You could call MGM the casino developer that won’t take no for an answer. It has been turned aside at every turn in its efforts to first stop Connecticut’s gaming tribes from building a third casino, and then trying to blunt their effort by pushing for its own casino. MGM is undeterred by multiple court rulings, legislative decisions and now even a statement from the governor pouring cold water on its proposal. MGM pushes on.
Last week MGM released plans for a proposed $675 million “funded, shovel ready” casino in Bridgeport, the state’s largest city. Aiming at the New York market, the casino would be built along the waterfront. A water taxi could bring patrons from Long Island to Bridgeport. The site has long been popular with would-be casino developers. Donald Trump proposed his own casino along Long Island Sound in the city’s Steelpointe Harbor more than 20 years ago. It is about 80 miles southwest of the MGM Springfield.
MGM proposes a casino with 2,000 slots, 160 gaming tables, a theater with 700 seats, a hotel with 300 rooms, dining and retail shopping.
MGM claims it would create 7,000 jobs, pay a $50 million licensing fee to the state and pay $8 million to Bridgeport and another $4.5 million annually to surrounding communities.
Is the proposal a serious one, or the latest move in an increasingly frenetic chess game between MGM and the Pequot and Mohegan tribes? At the very least it creates political complications for the tribal casino.
First, the tribes proposed a third casino to lessen the devastation that opening of the MGM Springfield next year would have on Foxwoods and the Mohegan Sun. Then MGM tried to checkmate them by taking the state to federal court. When that gambit failed, MGM resorted to heavy lobbying of the legislature to try to persuade lawmakers to authorize an open competition and proposed a commercial casino in Bridgeport instead of the third, satellite casino run by the tribes. It argued that the southwestern part of the state was the most viable location for a third casino. That attempt failed when Governor Dannel P. Malloy threw his weight behind the tribal option, effectively killing the MGM-backed legislation.
Malloy doesn’t seem any more likely to embrace this latest proposal. Last week the governor, while admitting he hadn’t reviewed the MGM proposal, said that if the compacts were violated the state would lost almost $500 million in the next two years.
“I can’t imagine any scenario in which the tribal nations would agree to open up the compact on those grounds,” he told reporters. “I can’t imagine entering into an agreement with any entity that would endanger our agreement with the tribal nations.”
Now, after the most recent rebuff by a federal court of its challenge to the Connecticut law, MGM has unveiled a new commercial casino proposal. Is it a serious proposal, or a delaying tactic while it readies its MGM Springfield for opening in less than 12 months?
The $950 million MGM Springfield no doubt poses a nearly existential threat to the casinos the tribes operate in the southeastern part of the state. They are among the largest casinos in the world. But they are just climbing out of a nearly ten-year trough brought on by the Great Recession, when their profits declined dramatically. Foxwoods and the Mohegan Sun’s combined gaming revenue reportedly declined 7.5 percent between 2013 and 2015 at the same time when gaming revenues nationally were trending up.
Add to that studies that have shown that the Springfield casino will take a serious bite out their revenues if some stopgap casino wasn’t situated near the Connecticut-Massachusetts border. So, the tribes proposed a $300 million casino in East Windsor, 20 miles from Springfield.
MGM’s proposed casino would violate the exclusivity guaranteed to the tribes by their state tribal gaming compacts, under which the tribes pay 25 percent of gaming revenue to the state, and which they would continue to pay for their proposed satellite casino in East Windsor.
The tribes wasted no time early last week condemning the Bridgeport proposal and pointing out that it doesn’t have the support of the legislature or Governor Malloy. They also noted that it would violate their gaming compacts.
MGM, which has partnered with the development company Florida-based RCI Group, the developers of Steelpointe, dismisses this and insists it will “work diligently” to obtain the approvals it needs.
RCI has been involved with the waterfront development since 2001, working with the city to try to develop it. Two years ago, it opened a Bass Pro Shop, a Starbucks and a Chipotle restaurant. This year it began work on a 35,000-square foot building that would house a restaurant and offices.
