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The tribes that own Connecticut's two casinos are taking another step in their bid to open a third casino north of Hartford. The Mashantucket Pequot and Mohegan tribes hosted a signing ceremony. MGM has fought the third, satellite casino in the courts and in the halls of the Connecticut legislature, seeing it as a direct threat to its Springfield casino. However, even if MGM can’t stop the casino, delaying it until after the Springfield casino opens might be an effective strategy. Connecticut is on its way to its third casino, after a development agreement was reached between East Windsor officials and representatives of the joint Mohegan-Mashantucket Pequot company, MMCT Venture LLC. There are two potential locations for the casino project: East Windsor or Windsor Locks.
The Connecticut House joined the Senate last week in approving a third, satellite tribal casino. The bill awaits the signature of Governor Dannel P. Malloy. MGM Resorts International is likely to challenge the new law in U.S. District Court. The vote came less than 24 hours before a June 7 deadline.
The vote was a dramatic last minute save of a bill that two weeks ago seemed on the verge of defeat, despite having passed the Senate. It was a bipartisan vote for one of the most controversial issues Connecticut lawmakers dealt with in the last two years.
The vote was 103-46 in favor of the bill that allows the state’s gaming tribes, the Mohegan and Pequot tribes, through their joint powers authority, MMCT Ventures, to build a casino in East Windsor, near the Massachusetts/Connecticut state line with the publically stated goal of blunting the effects on Indian gaming of the $950 million MGM Springfield 14 miles away—which is due to open in the fall of 2018.
The Mohegan Tribe operates the Mohegan Sun casino and the Mashantucket Pequot Tribe owns and operates Foxwoods Resort Casino—Both on reservation land.
MMCT proposes a $300 million, 200,000 square-foot casino with 2,000 slots and up to 150 gaming tables, without a hotel.
MGM is likely to file a complaint in federal court asserting that the bill violates the U.S. Constitution’s Equal Protection Clause because it gives the sole authority to develop the third casino to the tribes without a bidding process—a process that MGM says it would like to participate in.
“That’s not a threat. That’s a promise,” said Uri Clinton, a senior vice president and legal counsel with MGM, of the legal challenge. He added, “This is about people in the House thinking that they are going to get the benefit of a bargain that will never materialize.”
House Majority Leader Matthew Ritter said, “It’s hard to predict what their claims are going to be and then what the defenses are going to be. But we acknowledge that someone is going to sue. We don’t know who or for what reason, but they will.”
After the vote House Speaker Joe Aresimowicz declared, “there was a lot of workers out in the hall for the past couple of months talking about their ability to provide for their families. We have to focus on jobs and the bill we did last night, that’s why I supported it, was the one bill that really focused on jobs particularly in Eastern Connecticut.”
Rep. Chris Davis, whose district includes East Windsor, dug in his heels against attempts to spread out the gaming expansion over a series of smaller casinos in Bridgeport, New Haven and Waterbury, including a “boutique” casino in Hartford.
“I think the only one that makes sense to me, public-policy wise, is in East Windsor or a facility in that area. It would ultimately, potentially, save revenue from going up to Springfield and protect those jobs,” he said. “The idea of them spreading it out to four of five more places, I think is a true public policy question for most people. It opens up gaming across the state.”
MGM already has a case in federal court, one that was dismissed by a judge but is now on appeal. However, the new bill makes a new case likely.
Attorney General George Jepsen has previously warned that such a bill was vulnerable to challenge. Promising to defend it, he said last week, “This is a new territory and so I’m not here to make any predictions but we do believe that we have very straight-faced arguments to make.”
The two tribes argue that MGM hasn’t been able to prove that it even has standing in the case—partially because MGM’s non-compete agreement with the city of Springfield prevents it from operating a casino within 50 miles of that city. East Windsor, a community with a population of about 12,000, is 14-miles from Springfield. The proposed casino would be near Interstate-91 in a now closed Showcase Cinemas complex.
Also threatening legal action against the bill is the Schaghticoke tribe, which does not have federal recognition but insists it should be allowed to build a casino anyway. It has supported MGM’s proposal to build a casino near Bridgeport to tap the New York market.
The bill also increased the number of allowed Off Track Betting parlors to 24, which means eight more licenses for Sportech Venues. An added sweetener that brought onboard other representatives was the creation of a new entertainment sharing agreement between the tribes and concert arenas that have 5,000 seats or more. An additional provision would create a framework for possible sports betting if the federal government legalizes it. Another addition was the legalization of mixed martial arts matches on non-tribal land.
One provision that was not added was licensing fees for the casino, even though it will be located on non-tribal land. However, the bill does require that non-gaming service vendors providing more than $25,000 a year in services buy a $250 license annually while gaming services vendors will pay $500 a year.
Ted Taylor, president of Sportech Venues, greeted the increase of OTB licenses: “With 400 employees at 16 locations across the state, including those in the cities being discussed, Sportech has consistently and repeatedly stated that Connecticut must address the impact that MGM Springfield will have on our employees and the revenue we generate for Connecticut.”
Governor Malloy is thought likely to sign the bill. The governor has not called for a third casino, but said he preferred that such a casino be operated by the two gaming tribes, rather than a commercial casino.
He issued a statement after the vote: “I commend and thank both chambers of the General Assembly for keeping Connecticut jobs and workers at the center of this debate. Our state has a longstanding partnership and compact with the Mohegan and Mashantucket Pequot tribal nations, who employ thousands of Connecticut residents in their casinos. I have been very clear that I will not sign a bill that puts these jobs at risk, and I look forward to reviewing this proposal.”
