the time but this is more convenient,” he said.
The Marine Corps veteran saves his big-money, overnight casino trips for Mohegan Sun, but on this night he was part of a parade up Interstate 91 from Connecticut to MGM.
How big a parade? On two trips, monitoring cars leaving the 3,500-space garage and parked in some of the seven decks, I counted an average of 25 percent of all vehicles with Connecticut license plates.
Twenty-five percent. It’s less than I guessed before the tally and less than some forecasts. But, said Matt Landry, a marketing consultant working for MGM, “That seems to be somewhere in the range that you would expect.”
And it’s a big number when you consider that just about every one of those cars carries money that won’t come back home to Connecticut.
I counted almost no cars from Vermont and just a small handful from New York.
It’s too soon to say what all this means for Foxwoods and Mohegan Sun and for Connecticut coffers, as the state collects 25 percent of slot machine revenue from the tribal, rural casinos in New London County. We don’t know how many of those MGM customers would have gone to the Connecticut casinos, and how many are adding gaming visits they wouldn’t otherwise have made.
What we know is that in September, the first full month of operation for MGM Springfield, both Connecticut casinos saw their largest year-over-year slot machine revenue declines in at least two years — 9 percent at Mohegan Sun, 6 percent at Foxwoods.
For the economy as whole, it could easily be $130 million a year or more if the 25 percent count proves correct, if it holds up over time, if traffic at MGM stays strong, and if Connecticut customers such as Josh Jericho settle in as regular betters.
That’s a lot of ifs, and let’s be clear: My two visits to MGM Springfield, with a tallying pen and legal pad in hand, do not constitute a scientific study. That would require dozens of visits at different times and days.
Still, there’s no denying the exodus of cash from Connecticut, which is already leaking money in lots of ways, to a state that hardly needs our help. The rough
figure of $130 million amounts to one-half of 1 percent of the Connecticut economy.
“We work out of state, we play out of state, we travel out of state,” said University of Connecticut economist Fred V. Carstensen, an expert on development modeling. “We still live in Connecticut.”
Some of us, anyway.
As the parade of money continues — augmented by soon-to-open marijuana sales and whatever other activity the combination of gambling and pot generates — it will become all the clearer that Connecticut needs to get its act together under a new governor when it comes to sanctioning and regulating commercial casinos, sports betting, marijuana sales and other lifestyle changes.
That could mean rethinking the strategy that has left Connecticut with no commercial casinos and none about to be built anytime soon. A planned East Windsor casino would be operated by the Mohegan and Mashantucket Pequot tribes under the banner of MMCT. But that project could be tied up in court for years, as the
federal government, prodded by MGM, has held up a crucial license and a judge last month sided with the government.
Bridgeport is the obvious place for a casino, whether that happens through MGM’s proposal for open bids or by a negotiated solution. We’ll have the whole 2019 legislative session to debate that. For now, it’s enough to figure out the effect of MGM Springfield.
Effect on Connecticut economy
The $130 million is not a gargantuan hit and it’s way less than a 2015 study commissioned by the tribes, which projected a fully mature MGM could take more than $300 million a year in gaming revenues from the tribes’ casinos.
“It’s one of these subtle, cumulative kinds of things,” Carstensen said, describing the lost revenue for Connecticut.
Some of the money leaking to Massachusetts comes back in the form of wages and salaries paid to Connecticut residents working at MGM, but unfortunately for Connecticut, they pay income taxes to Massachusetts.
And some of the money comes back through the MGM supply chain if, for example, the company hires a Connecticut electrical contractor.
We’d like to think of the whole Connecticut River Valley and I-91 corridor, from central Massachusetts to the Long Island Sound, as one linked region. It would be bigger than metro Pittsburgh, bigger than greater St. Louis or the sprawling area in and around Portland, Ore.
A large new casino should help that super-region, or at least help the gaming industry, if it brings in new money.
But does it? The answer isn’t easy. “Some of those people from Connecticut probably weren’t going to make that trip if it weren’t for a well-placed casino,” said Landry, the MGM consultant, whose company, Strategic Market Advisers, is in Portsmouth, N.H.
Clyde Barrow, the University of Texas professor and casino expert who condusted the 2015 study for the tribes, believes most of MGM Springfield’s traffic from Connecticut will siphon dollars that would have gone to the tribal casinos.
Clearly, the first month of operations at MGM, $27 million in revenue from table games and slot machines, or about $330 million a year if it were a typical month, is less than MGM plans to see, Barrow and others said.
“If you spent $950 million to generate $330 million a year, that’s not a very good investment for a casino,” he said.
By all accounts, MGM’s rollout predicts rising revenues as curiosity gives way to cash outlays. The place was packed when I visited.
In a half-hour between 10 p.m. and 10:30 p.m. on a recent Friday night at the main gates of the garage, I saw the plates on 156 vehicles exiting. Those included 48, or 31 percent, from Connecticut, 64 percent from Massachusetts and just eight cars from other states.
Inside the garage, on Level 2, 92 of the 328 cars I counted hailed from Connecticut — 28 percent. Massachusetts claimed 61 percent and the rest were from a dozen other states.
This past Thursday, at 3 p.m., I counted 331 cars on Level 3 (dubbed the “New York, New York” level), including 64, or 19 percent, from Connecticut. Sixtynine percent had Massachusetts plates and 16 other states were represented, including 12 cars from New York.
Combined, all of that equals 25 percent from Connecticut. My cruise through the other levels appeared to reveal about that percentage.
If we assume MGM will eventually reach at least $500 million a year in gaming revenue, and customers spend a bit more on food and other entertainment, Connecticut’s spending could easily top that $130 million figure.
MGM will have to do better than it did with Michelle Newell, who drove up there from Vernon with a friend, Chryssy Middlemass, and spent money only on a cup of coffee.
Like Jericho, they’re curious, for now. “It’s the nice, new, shiny thing,” Middlemass said, “the kid with the toy ... people will keep coming, absolutely.”
An exterior view of MGM Springfield, the $960 million casino complex that opens Friday.