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MGM Will Be Held to Host City Agreement in Possible Springfield Casino Sale, Say Officials

Nearly two months ago, reports surfaced that MGM Resorts International (NYSE: MGM) is mulling the sale of its regional casinos in Ohio and Springfield, Mass. Officials in the Massachusetts city said they intend to hold the gaming company to the terms of the host city agreement should a transaction materialize.

Chang Goo Yoon, physical therapist, casinos
MGM Springfield. City officials said the gaming company must abide by the host city accord if it opts to sell the casino. (Image: Boston Globe)

In March, it was reported that MGM could be evaluating the sale of MGM Springfield and MGM Northfield, a racino near Cleveland. MGM Springfield opened in August 2018 as the first traditional casino in Massachusetts. That venue, which generated $278 million in sales in 2023, hasn’t lived up to the operator’s expectations.

In a recent interview with Western Mass News, Springfield City Council President Michael Fenton, who also chairs the casino oversight committee, said MGM cannot unilaterally decide to leave the city.

I don’t think the public should be concerned because we have safeguards at the city and state level to make sure there’s no unilateral movement by MGM,” Fenton told the media outlet. “MGM doesn’t have the right to decide to move out on their own.”

The Massachusetts venue cost the operator $960 million to build. MGM sold the real estate assets to MGM Growth Properties (MGP) for $400 million in 2021. VICI Properties (NYSE: VICI) acquired MGP for $17.2 billion that same year, gaining control of the property assets of MGM Northfield Park and the Springfield casino, among other MGM venues.

How MGM Can Do Right by Springfield

While MGM has acknowledged that the Massachusetts and Ohio casinos haven’t lived up to expectations, it hasn’t publicly confirmed it’s shopping those venues. The topic wasn’t addressed on the operator’s first-quarter earnings conference call earlier this month.

The obvious avenue through which MGM can assuage Springfield’s concerns about a possible sale of the casino is to line up a buyer from the gaming industry, which would be likely assuming the operator is looking to sell. That’s also important because the property is zoned to be a gaming venue.

As for potential buyers for MGM Springfield’s operating rights, names haven’t been floated, but it’s probably fair to rule out Penn Entertainment (NASDAQ: PENN) because it runs  Plainridge Park Casino in Massachusetts.

It’s possible that tribal gaming entities in New England could be interested in MGM Springfield, but for now, that’s just speculation.

Springfield Wants ‘Same Pedigree’ as MGM

Fenton told Western Mass News that should MGM opt to depart Springfield, the city will require that the replacement operator be of the “same pedigree” as MGM. That’s a subjective term, but there are some hard details.

Under the host city agreement, MGM is required to deliver $25 million in annual payments to various groups in the city and book at least 12 acts per year at entertainment venues near the casino. Fenton said a new gaming operator of the Springfield casino would be held to the same standards.

A transaction involving MGM Springfield materializing over the near term is a possibility, but analysts believe gaming industry mergers and acquisitions are currently hamstrung due to high interest rates. That implies prospective suitors that need financing to buy the operating rights to the venue might be put off and eschew bidding, thus dwindling the pool of potential buyers to those that can pay in cash.

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Myanmar’s Kayin State Gambling Project Leads to Sanctions Against Officials

Myanmar is in the middle of an unofficial civil war that has at its roots, in part, an attempt to rid the country of its gambling element. The U.S., the UK, and other countries are making a statement about the ongoing conflict, introducing sanctions against two high-ranking officials in the country who also have ties to a major gambling operation.

Colonel Saw Chit Thu with his entourage traveling through Kayin
Colonel Saw Chit Thu, with his entourage, traveling through Kayin. The leader of Myanmar’s Border Guard Force faces new sanctions for his ties to illegal gambling. (Image: Frontier Myanmar)

Colonel Saw Chit Thu, a leader with the Burmese junta-tied Border Guard Force (BGF), alongside two other individuals, incurred sanctions from the UK last Friday. The other two are Chinese investor She Zhijiang and Colonel Saw Min Min Oo, a primary leader under Saw Chit Thu.

The sanctions link back to their alleged involvement in the recently established Shwe Kokko town in Kayin (previously Karen) State. This decision comes as a response to the severe accusations related to human trafficking, forced labor, and infringements on human rights against the two.

Cracking Down on Fraud Farms

On Friday, the UK unveiled the joint sanctions against Saw Chit Thu and the others. These restrictions were implemented in response to the exposure of nine individuals and five companies involved in internet-based “fraud farms” located in Cambodia, Laos, and Myanmar. It has been widely documented that the workers of those operations are victims of human trafficking.

The sanctions mean an asset freeze that prevents anyone from the participating country from dealing with the economic or financial resources of the sanctioned individual(s). In this case, it also comes with a travel ban that prevents the sanctioned individuals from traveling to or through the participating countries.

An official statement from the UK explained that Saw Chit Thu and the other two have been implicated as accomplices or beneficiaries of human trafficking in the operations of Shwe Kokko. The trio, with assistance from others, forced their victims into slave labor and allegedly routinely subjected them to torture, physical abuse, and various forms of exploitation.

The United Nations has estimated that as many as 120K individuals in Myanmar face similar conditions of forced labor. At least another 100K in Cambodia are also victims of human trafficking.

Shwe Kokko Survives Attempts to Shut it Down

The Shwe Kokko Project is a collaboration between Chit Lin Myaing Co and Yatai International Holding Group, a company registered in Hong Kong. Chit Lin Myaing Co allegedly belongs to the BGF, with Saw Chit Thu serving as its highest-ranking executive.

Saw Chit Thu and his border guards are reported to significantly benefit from the operation, which has gained a notorious reputation in Southeast Asia due to its connections with Chinese criminals. Apart from its involvement in human trafficking, labor exploitation, online fraud, and gambling, the operation presents itself as a major revenue stream for the BGF officer.

Last year, Thai police arrested She Zhijiang in Bangkok. His apprehension was triggered by a foreign warrant accusing him of managing an internet-based casino.

In addition to his involvement with Shwe Kokko, he allegedly has deep involvement in several controversial ventures in other countries, as well as in Cambodia’s gambling industry. Despite the arrest, Shwe Kokko remains operational, as highlighted by previous comments by the BGF.

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