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MGM Springfield pumped $974M into Massachusetts economy in first year; post COVID-19 recovery looms

MassLive.com logo MassLive.com 10/14/2020 By Jim Kinney, masslive.com
a sign on the side of a building: Officials have formally launched the $51 million Elm Street Redevelopent and Preservation Economic Project in Court Square. © Don Treeger | dtreeger@repub.com/masslive.com/TNS Officials have formally launched the $51 million Elm Street Redevelopent and Preservation Economic Project in Court Square.

SPRINGFIELD — MGM Springfield supported $356.9 million in new personal income and $974.2 million in new output within the Massachusetts economy in its first year of operation, according to a University of Massachusetts study released Wednesday.

Of that that $974 million, $640.1 million was value added to the state’s total economy.

Researchers working before the coronavirus pandemic and the closure — and only partial reopening — of MGM Springfield also found that:

There were on average 2,538 jobs at MGM Springfield in 2019, paying $85.2 million

Outside the casino, MGM Springfield and its visitors created 3,740 jobs on net, for a total of 6,287 jobs supported by the casino.

Those 6,287 jobs meant $356.9 million in personal income

$110.1 million in MGM Springfield spending to vendors

$101.5 million in payments to government

$66.3 million in new off-site spending from casino visitors

61.7% of patron spending was new to the state

Researchers with SEIGMA, or the Social and Economic Impacts of Gambling in Massachusetts, program at the University of Massachusetts School of Public Health and Health Sciences also found little change in the percentage of Springfield-area residents at risk for problem gambling.

In 2015, between 42,074 people (9.3% of the population ) and 870,123 (15.5% of residents were at risk. In 2019, after MGM Springfield opened, that estimate was between 36,421 (8%) and 63,281 (13.9%) were at risk.

a person sitting in front of a laptop: Gamblers wearing face masks return to the slot machines at MGM Springfield on Monday as the casino reopens after 4-months shuttered by COVID-19. © Hoang 'Leon' Nguyen / The Republican/masslive.com/TNS Gamblers wearing face masks return to the slot machines at MGM Springfield on Monday as the casino reopens after 4-months shuttered by COVID-19.

Researchers said the muted impact might have been because the region – including Connecticut – had casino gambling long before MGM Springfield opened and the population may have already become acclimated to the lure.

A study of casino visitors showed that almost 60% of the patrons were from Massachusetts, with 41.5% coming from Springfield and surrounding communities — Agawam, Chicopee, Holyoke, East Longmeadow, Longmeadow, Ludlow, West Springfield, Wilbraham, Hampden, and Northampton.

The demographic makeup of patrons was mirrored the state’s population. They were more likely to be Hispanic, and less likely to be white or Asian. They tended to be older as well, with a higher proportion in the 35 to 64 age range compared to the adult Massachusetts population.

a tall building in a city: A UMass study looked at the economic impact that MGM Springfield has had on the state. © Don Treeger | dtreeger@repub.com/masslive.com/TNS A UMass study looked at the economic impact that MGM Springfield has had on the state.

But it was the economic, and the employment impact that took up much of the two-hour Zoom presentation Wednesday hosted by UMass and attended by public officials from around the region.

The question looms just how relevant the data is, seeing as how it was all collected prior to COVID-19

“As we know there have been layoffs,” said Andrew Hall, a senior research analyst. “The casino was shut down for several months . There have been furloughs. There was a question about people receiving benefits.”

MGM Springfield laid off 1,000 furloughed employees at the end of August.

Before the pandemic, MGM Springfield had 2,000 employees. In July, it reopened with 800 workers, with plans to call more people in as business ramps back up.

MGM had promised the city and the state it would reach a payroll of 3,000, a goal that was never met even pre-pandemic.

Wednesday’s report showed that MGM Springfield started operations in August 2018 at about that 3,000 jobs numbers and then it declined slowly over time.

Mark Melnik, director of economic and public policy research at the UMass Donohue institute said the leisure and hospitality sector of the state’s economy was overall one of the hardest hit by coronavirus. State staisticss show that over the last year the sector lost 146,000 jobs, or 38.7% of its pre-pandemic totals.

Pandemic recovery at MGM Springfield needs to include real-estate and economic development in the South End neighborhood surrounding MGM Springfield’s billion-dollar facility, said Richard K. Sullivan Jr., president and CEO of the Economic Development Council of Western Massachusetts.

“There is real economic opportunities to see more development in the neighborhood,” he said, pointing to the $66.3 million in new off-site spending.

But that development will require the completion of the $51.3 million rehabilitation of the at the former Court Square Hotel property at 13-31 Elm St. now under reconstruction. The project is in part funded by MGM as part of its promised commitment to provide market-rate downtown housing.

MGM Springfield should be reopened to at or near pre-COVID operations by the tie the Elm Street project is completed about a year form now, Sullivan said.

“I’m a big believer in the three-legged stool where you work, play and live downtown," he said.

The city is also working on new development plans for the neighborhood, acknowledging recently that promised neighborhood retail and restaurant openings hadn’t happened even prior to COVID.

Researchers Wednesday didn’t compare MGM’s results with what it’d promised prior to opening in 2018.

But gross gambling revenues supplied to the Massachusetts Gaming Commission show that the the casino has never brought in at the tables and slots what had been promised.

Before MGM Springfield opened in late August 2018, the company told the state and city it would bring in an average of $34.8 million a month in gross gaming revenue from slot machines and table games like poker. Instead, the average over its first 18 full months was $21.5 million. The peak was $26.9 million in September 2018, its first full month of operation.

Operating at one-third capacity, MGM Springfield brought in $18.46 million in gross gaming revenue in August — a year-over-year drop from $20.97 million in August 2019.

Sullivan said though that employment, payroll and economic impact numbers were on target.

“I think the numbers that you saw there are certainly within the range of what was promised and expected,”

“I think all of those thigs were absolutely hitting their mark,” Sullivan said. “During or post-COVID. We will see what those studies show a year from now.”

MGM released a prepared statement following the presentation:

“Today’s SEIGMA presentation reaffirms the significant positive economic impact MGM Springfield has had on the City and region. From day one, we have been focused on repatriating out-of-state gaming revenue, providing good jobs to local residents, and generating new spending and investment beyond our resort. The initial data clearly demonstrates that we have lived up to these commitments and given people another reason to rediscover downtown Springfield. We look forward to reviewing the full study once it is released and future SEIGMA research that reflects our evolving market in the wake of COVID-19.”

Related content:

No poker, no roulette: Massachusetts Gaming Commission talks reopening rules for reopening for MGM Springfield, Encore Boston Harbor, Plainridge Park

More coronavirus pandemic news and data

MGM Springfield reopens Monday; Here’s how the casino plans to provide a safe experience amid the pandemic

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