With the knowledge that authorizing a third casino in Connecticut could hurt the existing off-track betting (OTB) facilities in the state, the legislature offered a Band-Aid for the potential damages, by authorizing an increase in the allowable licenses from 16 to 24.
That probably won’t help Sportech PLC, the British-owned firm that accounts for the lion’s share of OTB in the state and operates similar venues in California and the Netherlands. It hasn’t used all of the available licenses. According to state records, OTB parimutuel betting on horses, dogs and jai alai was $88 million.
The state collects a total of $590 million total from all gaming in the state, including OTB, casinos and the lottery. That’s down from the $717 million it collected in 2006, when competition began to ramp up in surrounding states. A large part, $266 million, comes from the Mohegan and Pequot tribes who pay 25 percent of gross revenues to the state, from two of the largest casinos in North America, Foxwoods and the Mohegan Sun.
To help the tribal casinos fight the potentially ruinous competition from the $950 million casino MGM Resorts International is building in Springfield, the tribes persuaded lawmakers to authorize a third casino. That could prove even more ruinous for the state’s OTB.
Ted Taylor, who operates Connecticut Gold Coast OTB in Stamford, told the Connecticut Mirror: “How do I end up being screwed? How is that fair?” His other operation, the Bradley Teletheater, is four miles from the Windsor Locks location that the tribal enterprise MCCT Ventures plans to open the third casino. He is spending millions refurbishing both operations.
Taylor anticipates that the Windsor Locks casino will drain away 35 percent of his business in that town and 20 percent from his other closest venues in Manchester, Hartford and New Britain.
That hit is coming just as Sportech has just finished investing about $20 million in the last five years in widening OTB’s appeal by adding more food, drink, comfort and high-tech goodies like a huge high definition screens at all its venues. It spent $5 million of that at Bradleys.
Taylor says Bradley’s is as much high-end restaurant as it is a high tech OTB.
“Yeah, it’s a little bit of both,” Taylor told the Mirror. “It’s the next generation of a gaming facility in accordance with our license. We know that what people want is great quality food and entertainment, and then some of them will game—and vice versa. So it’s presenting what is known historically as the OTB market in a different perspective, with a lot more style and panache than people might expect, to try to recover from years of not being so great.”
The only potential good news for Sportech in the recent gaming legislation was the provision that authorized a study to prepare for the possibility of sports betting, in case the U.S. legalizes it. Taylor figures that illegal sports betting in the state could be as high as $1 billion. Obviously, he would like to get some of that money if it becomes legal. Sports betting would mesh with OTB, which has a very small profit margin per wager, getting its profits from volume.
Meanwhile the Pequot and Mohegan tribes are crediting assistance from the Trump administration in getting the third casino bill over the finish line.
Both tribes attribute Jim Cason, associate deputy secretary of the Interior, with providing assurances that the Bureau of Indian Affairs, which is part of the department, supported the interpretation by the tribes that allowing them to operate a commercial casino would not violate their state tribal gaming compact that guarantees that their existing casinos would not be threatened by competition from commercial casinos. Some, including the state’s attorney general, George Jepsen, had worried that even a tribally owned commercial casino would break this provision. This line of inquiry was also put forward by critics of the opposed bill, and got serious attention given the 25 percent the tribes pay.
Cason provided assurances that the BIA did not view it that way.
Kevin Brown, Mohegan tribal chairman said last week “Jim Cason has been there for us … to ensure that our forward movement, our economic development, our partnership as tribes is respected.”
Mashantucket Pequot Chairman Rodney Butler, who joined Brown in presenting a ceremonial blanket to Cason, added, “Interior stood up for Indian Country, stood up for that government-to-government relationship.” He added, “We’re gratefully honored that Jim stepped up as he did.
All were appearing at the National Congress of American NCAI conference, which was hosted at the Mohegan Sun resort.
This isn’t the first time Cason has held this office. He held it in the last Bush administration, where he was criticized for opposing attempts by some tribes to have off-reservation casinos, something that critics say is exactly what the Pequot and Mohegan tribes did when they asked the legislature to authorize a casino in Windsor Locks. However, as Brown pointed out, they are doing so outside of the framework of the Indian Gaming Regulatory Act.
Cason credited career employees at the BIA and the Office of the Solicitor in Interior, who actually wrote the letter Cason signed.
Cason said he was happy to be back at Interior, and said of his new boss, Secretary Ryan Zinke, “I also have the privilege of working with a Secretary who is very much aligned with Indian Country’s interests.”
Now that the third casino has been authorized, the tribes hope to break ground on the $400 facility by fall and complete it by the end of 2018, about the time that the MGM Springfield is scheduled to open. MGM, which has been fighting the third casino in the halls of the state legislature and in the federal courts, lost another court round last week.
The 2nd U.S. Circuit Court of Appeals uphold a lower court’s decision to dismiss the lawsuit. MGM had claimed that the law put it at a competitive disadvantage. It agreed with the lower court that MGM’s fears were speculative and didn’t prevent it or other bidders from trying to compete in the state.
The court ruling said it might review the case if MGM is able to show that its feared harm was “sufficiently imminent” to cause it harm. Until then MGM’s fears were “purely speculative,” it said.
Uri Clinton, a counsel and vice president for MGM, said that moment could come as soon as when the state grants the tribes a license for the third casino.
In a separate but related development, the Mohegan Sun’s development arm has rebranded itself as Mohegan Gaming & Entertainment, to emphasize the “entertainment” part of the casino business.
CEO Mitchell Etess said in a statement, “The change in the name to MGE has been made to better reflect where we are today as far as an overall entertainment company and our advancement as a major player in commercial gaming worldwide.”
The Mohegan Sun opened in 1996 purely as a casino. It has since then added dining, retail stores, pro sports, a spa, and an 18-hole golf course. The tribe also operates casinos in Pennsylvania, Atlantic City and Washington state. Its first off-shore project will be in South Korea, where it is planning a casino with 1,500 slots and 250 gaming tables, hotel, shopping, entertainment and indoor amusement park.
Meanwhile Foxwoods has announced that it has signed an exclusive agreement with the Connecticut Lottery, the first time the lottery has partnered with a tribal casino on a scratcher ticket.
Felix Rappaport, president and chief executive officer of Foxwoods Resort Casino, said in a statement last week, “We are thrilled to offer a Foxwoods branded scratch ticket to the state of Connecticut in conjunction with the CT Lottery,” adding, “Through this partnership, we are bringing together two of the best gaming brands in the state to provide our loyal supporters with the opportunity to win exciting prizes only available through the Foxwoods High Roller scratch ticket. We look forward to building upon this relationship to continue providing our guests with innovative and fun ways to win in 2017 and beyond.”
The High Roller tickets will be available at many locations on the property, as well at nearly 3,000 CT Lottery vendors. The top prize is $125,000 but winners can also get overnight stays at the casino hotel.
The partnership helps to inaugurate Foxwoods’ 25th anniversary, noted Tribal Chairman Rodney Butler. “We greatly value our ability to give back to the local community, and the Foxwoods High Roller ticket provides us with an unparalleled opportunity to add to the nearly $4 billion dollars in revenue we have generated for the state.”
In addition, players whose tickets don’t show a prize will be able to redeem the coupons at Foxwoods for offers and prizes.
Foxwoods slots numbers for May declined 1 percent to $38.1 million, although the handle increased by 4.5 percent to $504 million. That’s the fourth month this year revenues declined.
