How MGM’s surrounding community agreements impact Springfield

SPRINGFIELD, Mass. (WWLP) – MGM completed eight surrounding community agreements with Holyoke, Longmeadow, East Longmeadow, WIlbraham, Chicopee, Agawam, West Springfield and Ludlow. If it opens a casino, MGM will pay various amounts of money to those communities over the next 15 years.

The 22News I-Team reveals how much money Springfield could potentially lose out on because of those deals.

MGM pays 100% of these surrounding community agreements, but it is money that could have ended up in Springfield’s pockets.

Here’s a simplified version of what was agreed to between Springfield and MGM in their host community agreement for surrounding community payments:

MGM will be fully responsible for all upfront and annual surrounding community payments up to $500,000 per year.  Anything above that will be split between Springfield and MGM.  MGM will pay both its portion and Springfield’s portion.  Springfield’s portion will come out of their Community Impact Percentage Payment, which is the fund that MGM is required to pay the city; 1/8 of one percent of its gross gaming revenue for their first $400,000,000 and 1% of their gross gaming revenue beyond that.  It’s estimated that those payments will be about $1.3 million per year.

The projected total upfront payment MGM will pay surrounding communities is $1,965,000.  The projected annual payments MGM will pay all surrounding communities is $1.5 Million per year for 15 years.  Overall, MGM is projected to credit Springfield $8,232,500 over 15 years or about $550,000 per year to pay surrounding communities.  These dollar amounts are estimates because they depend on MGM’s gross gaming revenue.  MGM’s agreements also include a look back provision for several of the communities it struck a deal with.

This is also contingent on casinos moving forward in Massachusetts.   MGM is expected to be designated the license winner in Western Mass on June 13, but the Supreme Judicial Court will likely decide by July if the state will vote this November on the legality of casinos. Alan Cabot from the group, “Repeal the Casino Deal”, sent 22News this statement: “Gambling opponents point to the awards as objective evidence that MGM’s application has hidden adverse costs that casino gambling would bring to both Springfield and the surrounding communities.”

MGM agreed to surrounding community agreements with six communities.  The awards Cabot statement references were the surrounding community agreements with West Springfield and Longmeadow.  An arbitration panel choose West Springfield’s and Longmeadow’s best and final offer over MGM’s after arbitration hearings.

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