Slightly more than a month remains in the Connecticut legislature’s regular session, with no decision made yet on a gaming bill.
The state is facing a budget deficit of almost $200 million and larger deficits loom down the road, so proposals to put more money in the state’s coffers are of increasing interest as the home stretch approaches.
No matter what happens, the legislature must adjourn by May 9. If no budget deal is reached in a legislature closely divided between Republicans and Democrats, they will have to return after the summer recess to resolve it.
Lawmakers have been especially interested in crafting legislation that would allow Connecticut to take advantage of a possible U.S. Supreme Court decision on sports betting, expected this summer.
The legislature’s Finance, Revenue and Bonding Committee voted 31-16 to recommend a bill that would create a regulatory framework for sports betting. The Connecticut Lottery Corporation would be allowed to offer it, but the Department of Consumer Protection would also be authorized to issue licenses for other providers.
Some estimates have the Lottery paying the state an extra $700,000 next fiscal year and up to $2.2 million the following year.
Supporting the bill, Rep. Jason Rojas, chairman of the committee declared, “If the Supreme Court’s going to allow states to do it, we can either choose to participate or not. And if other states around us are going to participate and realize some revenue, I think it would be a missed opportunity for Connecticut.”
Senator John Fontana, another supporter, added, “This stuff is happening. It will always happen. If people want to legalize it as opposed to doing it illegally, I’m not offended.”
Senator Scott Frantz was an opponent. “Anything having to do with gambling, I don’t approve of.”
Bridgeport Casino
Representatives from the state’s largest city, Bridgeport have continued to push for a process that would allow MGM Resorts International to bid to build a $700 million casino there that could tap into the New York state market.
Allies of the state’s two gaming tribes, the Mashantucket Pequot and Mohegans, worry that a Bridgeport casino would dynamite the 25-year old compacts between the state and tribes that commits them to pay 25 percent of their revenues to the state.
One bill supporters of the tribes have pushed would postpone for a year a payment of $30 million the tribes owe the state in connection with the satellite casino.
The compacts give the tribes exclusive rights to offer gaming. Last year they paid $270 million, but that total continues to decline from its height of about $400 million ten years ago. The new casino MGM is building in Springfield is expected to take a big bite out of that.
Which was the driving force behind the tribes’ efforts to open a third “satellite” casino in East Windsor. That, in turn, sparked a fierce response from MGM, which challenged it in court and so far successfully lobbied the U.S. Department of the Interior to prevent the tribes from updating their tribal state gaming compact, which is necessary to operate a casino in East Windsor.
Connecticut Speaker of the House Joe Aresimowicz has called for bipartisan efforts for a unified approach to gaming expansion in the state. But he has said he would not be surprised if nothing happens this year.
He said at a news conference last week “I think it’s a complex issue that we need to have a comprehensive strategy. Now, to say that negotiations or discussions really start moving quickly and we’re ready to act, OK, let’s do that, but I don’t see that happening in the next month.’’
He told reporters, “There’s dueling reports that keep coming out in talking about the fiscal viability of a casino in Bridgeport and what it would do to the state’s finances. I think we have to have a comprehensive view of gambling here in the state of Connecticut and what that looks like.”
Joe Verrengia, chairman of the Public Safety and Security Committee, “There’s just not enough votes in favor.”
The Speaker insisted that he would not support requesting proposals for a Bridgeport casino would a comprehensive gaming strategy. “If we were to drop a casino in Bridgeport, what would happen to our current two casinos?” he said.
Such a bill would not authorize such a casino, but would call for another vote by the legislature next year. Proponents are that the tribal state gaming compacts would not be broken until that vote takes place or perhaps until a license is granted.
Rep. Steven Stafstrom, emphasized that point. “Let’s remember what the bill proposes: the bill as proposed does not authorize the construction of a new casino. The bill authorizes an RFP process… We could pass a bill this year that allows an RFP process to go forward and then next session come back and act on a more comprehensive gaming strategy for the state that may or may not include pieces that came out of that RFP process.”
Last week MGM sent a letter to Governor Dannel P. Malloy that made these same points. “We are willing to participate in multiparty talks that will allow the policy considerations to be placed in their proper context as the state considers how to adapt and modernize its gaming laws,” wrote MGM.
Rep. Chris Rosario, who represents Bridgeport, also called for a comprehensive approach to gaming. “We are in this position because we have no gaming commission,” he said. “This state is reactionary… there should be some sort of gaming commission to see what the trends are.”
Asked why an RFP and gaming strategy might not be done in tandem, Aresimowicz replied “I’m open to those discussions but think about, we moved with the bill last year to conserve the customer base and everything else for our current casinos here in the state, if we were to drop a casino in Bridgeport, the important flow of traffic from New York to those casinos—which they heavily rely on—would be stopped.”
Zinke’s Inaction
Meanwhile the National Congress of American Indians last week tried to force the hand of the Interior Department by writing a letter saying that if the department doesn’t say yes or no to the compact changes that it will consider it approved.
