The two gaming tribes of Connecticut hope that the new name for their joint venture, Tribal Winds, will blow some good luck their way in their struggle for gaming market share with the MGM Springfield. The tribes, through their joint authority MMCT Venture, are still pushing to open the state’s third casino in East Windsor.
The Mohegan and Mashantucket Pequot tribes timed the announcement of the new brand name with their push to persuade lawmakers to support bills that would allow them to build and operate their casino 14 miles from Springfield where the $965 million MGM Springfield opened in August.
The new casino has already started to eat into the profits of their Mohegan Sun and Foxwoods Resort Casino, although not as badly as some had predicted. However, the Encore Boston Harbor is expected to open in June, and it too will chip away at some of their bottom line.
The just introduced bills, if they become law, would allow the tribes to proceed with their casino in spite of not receiving the blessing of the Department of the Interior, as the original bill authorizing the East Windsor casino had required. However, the department has only approved the amended state tribal gaming compact of one of the tribes, and dragged its feet for more than a year on the other. This prompted the tribes and the state of Connecticut to sue to force the issue.
But in September a federal judge ruled that the state and the Pequots had not legal standing to force then Secretary of the Interior Ryan Zinke to accept amendments to the Pequots gaming compact with the state.
The tribes blame the delay on the intervention of Nevada lawmakers representing the interests of MGM, which is based in that state. Former Interior Secretary Zinke, who resigned under an ethical cloud, is also implicated, say state representatives such as U.S. Senator Richard Blumenthal. His concerns led to an investigation by the Interior Department’s Inspector General, who has yet to issue a report on his findings. With his departure the tribes have said they are optimistic federal approval will be forthcoming.
The tribes and the state’s budget forecasters had predicted the tribal casinos would experience a 25 percent drop in slot revenues once the MGM Springfield opened. The reality has been a 9.2 percent drop. This reflects the fact that the MGM Springfield has not been as successful as it had projected. In 2014 it predicted it would generate $412 million in gross revenue the first year; but in its first five months it has generated $101.5 million.
“We built in a significant decline,” Chris McClure, a spokesman for the governor’s budget office told the Hartford Courant.
Peggy Holloway, an analyst at Moody’s Investors Service told the Courant that a casino’s revenue unusually climbs for a year before leveling off. “It’s already plateaued,” she said. But she added that it’s too early to predict a decline. “These are big properties. They take 24 months to ramp up,” she said. “They’ll over-hire in the beginning. They’ll overspend to give gamers the right experience.”
Nevertheless the tribes are pushing to open the East Windsor, which they claim will create 5,000 construction jobs and 2,000 permanent jobs once it opens. It will also create indirect economic benefits that translate into another 1,000 small business jobs, they say.
The $300-$400 million casino would be about 100,000 square feet on the former site of a defunct cinema near Interstate 91.
The two tribal chairmen, Mashantucket Pequot Tribal Council Chairman, Rodney Butler and Mohegan Chairman Kevin Brown, spoke to lawmakers of the Public Safety and Security Committee last week. That committee has oversight on gaming in the state.
“We understand that there are skeptics out there,” said Butler “We also know there is a larger conversation about the future of gaming in our state.”
“We’re talking about the next phase of this development, to save jobs, bring more revenue to Connecticut,” said Butler, “The project is shovel ready. We’d be there were it not for the roadblocks in Washington, D.C.”
Butler last week declared, “Tribal Winds Casino will be a great addition to the entertainment landscape of Connecticut’s Capitol Region.” He added, “Building on the iconic brands of our two flagship properties, Tribal Winds will be a world class gaming and entertainment facility that combines our shared past with the proud local character of East Windsor. This shovel ready facility will create jobs and bring in new revenue for the state the minute we break ground.”
So far, the tribes have not applied for a building permit, something that would need 30 days for the city of East Windsor to review. They originally planned to begin construction last November.
The tribes were actually prepared to go a long time before that. They hoped to be operating before the MGM Springfield opened. The stubborn but effective resistance by MGM put roadblocks up at every possible juncture, combining lawsuits, lobbying of the federal government and state officials and a proposal to put a competing casino in Bridgeport that ignited regional rivalries in the state.