MGM Chairman and CEO James Murren, a Bridgeport native son, insists the casino could help revitalize the state’s economy: “We’re interested in stabilizing Connecticut’s finances and strengthening its largest city and in the region creating jobs and economic expansion. MGM Bridgeport is the right development, at the right time and in the right place.” He added, “We just need the political commitment to make it happen.”
MGM has been crafting the proposal since June. It would take a year to begin building and 30 months after that to open, he said. It would be MGM’s 17th casino complex, if built. It would allow MGM to tap the New York market, which MGM has unsuccessfully tried to break into with a proposal for a casino in New York City, the U.S.’s largest city.
Murren touted both his personal connection to the city and MGM’s marketing expertise in New York and Fairfield County. “We are the market leader,” he said. “We are doing as well today as 15 years ago.”
In a separate statement he said, “A century ago, Bridgeport welcomed my family when they emigrated from Ireland. It is the city where I was born, and where a work ethic took root. I recall the neighborhoods and businesses that helped define Connecticut’s largest city, where families like mine could, through hard work and determination, build their futures.
“My connections to Connecticut remain strong, and I have assembled a team of experts at MGM who share my commitment to developing properties that maximize the potential of urban communities and contribute to their vitality. MGM believes that Bridgeport is the best location for Connecticut’s first commercial casino and is committed to competing in Connecticut wherever opportunities arise.”
He added, “MGM Bridgeport promises to be a pivotal development that will jumpstart job growth and economic expansion in Connecticut. As a central component of the breakthrough Bridgeport Harbor initiative, MGM Bridgeport will emerge, advancing efforts to realize the potential of Connecticut’s largest city.”
RCI Chairman Robert Christoph Sr., who developed Steelpointe, declared, “The focus is rightly on the thousands of jobs that will be created, on the economic impact that will be felt by families, by the community, and by residents all across this state. That impact should not be underestimated, and cannot be overstated. What we have developed with MGM is, in so many ways, a blueprint for progress for Bridgeport and for Connecticut.”
As chairman of Seaview Bridgeport LLC, Christoph added, “From day one, Seaview Bridgeport LLC has been unrelentingly committed to the development of Seaview Bridgeport LLC as an economic engine for Bridgeport, Fairfield County and the State of Connecticut – a thriving mixed-use, urban-oriented waterfront development and new Long Island Sound destination.
“That vision will be energized and enhanced with the presence of a world-class resort casino. That is why we are so excited by, and strongly support, the partnership we have forged with MGM Resorts International,” he said. “MGM Bridgeport, is just the type of private investment that caused the state of Connecticut and the city of Bridgeport to support the Bridgeport development in the first instance.”
The same day that MGM pulled the curtain back on its new proposal, its senior vice president and legal counsel Uri Clinton argued that the state did not support open competition and that the state and tribes openly supported the East Windsor casino as a defense against the Springfield casino.
MGM Resorts President William J. Hornbuckle told an interviewer that he has contacted Malloy. To the question of whether Malloy was receptive, Hornbuckle answered: “I wouldn’t go that far. But he didn’t know up until this morning whether this was going to happen.”
In the news conference Malloy said, “They admit in their own answers to questions earlier today that this would violate our agreement with the tribal nations, so over the next two years, that would have negative impact to the tune of almost $500 million on the state should they move forward.”
Andrew Doba of MMCT, the joint tribal entity that would actually run the third casino, accused MGM of a “pattern of dishonesty,” adding, “Authorization of this facility would violate the existing compacts between the two tribes and the state which would immediately end the slot payments that currently sends the state hundreds of million a year in much need revenue.”
Doba added, “The idea that MGM is having a ‘groundbreaking’ for a project that hasn’t come close to receiving legislative approval continues a pattern of dishonesty that we saw time and again during the legislative session. Our state’s elected officials saw through their dishonesty last session, and we expect them to see this latest fib for exactly what it is – another bought and paid for piece of misinformation.”
For any kind of traction, MGM’s proposal would require the support of the legislature and Governor Malloy. MGM argues that its deal is better than the 25 percent the tribe currently pays the state because that source is starting to dry up.