The letter begins, “These tribal gaming compact amendments are very important to economic development for both tribal governments as well as the State of Connecticut, and publication of amended compacts is within your duties under the Indian Gaming Regulatory Act. We urge you to act with dispatch.”
Although the NCIA represents tribes from across the country, it has no legal authority. It does have moral authority, according to John Dossett, a spokesman, who said, “I think the organization carries a good bit of credibility and we hope to add our voice to the effort.”
The action by the department is required by the bill the legislature passed last year allowing MMCT Venture, the tribal joint authority, to operate a casino. All gaming compacts must get this approval.
In trying to prod Interior Secretary Ryan Zinke, Dossett added, “The secretary’s job is to review the compact and if it doesn’t violate the law, then he shall publish it in the federal register. It’s not a discretionary decision.”
MMCT Venture spokesman Andrew Doba praised the NCIA’s letter. “Adding their voice to this issue should show the secretary that the department’s failure to follow the law has far reaching implications,” he said.
When asked to comment, a spokesman for the department pointed out that the process is in the federal court where it has been since the tribes and the states sued the department last fall. It has been six months since the compacts were forwarded to the department. Normally the department acts on such requests within 45 days.
The Department of Justice, which is depending Interior, has offered its own interpretation because one of the tribes, the Pequots, opened Foxwoods Resort Casino under a provision of the Indian Gaming Regulatory Act that is triggered when a state refuses to agree to a Class III gaming compact. “The Secretary therefore has no discrete and mandatory obligation to take action,” it wrote in its motion to dismiss.
The tribes call that a “hyper-technical reading” of IGRA. The federal judge in the case has not yet ruled on that motion.
Breaking an Agreement
James Rawlings, founder the Native American Intertribal Council in New Haven, and an elder of the Wampanoag Nation, last week criticized lawmakers for considering violating the tribal compact with his tribe. “Our state leadership envisions, by breaking our agreement with our native nations, new infusions of “gold” as it relates to MGM’s proposal for a new casino in Bridgeport and as an attempt to destroy financial independence and sovereignty of the Pequot and Mohegan nations. Our consideration of new capital to be infused into our state and dismissal and cancellations of our agreement with our native nations continues the long legacy of broken treaties and agreements that have decimated native nations nationally and in our state.”
He added, “Now here we stand in 2018 about to be a part of and “witness” yet another broken agreement Connecticut citizens entered into with our two tribal nations. The agreement with our state was approved to benefit the two nations and to some extent, right some injustices relative to land illegally, if not immorally, acquired from native nations. Concurrently this agreement met some of the needs of the state, which has benefited in excess of $7 billion through the agreement.”
Rawlings concludes, “It appears to be disingenuous that we proclaim Connecticut a sanctuary state, yet the economic genocide of our native nations continues to be a risk.”
East Windsor Casino
The inaction by the department has not completely stymied tribal efforts in East Windsor. They have begun demolishing the abandoned cinema the casino will supplant. Construction will take an estimated 18 months once it begins.
The more MGM’s efforts to block the tribes succeeds, the more wind they create in the sails of supporters of the Bridgeport casino. One of the most vocal is Bridgeport Mayor Joe Ganim, who is also running for governor of the state.
He argues against not taking advantage of the Bridgeport offer, especially since the East Windsor casino is stalled. He told the Hartford Courant, “I think it would be a terrible mistake and one that we would regret. Somebody wants to come in, and we’re trying to block them? MGM says, ‘We’re suited up and ready to go to spend $700 million and create 7,000 jobs.’” He points out that General Electric and Alexion have both announced they are pulling out of the state.
Ganim says he thinks the state can support four casinos.
The tribes disagree, and last week released a study by the well-respected expert on New England’s gaming scene, Clyde Barrow, to back them up.
Barrow’s report “Competitive Bid for a 4th Casino? Why Connecticut Would Be the Biggest Loser,” states that first the tribes would put all the money they would normally pay the state into an escrow fund pending litigation and adds, “Should the state lose that litigation it could result in an upfront permanent loss of more than $1 billion in revenue over a four year period ($270.7 X 4 years) while potential casino sites are identified, bids and proposals are submitted to the state, the state reviews proposals and issues a license, and a casino is eventually constructed.”
Barrow claims that the Bridgeport casino would pay, “at best” approximately $180.2 million in gaming tax payments by the fourth casino—assuming that the commercial casino is taxed at 25 percent of gross gaming revenues—which is equal or higher than the tax rates being paid by most other resort casinos in the United States (e.g., Nevada, New Jersey, Mississippi, Michigan, and Massachusetts).” That would permanently lose the state about $90.5 million, he says.
But that’s only the most optimistic projection, says Barrow, and is based on MGM’s original promise that it would invest $1.1 billion in Bridgeport.
For the state to break even from losing the tribal revenue, the Bridgeport casino would need to generate more than $1 billion in gross revenue, which is higher than MGM’s projections, says Barrow.
