Lawmakers Try To Calculate The Odds Of A New Casino
Posted to: Business, Economic Development, Gaming, Jobs, State Budget, Taxes, Tribes, East Windsor, Leisure & Hospital Sector
HARTFORD, CT — Lawmakers on the Public Safety and Security Committee struggled Thursday with figuring out what would happen if they expand casino gaming beyond the borders of the two federally recognized tribes’ reservations.
There’s a lot at stake, including a 25-percent revenue sharing agreement with the Mashantucket Pequots and Mohegan Tribal Nation. According to testimony Thursday, over the life of the agreement the tribes have provided the state with about $7 billion.
Rep. Joe Verrengia, D-West Hartford, said he’s struggling to figure out whether there would be enough of a revenue gain to Connecticut if the state decided to violate the agreement it has with the tribes to open up bidding for a third casino to commercial casino operators, like MGM Resorts International.
MGM is building a casino in Springfield, Mass. and the two tribes formed a joint business venture to build a casino in East Windsor in order to attract customers who might be headed north.
The East Windsor casino, which still needs the approval of the General Assembly, would be the first in the state off tribal lands.
The idea opens a lot of legal questions for the state and lawmakers, who gave the two tribes the exclusive right to gaming in Connecticut more than 20 years ago in exchange for 25 percent of the slot machine revenue.
MGM Resorts International has already sued Connecticut for allowing only the tribes to form a joint business venture under Special Act 15-7. A federal judge said it wasn’t time for MGM to sue and they appealed it to the Second Circuit Court, which has yet to issue an opinion.
“If you were to sue and you were to prevail and the casino is already built, what would be the remedy?” Verrengia said.
Uri Clinton, senior vice president and legal counsel for MGM Resorts International, said he can’t see that far into the future, but pointed out that there are others interested in casino gaming in Connecticut, including the Schaghticoke Tribal Nation, whose federal recognition was revoked.
“If there is to be a commercial casino in Connecticut, it should be the best deal for the citizens of the state in a fair and transparent process,” Schaghticoke Chief Richard Velky said.
Velky said his tribe would compete for a license if the process was open.
Lawmakers were openly struggling with whether to risk opening up the tribal gaming compact and risking the revenues it currently receives.
Mashantucket Pequot Chairman Rodney Butler told the committee that Connecticut will lose 9,300 jobs and $70 million in tax revenue if it doesn’t build a third casino to compete with the one in Springfield.
He acknowledged that slot revenue from the two casinos has gone down, but they said that’s because they failed to compete against gaming operations in other states.
He said slot revenues to the state have dropped from their peak of $400 million a year to $262 million a year as a result of increased competition in New York, Rhode Island, and Massachusetts.
Mohegan Chairman Kevin Brown said that allowing the tribes to build a casino in East Windsor would allow them to provide the state with an additional $56 million in slot revenue and $14 million on table gaming revenues. Currently, the tribes don’t share revenue from their table games with the state.
“We are attempting to stem the loss of revenue and jobs that we’ve seen in the past,” Brown said.
After almost three hours of testimony, Brown and Butler got frustrated with lawmakers who used the phrase “gun to the head” in describing the tribes’ negotiating position over the state.
“Does anybody want to roll the clock back a few hundred years and recognize the irony of the statement that we have to accept a deal that we don’t want to accept?” Brown asked lawmakers. “I don’t want to overstate that but I just want to offer a little perspective of what that means and why the Indian Gaming Regulatory Act exists in the first place.”
MGM contends that building a casino in the southwestern part of the state near the New York border would be more lucrative. It also has a contractual agreement with the city of Springfield that stipulates that the company it won’t build another casino within 50 miles of Springfield.
Clinton said they respected Connecticut’s decision to allow the tribes to have exclusivity over gaming, but they want an opportunity to bid if the state is going to get into the commercial casino business.
“Of course we want to be considered,” Clinton said.
Sen. Tim Larson, D-East Hartford, said he’s offended by MGM’s mailings and disparaging remarks about the community of East Windsor.
“If that’s the type of business you’re going to be running in the state of Connecticut, I don’t want to have any part of it,” Larson said, pointing to a mailing MGM sent to East Windsor residents.
“East Windsor taxpayers deserve better than bad deal cut behind closed doors,” the headline on one side of the mailing says.
He said 18 months ago there was not a single lobbyist banging on his door to talk with him about an issue of competitiveness. He said MGM spent nearly no money until they got to the fifth yard line.
He said if MGM wants to open a casino in Bridgeport then they need to just say so.
Clinton said if Larson was offended then he apologizes, but the facts are if there was a competitive process then East Windsor would have ended up with a lot more than $7 million.
Rep. Daniel Rovero, D-Killingly, said he hoped he would be able to figure out the best path forward for Connecticut after hearing from all of those involved, however, that’s not what happened.
He said he thinks they need a professional independent party to access the scenarios before the committee. He feels like both sides are spinning lawmakers with their lobbying efforts.
“I don’t feel comfortable,” Rovero said. “...I want to say I’m doing the right thing for the state of Connecticut, but I’m not sure.”
Gov. Dannel P. Malloy on Wednesday bristled at the notion that lawmakers would be able to create an open bidding process this year.
“I can’t imagine that going forward at this time, given all the work that’s gone into this other assumption,” Malloy said. “I’m not a proponent.”
Malloy also was quick to point out this isn’t his proposal and he hasn’t necessarily taken a position on it.
Malloy has asked Attorney General George Jepsen for an opinion about the state’s legal exposure if it allows the two tribes to open a third casino off tribal land.
A letter issued by Jepsen in April 2015 essentially delayed the General Assembly’s licensing approval for a third casino.
Jepsen’s formal opinion is expected to be issued before the Public Safety and Security Committee’s Tuesday deadline.
Lawmakers will be looking closely to that opinion for guidance on how to move forward.