Mashantucket Pequot Tribal Nation Chairman Rodney Butler called on tribal interests nationwide to pool their resources to acquire casinos nationally and overseas.
Butler was speaking during a panel discussion at the National Indian Gaming Association, and of course was referencing the relatively recent partnership that the Pequots forged with their erstwhile rivals, the Mohegans, to build a $300 million “satellite” casino in East Windsor to shield their revenues from being carted off wholesale to benefit the $950 million MGM Springfield, which is due to open in August.
Their East Windsor casino, which would be a commercial rather than tribal operation, won’t be able to open in time to beat MGM to the punch, but they are looking at late 2019 or early 2020.
Butler noted that this would be one of the largest joint tribal operations ever. He pointed to March’s announcement by the Poarch Band of Creek Indians that they would be acquiring the Sands Bethlehem in Pennsylvania for $1.3 billion as raising the bar for what gaming tribes can achieve.
He said, “It’s something that tribes are looking up to aspirationally and saying wow,” adding, “That is a big deal that a small tribe deep in the heart of Alabama buying a $1.3 billion asset from one of the largest gaming properties in the world. I look at that as inspiring. It’s something we have been pursuing with limited success and seeing tribes like Poarch do what they have done encourages all of us to keep looking at deals and pursuing opportunities.”
He noted that Eldorado Resorts just partnered with Gaming and Leisure Properties Inc. to purchase Tropicana Entertainment for $1.85 and declared, “Why couldn’t the tribes have done that?”
Tribes possess the gaming knowhow and are aware of what’s on the market, he said. “We have some of the best gaming analysts in the country working for us. We can analyze these deals and know what a fair price is to pay. We don’t give ourselves enough credit in Indian country of how well we run these facilities in comparison to the commercial operators out there. Many tribes have 10 to 20 years of gaming operations and that translates perfectly to the commercial gaming world.”
Butler is in favor of dreaming big and multiple tribes leveraging their gaming knowledge. “If there was a consortium of tribes that came together and bought multiple assets “at a decent earnings multiple of eight to nine times, that would be a great example,” he said.
The Mohegan tribe has partnered with another gaming firm to develop a large casino project in South Korea. Butler said, “The extreme example is what if a consortium of tribes come together and made a serious play in something in Japan or Brazil or one of the major markets that are going to open hopefully in the next few years. That is how we have to think.”
Robert McGhee, vice chairman of the Poarch Creek tribal council, who was on the same panel, seconded Butler’s suggestion and suggested that tribes create an investment fund similar to one his tribe created for investing in hotels.
Meanwhile Butler and his tribe’s gaming partner the Mohegans last week sent up a trial balloon for a process whereby they might be able to get around the requirement for federal approval for them to operate the East Windsor casino.
This would consist of a new agreement between the tribes and the state. The tribes’ chief legal officers sent letters to Speaker of the state House of Representatives, Joe Aresimowicz, and other legislative leaders.
Helga Woods, the Mohegans’ attorney general, and Elizabeth Conway, the Mashantuckets’ general counsel, disagree with Connecticut Attorney General George Jepsen’s recent opinion that they cannot proceed without the official blessing of the Department of the Interior on the amendment of the tribal state gaming compacts.
Circumstantial evidence would suggest that the Interior Department has failed to act on the amendments within the 45 days required by statute due to at least some heavy lobbying by the representatives of MGM and lawmakers from Nevada, where MGM is based.
In their letter the counsels wrote: “Where we disagree is the characterization of the risks identified by the Attorney General’s Office … and whether those risks outweigh the certain injury of delay and waiting for federal action — the risks to Connecticut jobs and revenues.”
Time is running out to do anything in the current session, which ends May 9.
The letter continues, “As an initial matter, we do not see the risks identified by the Attorney General as significant risks, and we strongly believe that the risks of a state legislative fix this session, without waiting for a court order or change in position from the DOI, can be effectively managed with the State and the Tribes all in agreement.”
They suggested that separate agreements, as opposed to amendments to existing agreements, would be the route to take. This way the 25 percent revenue sharing agreements enshrined in the compacts would be preserved.
They wrote, “The new agreement would be authorized by State law, would be binding and enforceable in State court, and would be consistent with federal, state and tribal laws; however, the agreement would not require federal approval.”
Currently the tribes and the state are embroiled in a lawsuit with the Interior Department as they are trying to force it to issue the approval they have been waiting for since last year. Recently the Interior Department’s Inspector General announced an inquiry into the process.
The tribes recently completed the demolition of the old Showcase Cinema and the clearing of that debris from the site, 13 miles from the site of the MGM Springfield, where they plan to build the casino that would compete with the MGM.
Town officials are expecting that actual construction could begin before the end of the year. So far, the 14-acre site is inactive, with no construction trailers or equipment.
First Selectman Robert Maynard told the Republican, “I think things are right on schedule.” He said he was more worried that if MGM ends up purchasing the casino formerly known as Wynn Boston Harbor (now Encore Boston Harbor) and doesn’t complete the MGM Springfield, that the tribes might abandon the East Windsor project.
The fact that Wynn has changed the name of the Everett casino and so far, the Massachusetts Gaming Commission hasn’t made any adverse announcements about the casino has Maynard breathing a little easier.
In March the tribes held a ceremony marking the beginning of the demolition of the Showcase Cinema building, derelict for a decade, and reiterated their plans for the $300 million casino that would employ 4,300 locals, including at least 650 from the Hartford area.
Maynard said that the tribes would need to get planning and zoning approvals from the city to begin building and he expects applications for these to be submitted this summer. The town would need at least a month to go over the applications before issuing an approval, he said.