MGM proposes that it be allowed to build the casino, while waiting for approval of a license until later, a procedure MGM calls a “two-step process.”
It promises that it will eventually pay the state more than $300 million annually. It also predicts $600 million in new private investment, and that the project will be built without any government money.
It was the promise of millions of dollars for Bridgeport and surrounding communities that brought out New Haven Mayor Toni Harp and Bridgeport Mayor Joe Ganim to hold a joint news conference. New Haven would host the project’s work force development and permanent training center that would focus on all facets of working at a casino. Mayor Harp advised lawmakers, “Don’t shoot ourselves in the foot.” Legislators who represent the area attended the presser.
A spokesman for Harp added, “What excites the mayor is the prospect that her constituents and other residents of the New Haven area will be able to learn a marketable skill.”
BIA Complicates Satellite Casino
Meanwhile the Bureau of Indian Affairs, which the tribes have said had already decided that the third casino, in East Windsor, although a commercial one, does NOT violate the exclusivity clause of the compacts, muddied the waters further with a clarification letter that was anything but.
Acting Assistant Secretary of the Bureau of Indian Affairs Michael Black sent the letter to both tribal chairmen, Kevin Brown and Mashantucket Pequot Tribal Chairman Rodney Butler. In it he wrote that the amendment to the charter that the tribes and some lawmakers felt was necessary to cover everyone on the issue of exclusivity was “premature and likely unnecessary.”
He was answering a letter the state sent in July asking for an opinion from the BIA.
Black wrote, “The Amendment addresses the exclusivity provisions of the Gaming Compact,” He added, “We find that there is insufficient information upon which to make a decision as to whether a new casino operated by (the tribes) would or would not violate the exclusivity clauses of the Gaming Compact. The Tribes have entered an agreement with the State whereby they have agreed that the exclusivity provisions will not be breached by this arrangement. Therefore, our action is unnecessary at this time.”
State Attorney General George Jepsen’s office said it was reviewing the letter and declined to comment on it.
The fact that the letter doesn’t clearly say whether the existing compacts need to be amended is making some lawmakers nervous.
However, Senator Timothy D. Larson, who represents East Hartford, isn’t one of them. He told the Hartford Courant: “It did not say no. It said it was unnecessary, and I took that as favorable.”
In May of this year the acting Deputy Secretary of the Interior, James Cason, had written that “In practice, the Department has not disturbed long-standing compacts when reviewing amendments to the underlying agreement. 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.”
Doba put the tribal spin on the letter: “The letter we received from the BIA affirms two points: 1) that both tribes maintain their exclusivity in the state and 2) that it’s up to that state and the tribes to agree that the exclusivity provisions will not be breached by their arrangement to jointly own and operate the East Windsor facility,” he said. “We view last year’s massive, bipartisan vote in favor of the project as positive proof that our state’s leaders understand exactly what’s at stake.”
Meanwhile Rep. Joe Verrengia, chairman of the Public Safety and Security Committee said in his opinion any changes to the compact will have to be formally adopted by the legislature.
But Verrengia added that this won’t amount to a rubber stamp and that things have changed since the legislature approved of the East Windsor site three months ago.
He intimated that the Bridgeport announcement by MGM would make it harder for lawmakers to reaffirm their support for the tribes.
“It may be problematic in moving forward because the political landscape has changed, those who voted in favor—the Bridgeport and New Haven delegations—carried the day in the approving the East Windsor casino,” Verrengia told Pechanga.net. “MGM’s announcement Monday of a Bridgeport casino, which includes a partnership with New Haven, may make it harder for lawmakers from Bridgeport and New Haven to offer their support.”
As if to buttress that statement, Rep. Christopher Rosario, whose district includes Bridgeport told the Courant: “I’m going to do everything in my power to see resources and jobs brought to Bridgeport. If there is a way that allows us to get both Bridgeport and their project, then let’s talk.”
A spokesman for the governor said that Malloy thought the murky BIA letter would at the very least slow down the process.
Given that the MGM Springfield will open almost exactly a year from now, delay may be exactly what MGM has in mind.
