April 30 (Bloomberg) -- MGM Resorts International cleared a hurdle in efforts to build an $800 million casino in Springfield, Massachusetts, gaining the backing of the mayor over a competing proposal by Penn National Gaming Inc.
Mayor Domenic Sarno announced his choice of MGM at a press conference today. The Las Vegas-based casino company’s plan must be approved by Springfield voters and a five-member Massachusetts Gaming Commission that will weigh competing plans in other cities.
“We think Springfield is a significant win for us, and we’re very excited about our chances going forward,” MGM President William Hornbuckle said on a conference call with reporters. “It’s very rare you get in a region the scale of western Massachusetts an exclusive opportunity for a license. I think ultimately our returns are going to be exceptional.”
The state legalized gambling in 2011, allowing one casino in each of three geographic regions. Would-be operators must negotiate an agreement with the municipality where their casino would be based and win local voter approval.
MGM will have to compete with two other operators chasing the western Massachusetts license: the Mohegan Tribal Gaming Authority wants to open a casino in Palmer, and Hard Rock International, owned by Florida’s Seminole Tribe, is seeking approval in West Springfield, a separate city.
If MGM gains final approval, it will pay more than $25 million annually to Springfield, including property taxes, community impact payments and workforce development grants, according to a summary of the host agreement. The city is the state’s fourth-poorest based on median household income.
A Springfield casino could generate gambling revenue of $450 million annually, drawing customers from Hartford, Connecticut, and suburban Boston, Hornbuckle said. If voters approve the proposal in a July referendum and the state awards the license by the first quarter of next year, the casino could open by the summer of 2016, he said.
MGM, the largest owner of casinos on the Las Vegas Strip, gained 2.1 percent to $14.03 at 2:42 p.m. in New York. The stock had advanced 18 percent this year before today.
Penn, based in Wyomissing, Pennsylvania, added 0.2 percent to $58.49 and had advanced 19 percent this year before today.
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