The Connecticut General Assembly’s Public Safety and Security Committee last week held a hearing on the proposed third tribal casino, a hearing that occasionally became heated as supporters and opponents worked to score points, and representatives from MGM Resorts International argued for an open, competitive process that put a casino in an entirely different location, the southwestern region, as the Nutmeg state’s best bet.
The committee had until March 16 to send new legislation to the full House and Senate for consideration. It beat that deadline and sent two bills, although the committee vote was divided. The first bill was the one the tribes had sought, to continue the process for a third, tribal casino. The second bill would create a new process to site a casino that wouldn’t necessarily be a tribal casino.
Each side was armed with experts and consultants who filled the Legislative Office Building.
The state’s two casino tribes, the Mashantucket Pequots and Mohegans and their joint powers authority MMCT are lobbying for lawmakers to approve of their choice to site their joint satellite casino operation in East Windsor, with the goal of preventing the $950 million MGM Springfield casino resort—14 miles across the border—from stealing their market.
The tribal casino, which would cost an estimated $300 million, would be located off Interstate 91 in an old defunct Showcase Cinemas complex. It would be 100,000 square feet and could create 2,800 permanent jobs and 2,000 construction jobs.
Supporters say the tribes have generated more than $7 billion in state taxes over the last 20 years, and that the third casino will blunt efforts by the Springfield casino to drain away much of that to the Bay State. The tribes estimate they could lose as much as 30 percent of their gaming revenue to the Springfield casino.
Opponents cited the usual anti-gaming arguments, that a new casino would “debt, bankruptcies, embezzlement, divorce, domestic violence, drunk driving and addiction,” as the Rev. Denise Terry of East Windsor told the panel.
MGM’s “Competitive Process”
MGM representatives, including Uri Clinton, vice president and legal counsel, urged the state, for its own fiscal health, to open the process to allowing others to bid for the right for a third casino. MGM argues that the state risks much by giving the tribe exclusive rights to the third casino. Clinton said the state could more than make up the money that it would lose from the MGM Springfield by opening a southwestern casino, possibly in Bridgeport, or some other part of Fairfield County.
“We knew this committee would not consider a competing offer if it didn’t cover the Pequot Fund,” said Clinton. “So the Pequot fund goes away, and you need an alternative that offsets that loss.”
MGM has been very aggressive in opposing the tribes. In 2015 it went to federal court to try to block the tribes from the process of identifying a site for a third casino. MGM claims it is unconstitutional to exclude them from the process since the tribes won’t be building on reservation land.
Clinton told the legislative committee that it should consider creating a competitive process that would create the most jobs and generate the maximum income for the state.
Clinton declared, “The city of East Windsor could actually do much better. In a closed, no-bid process that is not open for competition, the deal they got is what they could get. In a competitive process, all the bids would be richer, the economic benefit to the state would be greater and the contribution to the state’s infrastructure would be greater.” Any commercial developer would pay as much as 35 percent for such a license, he said.
MGM is backing the Schaghticoke Indians in Kent, a tribe not recognized by the federal government, who have sought to build a casino in Bridgeport for years.
Kevin Brown, chairman of the Mohegan Tribe, countered, “We have a real proposal with a real plan. Now it is up to us to choose a path Connecticut will take.”
He added, “Our friends from Las Vegas are here and they say we have not picked the right site. We have crafted a smart strategy and believe their claims are hard to take seriously. Instead of suggesting Bridgeport is the right place to go, where is the effort to build there?”
MGM argues that a commercial casino located in the southwestern region in a city such as Bridgeport could draw on the New York market. This would allow MGM to compete for such a license, since its non-compete agreement with Massachusetts prevents it from having a casino within 50 miles of Springfield.
Clinton told the committee, “Connecticut has the only game in town for the type of resort that MGM builds. The opportunity to tap into New York, that’s appealing, not just for MGM, but for any of the major players.”
Pequot Tribal Chairman Rodney Butler urged the committee not to miss the March 16 deadline, which, he said, would cost the state $70 million in slots revenue and kill jobs. This year the state is expected to collect $267 million from its two tribal casinos. As per the tribal state gaming compact, it collects 25 percent of slots revenue. A recent study projected that the MGM Springfield would cost the Nutmeg state 9,300 jobs.
Bridgeport Mayor Joe Ganim is watching the debate from the sidelines without taking a position—yet. A spokesman said last week, “At this point, we are letting this play out. MGM and the Schaghticokes are interested in Southwestern Connecticut and the most obvious place is Bridgeport. The mayor is waiting to see what emerges. If this goes anywhere, we will sit down and talk.”
On the other hand, Schaghticoke Chief Richard Velky is all in and brought a delegation of tribal members dress in bright red shirts to emphasize their support. “Southwestern Connecticut offers a growing opportunity that is five times the size of the market north of Hartford, a market that can only decline with the high-end competition from Springfield,” said Velky. “Connecticut citizens demand a better deal, so why not us?”
He added, “We’re saying, ‘Just give us an opportunity.’ If the state was to give us the right to go through the competitive bidding process, I would have three major contenders of gaming sitting at the table with me tomorrow.”
Clinton said, “We have been public in our support of the Schaghticokes and we are supportive of an open process. The Schaghticokes have no obligation to MGM. If they found a different dance partner that is their right.”
