Connecticut state Senator Tony Hwang, who is contemplating a run for governor, and is part of the anti-casino coalition “No More Casinos in Connecticut” is convinced that a third casino would be too much.
Despite efforts by the state’s two gaming tribes, the Mohegans and Pequots to lobby the legislature to authorize a third casino that they would run; and equally energetic efforts by MGM to fight that casino, and instead persuade the state to authorize a commercial casino further south that wouldn’t have a tribal monopoly, Hwang thinks saturation awaits.
He told fellow lawmakers last week, “We are looking at a declining, oversaturated marketplace,” adding, “I think we have to understand that jobs and promises are critical, but are they real? And are they truly sustainable in an economy that is on a decline?”
Hwang is also concerned about the social impacts of gaming.
During hearings held by the legislature’s Finance, Revenue and Bonding Committee representatives of the Pequot and Mohegan tribes, asked to be given the go-ahead to operate a casino at East Windsor to blunt the effects of the MGM Springfield on their profits, and to at least some of the estimated 9,000 jobs threatened from fleeing the state.
East Windsor is near the state line between Massachusetts and Connecticut, a place considered strategic to keeping patrons from crossing into the Bay State 14 miles to play at the $950 million MGM Springfield, due to open next year.
MGM is fighting fiercely to keep the tribes from being granted a monopoly. It says it is unfair not to be allowed to compete for the third casino.
There are two competing bills in the legislature. The one favored by the tribes would allow them to go forward with the East Windsor option. The second would open the casino up to bidding from all comers.
That second bill would commit the successful bidder to spending at least $500 million, $200 million more than what the tribes propose to spend. It would tax slots profits at 35 percent, 10% higher than what the tribes pay.
Also testifying was Uri Clinton, MGM senior vice president, who said MGM is interested in building a casino in southwestern Connecticut, near the state’s largest city, Bridgeport, but also able to tap the lucrative New York market.
MGM is lobbying for what it calls a “fair and transparent” bidding process, something that MGM’s protégé, the Schaghticoke Tribal Nation, echoes. The tribe is not a federally-recognized tribe, but has been asking to be treated the same as the Pequot and Mohegans, which are federally-recognized. It wants to build near Bridgeport.
“The state needs to realize the full potential of commercial gaming here — millions more in new annual revenues and thousands of well-paying jobs — rather than treat this as a spoiler for a new casino just over the border,” said Chief Richard Velky, of the tribe.
“This is a debate about a bird in the hand versus two in the bush,” said John W. Fonfara, co-chairman of the committee. “Much of the testimony so far is about if you’ve had a bird in the hand and you’ve had a bird in the hand for many years and benefited from that bird and now we’re being dazzled by the potential of something else.” He added, “That doesn’t leave a lot of people comfortable in that we should grab for something shinier and end up with something worse.”
Some lawmakers doubted MGM’s sincerity, expressing the believe that its purpose is to keep the tribes from building the East Windsor site and keeping some of the state’s money in the state. One politician compared MGM to Eddie Haskell, the TV character from Leave it to Beaver celebrated for his insincerity.
Rep. Chris Davis, a ranking member of the committee declared, “under no circumstances is there a requirement for MGM to actually move forward with any proposal. And, in fact, you guys might be doing this for other alternative motives to slow down the tribes from being able to build their casino rather than MGM being able to build another casino in southwestern Connecticut.” He added, “I am not fully confident that MGM is interested in building a casino here in Connecticut.”
Senate Majority Leader Bob Duff, told the committee, “We believe this bill should be rejected. We have heard from MGM that they can do better by building a casino in Fairfield County. Fairfield County does not want a casino.”
In an interview Clinton denied that his company was trying a delaying tactic. “It’s not true,” he said. “There’s no delaying tactic. What we are looking for is a meaningful opportunity and we’ve taken no greater means to push the issue than they’ve taken to oppose it.”
Clinton also cited the recent opinion by Attorney General George Jepsen that allowing a commercial casino, even one run by the tribes, threatens the existing tribal state gaming compact—and the tribes’ payment to the state.
Clinton quoted the tribes as saying that MGM’s casino could strip more than 9,000 jobs away, and then pointed out that the satellite casino would only employ about 2,000.
To combat MGM’s claims that the state stands to earn more money with the Bridgeport casino than it would lose by breaking the tribal state gaming compact that allows it to collect 25 percent of tribal casino revenues—only so long as the tribal monopoly is maintained—the tribe released a study that projected a $86 million loss to the state under that scenario.
The two casinos, which opened in the early 1990s, were once the two largest in the world. They are still among the largest. Last year paid the state $267 million, or 25 percent of their gross. That amount has been slowly declining over the last decade. During the life of the two casinos they have paid about $7 billion to the state.
The study’s author is Clyde Barrow, a longtime gaming expert in the New England market, who has studied and written about it for two decades. He noted that New York is likely to authorize a casino of its own soon, once a moratorium on building a casino in New York City expires—in three years. Barrow characterized MGM’s proposal as the “Trump Taj Mahal of Connecticut,” and predicted quick bankruptcy.
Barrow said that a commercial casino in Fairfield County would need to generate slightly more than $1 billion annually to make up for the lost revenue.
“The probability of a southwestern Connecticut casino generating $1.063 billion annually in gross gaming revenue is almost zero considering the fact that not a single commercial casino in the United States generates that level of gaming revenue,” he said.
He told the committee, “The claim that Connecticut could get a quote ‘better deal’ through a competitive bid have been greatly exaggerated,” adding, “In reality, the process would cost the state more than $85 million a year, and further worsen the state’s financial outlook. The state won’t even break even.”
Asked if market saturation is in the cards, Barrow said that is likely. “You’re probably approaching saturation at one point in the near future,” he said. “You’re still trying to maintain your market share.”
Clinton attacked Barrow’s findings. “The numbers Clyde Barrow is putting forth in this effort to confuse the public are pure fantasy,” he said. “The report’s conclusion is undermined by the tribes themselves, as they have repeatedly told their investors that the greatest threat to their two current casinos isn’t Springfield — it’s the casino market that could be accessed if there was a commercial casino in southwest Connecticut.”
Clinton conceded that saturation might be approaching, and advised: “But if that’s true, I think it’s incumbent on this body to look for a way to maximize your next — maybe your final — but your next casino.”
Two years ago, the legislature gave the tribes leave to conduct a process to identify a location for the third, satellite casino. MGM has fought that process every step of the way, combining an aggressive court strategy with an equally muscular lobbying effort.