After the vote Mohegan Tribal Chairman Kevin Brown said families of the two tribal casinos were “breathing a sigh of relief,” at the passage of the bill. The Mohegans and the Pequots have released studies that concluded that the state could lose millions of jobs in revenues—one estimate is $68 million annually—and thousands of jobs when the MGM Springfield opens—and that some of that damage could be staunched by a border casino.
This year the tribes are expected to pay $266 million to the state; they pay 25 percent of its gross slots revenues in return for exclusive rights to casino gaming. The tribes have paid a total of $7 billion since 1993. The highest year for payments was 2007, when the state collected $430 million.
Under the new bill the tribes would pay no licensing fee, but would pay 25 percent of gaming revenue. The first $4.5 millions of slots revenue would be given out in individual $750,000 grants to the towns of Hartford, East Hartford, Ellington, Enfield, South Windsor and Windsor Locks.
The latter provision was added instead of an alternative that would have allowed slot machines at existing off-track betting parlors such as “SportsHaven” in New Haven and “Winners Shoreline Star” in Bridgeport. A provision that would have allowed a boutique casino in Hartford was dropped.
Pequot Chairman Rodney Butler added, “Tonight the Connecticut General Assembly passed one of the most significant jobs initiatives of the legislative session. With more than 9,000 jobs at risk, legislators banded together to save an important sector of Connecticut’s economy.”
“With this vote, we have all demonstrated a commitment to protecting the state of Connecticut and the good jobs of its residents,” Brown said.
Some lawmakers, such as Rep. Joe Verrengia, chairman of the Public Safety Committee, did not favor granting the tribes exclusive rights to the third casino. He predicted legal challenges and said the state could lose as much as $100 million from licensing fees by not opening the casino up to bidding.
Rep. Chris Rosario of Bridgeport was disappointed that Bridgeport was not included as a site for a casino. Rosario, who is chairman of the Black and Puerto Rican caucus, told Yogonet, “We’re looking for jobs for the people of our communities. Quite often here in this building there are a lot of proposals and it seems like the inner cities are kind of left out of the conversation.”
One reason the casino bill was so controversial is that Connecticut lawmakers are wrestling to find new ways to fund a $40 billion budget that is facing a $5 billion deficit over the next two years.
The governor commented, “This is probably a more difficult year because, let’s be honest, a lot of the easier stuff to do with the budget has already been done. So, I can see people are having difficulties in coming to grips with the hard decisions that have to be made.”
Meanwhile, in the face of expanding gaming in the state, the Connecticut Council on Problem Gambling called on the state to devote more resources to assist those who are vulnerable to the blandishments of gaming.
Marlene Warner of the Council, writing in the Hartford Courant, declared “Connecticut may be poised to enter a new gambling frontier, one that requires better safeguards for the state’s most vulnerable populations,” including collecting anonymous player data, providing players with records of their individual gaming history, and providing guidelines for limiting the amount of money that can be gambled away over a specific period.
It was a battle of dueling economic reports before the state legislature Thursday as lawmakers considered whether to commission yet another study on the impact of a potential third casino.
The Commerce Committee held a public hearing on a bill that would require them to seek more data before moving forward with plans for a casino in north-central Connecticut.
But several reports have already been produced: two by the tribal partnership backing the casino, and one, revealed last week, but MGM Resorts, which is building a casino in Springfield.
MGM’s study, compiled by Oxford Economics, said the best economic impact for Connecticut would come from building a casino in the Bridgeport area.
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The partnership between the Mashantucket Pequot Tribe and the Mohegan Tribe, called MMCT, is working with the state to develop the project. It prefers to site in north-central Connecticut, as a way to draw customers away from the Springfield facility.
The partnership's reports were produced by Dr. Clyde Barrow of the University of Texas. He gave evidence to the committee, telling him the studies are not comparable.
'We have real data about where customers come from in Connecticut and how much they spend,' Barrow said. 'That's data that Oxford Economics doesn't have access to, and as a result their analysis, I would claim, is really purely speculative.'
Barrow also said the two are based on completely different scenarios. The tribal partnership is proposing a $300 million facility.
The data for Oxford's recommended outcome, a Bridgeport-area casino, is based on a $1.1 billion facility.
'They're essentially talking about replicating Mohegan Sun, an analysis based on an assumption that's four times bigger than what's being proposed,' Barrow said.
But not everyone agreed that there’s enough information already out there.
Fred Carstensen, an economist at UConn is in favor of a new study. He said that while he recognizes the positive impact the existing casinos have had on the state's economy, he has grave concerns about the third casino plan.
'We have not had any kind of an exhaustive study,' he said. 'We don't know what the implications are. My bottom line is that I actually think that the small casino idea not only may fail, in terms of either job preservation or revenues to the state, it may in fact become a zombie.'
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By which he means it will end up cannibalizing revenues from the two existing casinos, while the state continues to lose gaming customers to facilities in Massachusetts.
Some lawmakers questioned the potential social costs of expanded gaming in Connecticut, noting that the existing studies commissioned by the gaming giants don't touch on what the state may have to spend to mitigate problem gambling, crime and other issues.
MGM is also in favor of more study of the Connecticut proposal, despite having commissioned its own report. The gaming company has filed a lawsuit against the state, claiming it should open the potential casino development to outside bids.
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MGM has also backed a second lawsuit by the Schaghticoke Tribe in Kent, who would also like to be allowed to bid.
Executive Vice President Alan Feldman told the committee, 'Connecticut jobs absolutely matter. It is in no-one's interest to see that harmed. But there is a process in place that doesn't allow us to participate. It happens to be that we think Connecticut is a terrific market. The state needs to have its own perspective, not necessarily just what MGM thinks or what MMCT thinks.'
A wide range of casino employees, small businesses and local legislators gave testimony in support of the Connecticut tribes' position, opposing any new study.