The Department of the Interior last week quietly gave Connecticut’s gaming tribes what they have sought for two years: the go-ahead to start building a third satellite casino in East Windsor. That action was the simple one of posting a memo in the Federal Register that the amendments to the tribal state gaming compacts were approved.
This allows the joint gaming authority that the Mohegan and Mashantucket Pequot tribes formed: MMCT Venture, to begin building their $300 million Tribal Winds Casino in the city that is about 14 miles from the MGM Springfield casino in neighboring Massachusetts. Blunting its effects on their bottom line at their existing Foxwoods and Mohegan Sun casinos is the reason for the East Windsor casino. And to save the jobs those casinos create.
Following the federal action Pequot Tribal Chairman Rodney Butler said construction “will move forward” and “preserve much needed jobs and revenue.”
They have so far cleared the site of the former cinema complex on property along Interstate 91 and spent about $14 million. Reportedly they still need to obtain financing to start actual building.
But so mired is the state legislature now in the politics of a push for a commercial casino in Bridgeport that the tribes may take little comfort in the Interior action they sought for so long.
After the Interior Department took the action both tribes withdrew their lawsuit against the department, which they filed in 2017. That lawsuit had alleged that the department had failed to act on their compacts as a result of improper political influence. Their complaints prompted an investigation by the department’s Office of the Inspector General. Moreover, former Interior Secretary Ryan Zinke, who resigned under an ethics cloud in January, is under investigation for his actions in preventing the department from acting on the tribes’ request.
Meanwhile, the young administration of Governor Ned Lamont is trying to negotiate an all-encompassing gaming pact that doesn’t violate the tribal state gaming compacts, while including sports betting in the mix. And maybe gives MGM something too.
The governor, who took office in January told the Associated Press, “I would love to work out something with the tribes. We’re trying our best.”
According to records of Lamont’s schedule that the AP obtained, he has met privately with the tribes in January and in February with representatives of their archrivals, MGM Resorts.
MGM has fought the tribes’ efforts to build a casino in East Windsor that aims to blunt the effects of the MGM Springfield that opened in August on the Foxwoods and Mohegan Sun casinos. It has argued that it should be allowed to participate in an open bidding process for a third casino, and has proposed a $675 million waterfront casino for Bridgeport. This proposal drove a wedge between supporters of tribal gaming and the delegation that represents the state’s largest city.
Sports betting has created another wedge. The tribes assert that their tribal state gaming compacts entitles them to exclusive rights to all casino-style gaming, and they include sports betting in that if the legislature legalizes it. MGM counters that it hopes to offer sports betting at its Bridgeport casino.
At stake is the 25 percent that the tribes have paid on all slots revenues for more than 25 years. If the compacts are violated, they say, those payments will stop. That’s OK, says MGM, a Bridgeport casino will more than make up the $270 million a year that the tribes now pay to the state. Moreover, says MGM, it is unconstitutional to give the tribes a monopoly on what is an off-reservation, non-tribal, commercial casino—and not allow MGM a chance to bid on a casino in the state.
Following the announcement of the federal approval for the East Windsor casino, MGM issued a statement promising to “continue to pursue all legal options, including litigation” and “defend our right to compete in Connecticut.” MGM has gone to federal court before on this issue, although that case was dismissed. However, it feels it has a more solid legal ground now that the tribal casino is actually in a position to move forward.
Lamont confirmed that he had those meetings with the tribes and MGM, and that one of his goals is to avoid the costs of litigation if MGM carries out its threats to challenge the tribal casino in federal court.
Rep. Joe Verrengia, co-chairman of the General Assembly’s Public Safety Committee, which oversees gaming legislation, commented, “Depending on how those negotiations go, we may not see any gaming bills coming out this session.” The one exception might be passage of a bill to create a Connecticut Gaming Commission. This proposal is not seen as controversial.
There is still an active bill that would create an open bidding process and bills pertaining to sports wagering. The legislative session adjourns June 5.
Verrengia added, “I can only imagine the difficulties of getting financing” for the Tribal Winds project, given MGM’s legal threats.”
It would be hard for the tribes to provide the financing themselves since they are already heavily leveraged. So much so that Moody’s Investors Services called the Mohegan Tribal Gaming Authority’s existing leverage a cause for concern. It also noted that the tribal casinos are in an area of growing market competition. Besides the MGM Springfield, the Encore Boston Harbor is poised to open in June.
Moody’s in May 2008 opined that the Pequot tribe had a “week liquidity profile” and is operating under a forbearance agreement with its creditors that expires this summer. The tribe’s earnings have slowly decreased over the last decade due to “reduced spending trends by gaming consumers, increased competition, and more aggressive promotional activity.”