It is “shovel ready” to the extent that they have state authorization to develop the state’s first commercial casino, (i.e. not on a reservation) and the town of East Windsor has invited it, the land is cleared and ready for construction. But until the federal government gives the final approval for the compact amendment—or state law is amended to remove that requirement, they won’t be able to get financing to begin building.
The federal nod requirement was attached to ameliorate the possibility that the BIA would invalidate the state tribal compacts because they stipulate no commercial competition to the tribal properties.
Meanwhile some lawmakers representing Bridgeport are ready to push hard for a commercial casino in the state’s largest city that would, by its very existence, shatter the state’s tribal state gaming compact with the tribes. It would relieve them of the obligation to pay the state 25 percent of their slots profits but also end their monopoly on gaming in the Nutmeg state.
The tribes have paid about $8 billion to the state over the last 25 years, but the amount they paid has slowly declined in the last ten years until last year it was about $250 million. This is a point that MGM makes as an argument for cutting the state’s cord with the tribes and allowing commercial casinos.
However the tribes argue that the Tribal Winds will pay the state about $70 million annually.
On the other hand, if the tribes are encouraged to open their casino in Bridgeport, the compacts wouldn’t be broken. That’s something state Senator Dennis Bradley is looking at with the committee he co-chairs along with Senator Catherine Osten. He told News 12 Connecticut, “Obviously we want to see, we want to gather the information. So I’m not a guy who plays with statistics and sees what percentage wise what’s going to happen here. I’ll leave that to the gamblers.”
Senator Osten introduced a bill that removes the BIA approval from the requirement for the tribes beginning work. That provision was included originally after former Attorney General George Jepsen warned that federal approval was needed to close off the possibility of a later lawsuit. The legislature has asked Jepsen’s successor William Tong for a new opinion.
Osten told the Hartford Courant, “There was some stymieing at the federal level that was political in nature more than policy.”
Brown said, “We’re ready to go when you are.” They have already spent $14 million on purchase of the property, prep work and other expenditures associated with the project.
The new governor of the state has approached the tribes about the possibility of them developing a commercial casino in Bridgeport, a casino that was first proposed by the tribes’ arch-nemesis MGM, and which it repeated last week as a response to the appearance by the tribal chairmen before the legislature.
MGM called on the legislature to “move beyond the back-and-forth of the past few years and establish an open, competitive bidding process for a commercial casino.”
Chairman Brown said “We have always said that we would be interested in developing in Bridgeport. Don’t forget that this whole path began with us proposing three casinos throughout the state of Connecticut.”
Rep. Joe Verrengia, who represents Hartford, chairs the House version of Bradley’s committee. He has said that as long as the tribes and MGM are at a stalemate, he can’t see any progress on an additional casino or even sports betting.
However, nine senators disagree, at least when it comes to sports betting. The senators have introduced a law even though one was adopted in 2017 but never acted on.
They have introduced what is called a “placeholder bill,” S.665, placeholder because it is largely not filled out. Its purpose, says the bill is: “That the general statutes be amended to authorize wagering on the results of certain sporting events.”
The proposed law contradicts the 2017 law, which says: “The Commissioner of Consumer Protection shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to regulate wagering on sporting events to the extent permitted by state and federal law.”
Whichever law is in force, the main sticking point is the attitude of the Mohegans and Pequots, who insist that their compacts guarantee them the exclusive rights to sports betting, even though sports betting was not addressed in the compacts since it wasn’t legal at the time the compacts were adopted.
Former AG Jepsen last April addressed their claims: “… because sports wagering is a Class III game under federal law and is not an authorized game under either of the respective Compacts, the Tribes would still be prohibited from conducting sports wagering on their reservations.”
Jepsen added, “Moreover, it is our opinion that if sports betting were to become lawful in Connecticut, the Tribes would not have an exclusive right under the existing Compacts and MOUs to offer it … Sports betting is not listed as an authorized game.”
To push their point home the tribes have threatened to withhold their 25 percent slots payments if they don’t get exclusive rights to sports book.
When he was still in office Jepsen replied that without a valid compact, the tribes might violate federal law if they continued to offer gaming. No word on what Jepsen’s successor Tong says.
