Developers of a planned Foxwoods casino for the New Bedford waterfront abruptly backed out of the competition for Massachusetts' final resort casino license on Wednesday, citing an inability to secure financing for the projected $650 million project.
KG Urban Enterprises partner Barry Gosin said in a letter to the Massachusetts Gaming Commission that the New York-based firm was officially withdrawing because it found it "significantly harder" than expected to convince lenders to invest in the plan.
"Given the uncertainty of obtaining viable financing for the project and the time constraints of the license application process, we cannot justify investing any additional funds in the project beyond the significant amount already invested," Gosin wrote.
The surprise development leaves only one project in the running for the license reserved for the southeastern region of the state: Mass Gaming & Entertainment's $650 million proposal for the Brockton Fairgrounds. But state regulators have said they reserve the right not to issue the license at all.
The state previously awarded resort casino licenses to MGM for an $800 million project in Springfield and Wynn's $1.7 billion casino for the Boston-area. Penn National Gaming also has a slots parlor license to operate the state's first gambling hall — the Plainridge Park Casino in Plainville.
Mass Gaming, which has already cleared an initial background check by state gambling investigators and secured approval from Brockton voters, issued a statement Wednesday touting its project's potential without acknowledging its rival's apparent demise.
New Bedford Mayor Jon Mitchell said in a statement that KG Urban's decision was an "extreme disappointment and a great shock." The mayor said city leaders were upset because KG Urban executives had led them and residents who had voted to approve the project in a late June referendum to believe financing was imminent.
Mitchell's office provided a May letter from Gosin to the gaming commission stating that Gaming and Leisure Properties of Pennsylvania was prepared to fund the real property portion of the project.
"We have been united as a community and have done everything possible to support the KG casino proposal," the mayor said.
Gosin and other KG Urban executives did not respond to a request for comment Wednesday. But in his letter to the commission, Gosin expressed "sincere gratitude" to New Bedford voters, the mayor, the gaming commission and others.
He said investors expressed reluctance in the project partly because of the potential for an Indian-tribe owned casino opening in the region and undercutting casino profits.
The Mashpee Wampanoag are seeking federal land-trust status to build a resort casino in nearby Taunton that would not require state licensure approval.
KG Urban had pushed for years to develop the city waterfront site of the former NStar power plant. In recent months, the project seemed to gather momentum as it inked a deal with Foxwoods to operate the casino, brought on former Foxwoods CEO Scott Butera as partner and reached a financial compensation deal with the city.
Representatives for Foxwoods, a Connecticut-based casino company, did not immediately respond to requests for comment.
The gaming commission, which is set to discuss the New Bedford project at a Thursday meeting, had also recently granted the developers additional time to finalize the finances.