This demonstration brought a sharp rejoinder from Senator Tim Larson, who represents Hartford. “You want to be in Bridgeport,” he snapped. “I’m annoyed at how you seek to insult a community I represent. I don’t want to have any part of it.”
When the time came to vote Senator Craig Miner, who doesn’t support a third casino, supported moving the bills so that the issue could receive more scrutiny.
“I am hoping to continue a deliberative process for the best outcome for the state,” he said.
One bill would continue the process of authorizing a third tribal casino. The rival bill would open the process to other bidders. That bill, authored by Representatives Chris Rosario and Ezequiel Santiago, who both represent Bridgeport, would hand over the process to the consumer protection department. The department would have until next January to put out a request for proposals. The bill also stipulates that any host community would hold a referendum to determine local support. Of course, both houses of the legislature would be required to sign off on any casino, as would Governor Dannel P. Malloy.
Attorney General’s Opinion
Meanwhile, acting on the request from Governor Malloy earlier this month, Attorney General George Jepsen sent an eight-page legal opinion that details his longstanding concerns, concerns that in 2015 prevented lawmakers from authorizing the third casino outright—by requiring the tribes to identify a site and then come back to the legislature for approval.
When Malloy asked for Jepsen’s opinion he remarked “One of the reasons I’m asking the attorney general for his opinion, I’m the unlucky governor who’s had to live through about $150 million in revenue disappearing,” adding, “I think we also have to be careful not to give away another $250 million in revenue.”
The opinion reiterates Jepsen’s fears that the state could be violating the Constitution’s Equal Protection Clause if non-tribal operators are banned from the process.
He writes, “It is foreseeable that any legislation resulting in approval of the joint tribal entity’s operation of casino will be challenged” both the commerce and equal protection clauses.
He also fears the state tribal gaming compact with the Pequots and Mohegans prevents such a process, although both have said they are willing to amend the compact to allow it. Jepsen is also concerned that the newly installed Secretary of the Interior would approve such an amendment to the compact.
He writes that the risk “are not insubstantial and cannot be mitigated with confidence,” and adds, “the relative novelty of the legal issues such claims would present makes it difficult to predict their outcome with confidence.”
This echoes a letter from former U.S. Secretary of the Interior Ken Salazar, a consultant hired by MGM, that was read during the committee hearings, when he said, “There is a significant risk that the Bureau of Indian Affairs would require a reduction of the 25 percent slots-revenue royalty that the tribes currently pay to the state. The 25 percent royalty rate is unusually high—higher than 95 percent of all tribal state compacts.”
MGM is currently challenging the 2015 law in federal court. It lost the first round, but has appealed. MGM has said it will file a new case if the third casino bill is passed.
As has been his practice, the governor kept his own counsel, stating that the legal opinion gave him issues to consider.
The tribes reacted to Jepsen’s letter by stating that it doesn’t address the new law before the legislature, which, they said, includes language addressing Jepsen’s concerns.
MMCT spokesman Andrew Doba said he has been assured that the new administration’s officials at the Bureau of Indian Affairs have given assurances that proposed changes to the compact would not “adversely affect anything.” Last year the BIA sent a letter saying that its preliminary examination of the issues led it to believe that an off-reservation casino by the tribes themselves wouldn’t threaten their compacts with the state. But that opinion doesn’t in any way obligate a federal court.
Although he has been reluctant to address the issue of whether a third tribal casino is a good idea, the governor wasn’t shy about talking about MGM’s proposal for a Bridgeport casino, at least the time factor that applies to it.
“I don’t think that question has been appropriately raised and put before the legislature, and we’re now in March,” said the governor. The legislative session ends in June.
Doba thanked Malloy. “We appreciate the governor’s comments,” he said. “It’s clear that more and more people understand both the game that MGM is playing and what’s at stake for the state.”
Clinton was less happy. “I have great respect for the governor,” said the MGM representative. “If the state makes a decision to have a commercial casino industry, they ought to have a competitive process that allows them to get the full benefit.”
Expensive Lobby Campaign
The campaign to influence the legislature has been an expensive one for both the two tribes and MGM. The tribes have so far spent about $1 million on the lobbying effort.
MGM has retained two lobbying firms to conduct its campaign in the State Capitol and the Legislative Office Building. Coordinating the effort is Global Strategy Group, which specializes in polling, marketing and political campaigns. Governor Malloy is a former client of the firm whose staff includes some of his top former political advisers.
Employing insiders to run its campaign in Connecticut is obviously shrewd strategy for the company, since it has not ties to the state.
Even the small town of East Windsor has gotten into the lobbying game. Last week its Board of Selectmen voted to hire a lobbyist to send to the state capital. They voted to pay $8,500 a month. Two weeks ago, the town signed an agreement with MMCT Venture which would pay the town $5 million for the first five years after the casino opens and $3 million in annual impact payments.
The board got a lot of pushback at the meeting where it voted the expenditure from an anti-casino group that has formed: Coalition Against Casino Expansion in Connecticut, which has formed to press for a statewide referendum on the casino. The city charter does not require a referendum on such decision, but the group argued that residents should have a role in the decision.
The Rev. Denise Terry, a resident of the city and a pastor of a local church, asked the board a series of questions about the proposal, including where the money would be spent.
For their part, some Selectmen were irritated with the group for renting a city facility for a casino forum, and only allowing opponents to speak. They also criticized the group’s publicity tactics, which included blaming the closing of supermarket on the casino proposal when the market was already slated for closing.
