Connecticut’s gaming tribes have gotten the letter they sought from the U.S. Department of the Interior that confirms its opinion of last year that their revenue sharing with the state that is mandated by the tribal state gaming compacts would not be threatened if the tribes partner in a third but commercial casino that would be located off the reservation. The Bureau of Indian Affairs, which oversees tribes, is a part of the department.
The letter confirms an earlier letter sent last year by the previous administration.
The Mohegan and Mashantucket Pequots tribes have emphasized for months their belief that they would be able to operate a commercial casino without affecting the compact, which guarantees tribal exclusivity within the state in return for 25 percent of their gaming revenues. Some critics of such an arrangement had cited the concerns of Connecticut Attorney General George Jepsen, who had written that the 20-year old compact might be jeopardized by such an arrangement.
He felt that this was a possibility even though the tribes would, in effect, be competing against themselves.
The department letter, dated May 12, was written to the two tribal chairmen. It reiterated that the Trump administration’s opinion on this matter was the same as the Obama administration.
Acting Deputy Secretary James E. Cason wrote, “We confirm that the current administration supports the views in the technical letter.”
Cason added, “In practice, the Department has not disturbed long-standing compacts when reviewing amendments to the underlying agreements. Here, the Tribes and the State have long-relied upon the Compacts that have facilitated a significant source of revenue for the Tribes and the State. The Department does not anticipate disturbing these underlying agreements.”
Cason emphasized that the letter didn’t amount to a “preliminary approval,” and is not “legally binding” since the expansion proposal hasn’t been formally presented to the department. That won’t happen unless the legislature approves a third casino. Anything else would speculative, wrote Cason.
Nevertheless, the tribal leaders were happy to point to the letter and to redouble their lobbying efforts to be allowed to build a satellite casino in East Windsor to try to blunt the effects the $950 million MGM Springfield will have on the Connecticut market when it opens in 2018. That casino is 14 miles away from the Massachusetts-Connecticut state line.
Mohegan Chairman Kevin Brown declared, “We’ve acted in good faith for the last two years. We’ve done all the hard work of selecting a site, and are proud to have a staunch ally in the town of East Windsor. With this important confirmation in hand, we urge everyone in the legislature to stand with us as we stand up and fight for Connecticut jobs.”
“Receiving this confirmation from the BIA provides a huge boost for our project,” said Rodney Butler, chairman of the Pequot Nation. “The choice now is simple. We can do nothing, and lose thousands of jobs and millions in tax revenue. Or we can compete, and do right by the hard-working families in our state.”
The Mohegans have operated the Mohegan Sun, and the Pequots have operated Foxwoods, in Eastern Connecticut, just a few miles from each other, for more than two decades.
The letter did not shut down the criticism of the third casino by MGM, which feels threatened by the possibility and has fought it in court and in the state capital. MGM Senior Vice President Uri Clinton declared, “This is not news—it’s a hoax.” He added, “This is not news — it’s a hoax. It’s just another attempt by the tribes to pull the wool over people’s eyes, which means the red flags raised by Attorney General George Jepsen remain as red as ever.”
So far the attorney general hasn’t reacted to the letter, although it is reviewing it according to Jepsen’s spokesman.
Casino expansion has been one of the most controversial issues being debated in the legislature this session. On one side are legislators who worry that the state’s Indian gaming revenue will suffer if the MGM Springfield drains away too many customers. Those payments have declined over the year from a high of $400 million to an estimated $267 million this year.
On the other side is lawmakers, backed by MGM, which supports opening up bidding for a third casino to anyone, not just the tribes. MGM has said that it believes the state could make more money from commercial casino than it will lose if the tribes’ monopoly is broken.
House Speaker Joe Aresimowicz, who is in the first group, said “This letter is another positive factor to consider as we continue these conversations. The reality is that gaming is entrenched in our economy, casinos support thousands of jobs in our state and are an important contributor to our overall budget.”
MGM has its own letter to brandish, this one from Arizona Senator John McCain, the author of the 1988 Indian Gaming Regulatory Act, urging the department not issue a guidance letter to the tribes.
McCain’s letter said he was concerned that the department’s previous letter to the tribes was “being construed as the department’s tacit approval for their project.” He asked the department not to send the second letter and to rescind its earlier letter that was issued under the Obama administration.
The tribes were quick to hit the McCain letter, not that it was incorrect in talking about their seeking to have an “off reservation” casino, when it would, in fact, be a commercial casino. They issued a statement that said, “This letter is nothing more than an eleventh-hour tactic by MGM to stall our growing momentum. We’ve been working with the BIA for months, and expect to see the fruits of that labor in the near future.”
The Cason letter does not address another of Jepsen’s concerns: that the bill might be successfully challenged in court on constitutional grounds. MGM has already done this with the bill authorizing the tribes to conduct their search for a casinos site, and have so far not gotten anywhere in federal court. However, once a bill is passed that actually authorizes a casino, it would be subject to further challenges by MGM.
Things are getting down to the wire for the tribes. Three weeks remain in the legislative session. The tribal casino is one of many other initiatives before lawmakers, including legalizing marijuana, cutting municipal aid, college and university funding and balancing the state’s two-year budget. State analysts have downgraded anticipated revenues for the next two years by $1.46 billion due to declining tax receipts.
The last may be the most compelling reason for lawmakers to approve of the third tribal casino. Referring to the budget, Rep. Toni E. Walker, House chairman of the Appropriations Committee, commented, “Given the current fiscal realities, our goal is to sustain Democratic priorities as best we can, such as protecting our most vulnerable residents, maintaining a quality public education system, and investing in job creation,” adding, “This takes revenues, and we have offered a number of areas where this can be accomplished, and remain open to other ideas on how best to fund the needs and priorities of our state going forward.”
The proposal to legalize and tax marijuana sales would raise an estimated $60 million a year. Lawmakers are also looking at imposing road tolls. The budget assumes that if the third casino is licensed it would bring in about $145 million over the next two years.
Meanwhile, acting on the assumption that the legislature will authorize a third casino, the tribes, through their development arm MMCT Venture has started negotiations with Elegant Clinic Services in East Windsor to partner in providing additional employment opportunities for people with mental health issues.
The Mohegan tribe says these talks are part of an effort to build a series of partnerships with companies that serve the area around the proposed casino.
Fluctuating Revenues
Meanwhile, as if to cast the spotlight on casino revenues, the Hartford Business Journal reported last week that casino revenues increased at the Mohegan Sun for the second month in a row while profits at Foxwoods declined compared to the same period in 2016.
The Mohegan Sun, which at 5,532 slots is still one of the largest casino in the world, increased revenues in April by 3.9 percent to almost $53 million, with its handle increasing 3.6 percent to reach $642.4 million.
In contrast, Foxwoods Resort Casino, with 4,800 slots, reported slot revenues decreased by 3.9% to $39.4 million, a statistic balanced somewhat by the fact that the handle increased by 2.9 percent, to $510.5 million.
Under the 25 percent formula, this means the Sun paid about $13.2 million to the state and Foxwoods paid $10.5 million.
