“We’re trying to save everyone the trouble,” said a councilmember of the town of Windsor, one of several Connecticut communities being considered for a casino. His council voted recently to announce that it doesn’t want to host a casino.
What do you do when the ideal communities for siting casinos that will defend Connecticut’s gaming revenues from outside competition say, “No thanks”?
That’s the problem that the Connecticut legislature is encountering. Several towns near the border with Massachusetts that have been identified as great locations for one of the three casinos that the Mohegan and Pequot tribes would be allowed to jointly operate have announced ahead of time that they aren’t interested.
Windsor was the first to make the announcement. