FOR THE SECOND YEAR in a row, the Legislature has directed gaming revenue used for mitigating the local impacts of casinos into its own coffers, leaving city and town leaders frustrated amid worsening municipal budget strains.

The move falls in line with the Legislature’s penny-pinching efforts to alleviate state budget pressures amid a host of federal funding claw backs nearly a year into the second Trump administration. Gateway Cities with budgets already nearing a breaking point will now lose out on funds they have used for nearly a decade for projects that address the adverse local impacts of casinos, such as increased crime, traffic, and regional gambling addiction.

The Community Mitigation Fund (CMF), established in 2015 and used to award millions of dollars in grants to municipalities that host a casino or are next to a community that does, normally receives 6.5 percent of the annual revenues collected from a tax on casinos.

In the 2025 state budget, lawmakers allowed a temporary redirection of those gaming revenues – a move Gov. Maura Healey branded as a one-time maneuver to free up $100 million for state spending during a tight budget year. But the 2026 state budget saw the Legislature again redirect the funds to priorities like transportation, education, economic development, and tourism.

“Retrospectively, I think that’s when we should have really voiced concern that they’re touching the money at all,” Springfield’s chief development officer Tim Sheehan said in an interview. “From the Legislature’s standpoint – we did it once and we didn’t have any pushback, therefore, we’re going to take it again.”

With funding for the CMF now stalled for two consecutive years, the Massachusetts Gaming Commission will use the small remainder of the funds – around $5 million – to award grants for fiscal year 2027. Those allocations will be significantly smaller than the ones in previous years, leaving the mitigation fund to run out of money unless funding is restored.

The gaming commission has awarded nearly $80 million in grants from the CMF to eligible municipalities and entities since 2015. In 2024, the total amount awarded was approximately $22 million. Eight Gateway Cities are eligible for the funding, including Everett, Chelsea, Revere, Malden, and Lynn, because of their proximity to the Encore Boston Harbor casino in Everett, as well as Springfield, Holyoke, and Chicopee, because of the MGM Springfield casino.

The city of Lynn used a $200,000 grant to install dozens of surveillance cameras in public areas for increased safety.

Holyoke used the funds to conduct a survey assessing harmful gambling habits in the area, according to Aaron Vega, Holyoke’s planning and economic development director.

“Now that we have this data, what do I do with it?” Vega said. “I’ve got no funds to address it, whether that’s an educational campaign or targeting youth and seniors.”

In Springfield, Sheehan said the funds have been used for fire equipment and police presence around the casino, as well as major improvements to sidewalks and street lighting near the casino. It also helped pay for improvements to neighborhood parks like Court Square.

Springfield has been receiving around $3 million annually from the CMF since 2022, but the city is expected to receive just $360,000 in fiscal year 2027. (Springfield began receiving mitigation funds in 2016.)

“Three million may not seem like a lot to Boston, but it’s a lot to Springfield,” Sheehan said. “Those funding resources for that type of programming are no longer going to be there.”

In October, the Springfield City Council adopted a resolution calling for the restoration of casino mitigation funding for the city.

“The Massachusetts Legislature recently allocated $10 million in mitigation funding to Eastern Massachusetts communities to address the impacts of the 2026 FIFA World Cup, while Western Massachusetts communities lost their casino mitigation support,” the resolution stated.

Boston’s host committee for the World Cup games had requested $20 million for operations, transportation, and other expenses related to the event, which was included in Healey’s supplemental spending proposal. But the Legislature earmarked only $10 million.

State Sen. Adam Gomez of Springfield filed an amendment to the fiscal year 2025 closeout supplemental spending bill that would have restored the statutory 6.5 percent allocation of total gaming tax revenues to the CMF, but it was rejected by the Senate in October. But Sheehan and Vega said the effort was too little too late, and state lawmakers representing the cities didn’t respond forcefully enough when the cuts were first proposed.

“It happened. They didn’t question it. Then they were called out on it, and they tried to do something about it,” Sheehan said of the lawmakers. “The train had already left the station. That ball had already dropped.”

Sen. Gomez did not respond to interview requests. CommonWealth Beacon also reached out to State Rep. Patricia Duffy of Holyoke and Rep. Bud Williams of Springfield, both of whom did not respond to interview requests.

In addition to traffic and public safety projects, Vega said Holyoke has been able to use the mitigation funds to create the Explore Holyoke website and initiative, which supports tourism and small businesses in the city. Like many other projects, it’s something the city wouldn’t have been able to pay for themselves, he said.

“The city is not going to give me $20,000 a year to run the Explore Holyoke website. It can’t give me $15,000 a year to run a shuttle bus between Springfield and Holyoke for events. It wouldn’t be able to give me $15,000 to do a survey on gambling habits in the city,” Vega said.

Local leaders appear to agree that the funds should be used locally for their original, intended purpose, despite the state’s budget woes. Vega said the state taking the money for itself was “a little bit of an insult.”

In January, the Holyoke City Council will likely file a resolution like Springfield’s calling for the restoration of the funds, according to Vega. Even though the budget has passed, lawmakers could still restore casino mitigation funds through a separate spending bill.

Funding for mitigation projects was promised to the community when the MGM Springfield casino was first being built in 2015, Sheehan said.

“The bottom line is that this was the compact that was made between the host communities and the state,” he said. “Clearly, those promises that were made have now been broken.”