One of the four sites being considered for Connecticut’s third casino is the Xfinity Theater near Hartford, the state capitol.
The Mohegan and Pequot tribes are looking closely at this site as the official location for the satellite casino, according to city officials and tribal leaders. They originally planned to choose a site by December 15, but later delayed the decision at the request of the towns making proposals.
The satellite casino would be built with the intention of drawing away some state residents and customers who might cross the border into Massachusetts to play at the $950 million MGM Springfield when it opens in 2018.
The site being looked at is about 10 acres in a current parking lot by the music theater, according to the Hartford Courant. This is near the city’s minor league baseball stadium and near where a new Hard Rock Hotel is planned. Tribal chairmen Kevin Brown, of the Mohegans, and Rodney Butler, of the Pequots, disclosed the information during a meeting with the paper’s editorial board.
Hartford Mayor-elect Luke Bronin has said he is not enthusiastic about the proposal and doesn’t intend to aggressively pursue it.
Other sites being considered are in East Hartford, East Windsor and Windsor Locks. Cities being considered would need to hold public hearings and probably referendums according to Andrew Doba a spokesman for MMCT Venture, which is the joint enterprise of the two gaming tribes.
“We are still conducting our due diligence and will make the necessary decisions once that process is complete,” said Doba.
A decision on the site is unlikely to be made before the state legislature goes into session since it will need to vote to authorize any such casino.
“There are many factors to consider as we move through this process, not the least of which is making sure that we secure the hundreds of millions of dollars the state get every year from casino slot revenue,” said Doba.
Senate Majority Leader Bob Duff told the Associated Press last week that he doesn’t know yet what legislation the tribes will seek in 2016. However, he sees such legislation as a way to preserve jobs. He said, “First, we have to figure out if there’s a community that wants this joint venture. If so, then we have to work through those issues that have been raised, which I’m confident that we can do. It’s really one step at a time. You want to get this right and not rush into something and get it wrong.” The state collects 25 percent of the Indian casinos’ profits.
Meanwhile, MGM Entertainment is doing its best to kill this competition in its crib. Besides challenging the state law that authorizes the site selection it is also busy hiring a team of lobbyists to keep the legislature from approving of the needed law.
Records with the Office of State Ethics show that MGM has hired the lobbying firm of Global Strategy Group, and its lobbyist Roy Occhiogrosso, a former policy advisor to Governor Dannel P. Malloy. It has also hired the Hartford lobbying firm of Sullivan & LeShane.
In a legal filing with the federal court where MGM is challenging the Connecticut law, the state backed up its claims that the law does not unconstitutionally favor the Mohegan and Pequot tribes because the law requires another vote by he legislature before a casino can be built.
According to the filing: “The gaming act could not be clearer; it does not authorize anyone to operate a commercial casino in Connecticut. Nor does it remotely guarantee that anyone will ever be able to operate a commercial casino in Connecticut,” the filing said, “That should be fatal to MGM’s attempt to establish standing.” The state claims that MGM lacks legal standing to challenge the law.
It adds, “Ultimately, Connecticut law did not, and does not, prevent MGM from taking steps toward developing a Connecticut commercial casino.”
MGM had claimed, “Even if MGM were able to compete for a casino-development project, it would be doing so ‘at a competitive disadvantage’ by virtue of the legislative endorsement and assistance from state agencies only the Preferred Tribes enjoy under the Act.”
MGM argues that the law passed last June violates the equal protection clause of the U.S. Constitution and the commerce clause by restricting who could issue an RFP for the casino to the two tribes.
It quotes Connecticut Rep. Stephen Dargan who said, “The new law that was enacted is about protecting and expanding jobs right here in Connecticut. I believe we can better achieve that goal by working with the Mohegan and Pequot Tribes who have agreed to partner with the state.”
Earlier versions of the law spelled out explicitly that the tribes would be awarded the right to build a third casino. Attorney General George Jepson warned that the law flirted with violating the constitution and lawmakers heeded his advice.
Meanwhile, the Mohegans are not giving up on their existing property, the Mohegan Sun, where the new Earth Hotel tower is expected to open this October.
According to Mohegan Chairman Kevin Brown, the $130 million project will include a 13-story 400-room hotel. The facility will cater to midweek convention groups. He called it a visible signal that we are committed to economic development.” The hotel will be the most visible symbol of the tribe’s efforts to diversify away from a gaming-centric resort.
It will join the existing 1,200-room Sky Hotel, which opened in 2002. The two hotels will share the same designer, Kohn Pedersen Fox, and similar themes. The tribe says that with just one hotel it has been losing 500,000 room bookings a year.
It will offer a restaurant, pool, fitness center and high tech wired rooms. It will also have an outdoor space to connect guests to nature. According to Vivian Huang of Kohn Pedersen Fox, “It will be a seating area off the lobby. There will be fire pits. People will be able to sit outside by the fire, relax with a cup of coffee.”
The builder is A/Z Corp., whose president and chief operating officer Perry Lorenz commented last week that the top floor of the hotel would be completed in January.
The Mohegans took state and local officials on a tour of the construction site, which they said shows that the casino’s main focus will continue to be the southeastern part of the state.
Foxwoods on a tightrope
Despite improving it relative position with cost reductions Foxwoods and the Mashantucket Pequot Tribe would face major difficulties if its creditors called in $1.7 billion in loans.
A forbearance agreement with the tribe, which was extended the last week of 2015, is set to expire at the end of 2016. If that happens, according to a recent audit report, the tribe lacks the resources to liquidate enough assets, according to an audit report by Deloitte & Touché.
For the last two years the casino cut costs and reduced the number of employees from 6,300 to about 5,000, which reduced payroll costs by nearly $29 million.
The tribe could be in considerable straits if the forbearance agreement is not renewed.
Foxwoods opened in 1992. The tribe defaulted on its debt in 2009. In 2013 the tribe was able to exchange its $2.2 billion in outstanding debt for $1.7 billion. It has been operating under a forbearance agreement since September of 2014.
According to Deloitte & Touché: “The Enterprise (Foxwoods) continues to invest in its business and to reduce operating costs to potentially improve its financial performance. Absent either an extension of the Forbearance Agreement or a refinancing or restructuring of the Tribe’s debt obligations, present cash flows of the Enterprise, while positive, plus available cash balances are not sufficient to liquidate all of the Tribe’s debt if called by the lenders.”
