City of Springfield Sues MGM, Alleges Casino Violated Host Community Agreement

_{MGM has allegedly fallen short with regard to expectations from the city of Springfield, Mass. (Photo: sep120 / Stockimo / Alamy)}

The City of Springfield, Massachusetts filed a complaint against MGM Resorts International and Blue Tarp Redevelopment, LLC in Hampden Superior Court on Thursday, alleging that the companies have failed to comply with the Host Community Agreement between the city and the MGM Springfield casino.

According to the lawsuit, the city alleges that MGM Springfield has failed to live up to commitments made in the agreement, even after extensive negotiations between the two sides over the past two years.

Springfield: MGM Coming Up Short on Jobs, Games

Springfield Mayor Domenic Sarno released a statement saying that the lawsuit was “in the best interests of the citizens of Springfield.”

“Look at the corner of State and Main, 101 State Street and the ugly scaffolding and Jersey barriers that have been there for years,” Sarno said in his statement. “MGM has not followed through and complied with our Host Community Agreement and lived up to what they’re supposed to do. So, I’ll let the legal process play out at this point in time.”

Springfield and MGM negotiated a Host Community Agreement (HCA) in 2013 as required under Massachusetts state law for any casino operation in the state. According to Springfield, MGM and Blue Tarp have failed to meet their obligations under the HCA in several ways, including failing to employe no fewer than 3,000 persons, failing to place no fewer than 2,800 slots and/or electronic gaming machines and 75 table games on the gambling floor, and failing to refurbish 101 State Street and leaving up the scaffolding and barriers for seven years despite the city’s complaints.

“The City’s discussions with MGM and Blue Tarp have been conducted in good faith over an extended period,” Springfield City Solicitor Steven Buoniconti said, according to Western Mass News. “Still, MGM and Blue Tarp remain in breach of their contractual obligations, and the City is compelled to file suit to enforce the terms of the HCA.”

The lawsuit also seeks injunctive relief to prevent MGM and Blue Tarp from taking the dispute to arbitration.

“MGM wanted to try and settle all these disputes in private through an arbitration process,” Buoniconti said, via WWLP.com. “One, we didn’t think they have a legal right to do that and second, we don’t believe those disputes should be done in secret.”

MGM Says Sale Delay Behind City’s Lawsuit

The HCA also gives Springfield approval power over any sale or transfer of the casino's operating business, which is the actual mechanism at the heart of the current standoff. MGM already sold the underlying Springfield real estate to MGM Growth Properties in 2021 and now leases the property back. What's being sold this time is the casino's operating license and business, not the land beneath it, and the city's refusal to sign off is what MGM is calling bad faith.

MGM Resorts released its own statement, accusing Mayor Sarno and city officials of attempting to prevent the sale of the Springfield casino “to a well-qualified casino operator.” According to the casino firm, both MGM and the buyer agreed to convert 101 State Street into a hotel at the request of the mayor, despite it being the most expensive option for the prospective owner, but city officials still wouldn’t advance talks related to the sale.

“It became clear that the Mayor and the City were not acting in good faith and the objective was to delay,” the MGM statement reads. “This lawsuit is just another tactic to delay and obstruct the process, jeopardizing the significant investments and long-term benefits the sale would deliver to the community.”

MGM says the delays have cost the company $500 million and that those losses will persist even if the sale proceeds. While the potential buyer hasn’t been publicly named, several Massachusetts media outlets have identified it as Clairvest Group, a Toronto-based firm that recently purchased MGM Northfield Park in Ohio for $546 million.

MGM Springfield was chosen as the winning proposal for a casino in the city by Mayor Sarno in 2013. The casino opened on August 24, 2018, with an estimated development cost of $960 million. In 2021, MGM sold the land and buildings to MGM Growth Properties for $400 million, while leasing back the property and continuing to operate the casino.

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