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After underwhelming first year, can casino improve fortunes?

Boston 25 News

Philip Marcelo-AP

August 24, 2019

BOSTON (AP) - Aerosmith, New England Patriots cheerleaders and a five-tier birthday cake: Massachusetts' first Las Vegas-style casino is throwing itself an indulgent birthday bash Saturday.

But one year after opening in western Massachusetts, MGM Springfield has underperformed its lofty revenue promises and already shed hundreds of jobs. And for some, the promised downtown revival has been underwhelming.

With a new rival in the form of the $2.6 billion Encore Boston Harbor casino and potentially more competition in Connecticut, can the $960 million entertainment complex meant to revive a struggling region turn around its own fortunes?

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Casino president Michael Mathis promises the gambling, hotel and entertainment complex is retooling for its second act, even as he and city leaders tout the resort's success in spurring new economic investment, drawing millions of new visitors to downtown and employing thousands of city residents.

"We're just ramping up. There's a lot of upside," he told The Associated Press ahead of Saturday's festivities. "The dominoes are falling, but not as quick as we've liked."

Mathis concedes casino officials underestimated the challenge of drawing loyal customers away from regional powerhouses Foxwoods and Mohegan Sun. The Indian tribe-owned Connecticut resorts saw gambling revenues decline this year, though not as bad as some feared with MGM's entry.

Going forward, MGM plans to double down on high quality, non-gambling entertainment, like Aerosmith's slate of four concerts this week, Mathis said. The casino is also overhauling its slot machine offerings, introducing new amenities for high rollers and continuing to press for legalized sports gambling in Massachusetts, he said.

"This is a competitive market and each place has to find their niche," Mathis said. "Great entertainment and a unique property, I think, will be ours."

The adjustments will reap marginal benefits but likely won't be game changers, suggests Colin Mansfield, a casino expert at the ratings agency Fitch.

"Many of its regional competitors are focused on the same initiatives," he said. "From an amenity perspective, the tribal casinos have much more destination-style offerings that MGM Springfield lacks."

But unlike the troubled new casinos in upstate New York - which have faced bankruptcy or ownership changes just a year after opening - MGM Springfield will eventually find its footing, predicts Paul DeBole, a gambling expert at Lasell College in Newton, Massachusetts.

"MGM knows how to run a profitable casino," he said. "Even in a saturated market."

Through July, MGM Springfield has generated just over $250 million in gambling revenue despite initially projecting more than $400 million in year one - and much more in succeeding years. The casino also opened with 3,000 workers, but is down to roughly 2,300 as the company reduces its global workforce.

Mathis said he doesn't anticipate further local job cuts. He's quick to note that more than 40% of those employed are residents of Springfield - exceeding initial goals - and that the casino brought in roughly six million visitors its first year.

Still, some downtown shop owners complain the promised spillover to Main Street hasn't materialized. Some storefronts near the casino remain vacant and a few new shops have already opened and shuttered.

The resorts' unconventional design - a low-slung brick facade that blends with the historic streetscape and a generous outdoor plaza - was meant to encourage casino patrons to explore downtown and breathe new life into Main Street.

Springfield Mayor Domenic Sarno says there are other signs the economic boom is underway. Meals tax revenue is up 16% from the same period last year, and hotel tax revenue is up 55%, he said.

Actor Mark Wahlberg and his family plan to open a Wahlburgers eatery next to the casino, while a developer is restoring a historic downtown theater and pairing it with a new boutique hotel.

MGM is also working with the city to transform another key downtown property into dozens of units of market-rate housing - a critical requirement of its agreements with the city and the state.

Downtown-area crime, meanwhile, is down 9% from the same point last year, according to Sarno.

"This has been a huge shot in the arm," he said. "The spin-off effects are happening. It's brought an air of momentum. People feel confident in the city."

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