MGM Resorts answered the state of Connecticut’s motion to dismiss its lawsuit against a third, Indian satellite casino by filing supporting . documentation claiming that the state’s law passed in June “stacks the deck” in favor of the Mohegan and Pequot tribes while locking out MGM from participating.
MGM, whose legal team is now led by former U.S. Attorney General Eric Holder, in its filing declared, “The exclusive, no-bid process violates the Equal Protection and Commerce Clauses of the United States Constitution.”
MGM filed its lawsuit in U.S. District court in New Haven in August. The battle between MGM and the existing tribal casinos in Connecticut for market share is seen as of high importance to Connecticut, where lawmakers describe it as a struggle to preserve jobs and state revenue, and in Massachusetts, where the Connecticut law is seen as an attempt to strangle the new Bay State gaming industry in its crib.
Some studies suggest that the MGM Springfield and the Wynn Everett could drain as many as 9,300 jobs from the Foxwoods and Mohegan Sun casinos. The tribes say they could open a third satellite casino before the September 2018 date when MGM says it can open.
MGM will soon begin building its $950 million project, once its altered, downsized plans are endorsed by the city council and the state’s gaming commission.
MGM claims that the request for proposals from the joint venture created by the two tribes, MMCT, violates the U.S. Constitution because it does not allow MGM or other outsiders to compete.
It writes: “By virtue of being denied an opportunity to compete on equal footing, MGM is presently injured by the Act,” adding, “Indeed, the harm to MGM is only increasing as the Preferred Tribes are getting further and further ahead in the casino-development process and will have a competitive advantage even if the process is begun anew in a form that allows MGM to participate.”
In its motion to dismiss Connecticut’s Assistant Attorney General Robert Deichert argued that the law passed in June by the legislature does not prevent MGM from participating because another law will be required to award a casino license, which MGM could compete for.
The law does not prevent MGM from building its own casino, so MGM has no standing to sue, the state argues.
For its part, MGM claims that the law was specifically crafted to lock out outsiders and to favor the tribes. It cites transcripts from the legislature’s session earlier this year where lawmakers stated that the purpose of the law was to benefit the tribes. It claims also that it has an interest in building its own casino in the state, despite a non-compete clause that would prevent it from building a casino within 50 miles of Springfield. MGM claims it has studied building outside of that radius and has found many feasible sites.
Before the law reached its final form in June lawmakers were definitely looking for ways to simply award new casino licenses to the tribes. It was only when Attorney General George Jepsen in April warned that they were straying close to violating the Constitution that they limited the new law to allowing the tribes to look for a casino site. Legislators heeded Jepsen’s warning and the law does not violate the Constitution, the state argues in its motion to dismiss.
Meanwhile, the tribes, acting under the aegis of the June act, are moving forward. Four towns, East Hartford, East Windsor, Hartford and Windsor Locks met the December 10 deadline for submitting proposals.
The next step would be for the tribes to negotiate a plan with the winning community and to persuade the legislature to authorize a casino at that location. Some see MGM’s court battle as a holding action while it assembles an army of lobbyists to fight the next campaign in the halls of the legislature.
Meanwhile the tribes are ramping up the heat at their two existing casinos by increasing slots payouts. According to the Boston Globe the Mashantucket Pequots raised the payout rate at Foxwoods to 91.98 percent, higher than it has been in 20 years. The Mohegan Tribe increased the payout percentage at the Mohegan Sun to 91.79, the highest in five years.
This compares to a 91.87 percent payout rate at Twin River Casino in Rhode Island, and 91.43 percent at Plainridge Park Casino in Massachusetts. Plainridge increased its own percentage from 90.07 since opening on June 24.
Casino News Daily quoted Mohegan Tribal Gaming Authority President Bobby Soper as saying that his organization monitors payouts at competing casinos and changes its own payouts accordingly.
Seemingly miniscule changes in payout percentages can have a significant effect on the bottom line. When Plainridge made its 1.5 percent change the result was that $2.25 million more went from profits to customer wallets for that month. Annually that would work out to $27 million less revenue.
Obviously casino operators don’t do this for charitable reasons. They hope that customers will spend more time playing at casinos that have higher payout rates and that this will mean more revenue over time.
According to Clyde Barrow, an expert on gaming based at the University of Texas quoted by Casino News Daily, higher payout rates mean that players still lose the same amount, but they lose it more slowly.
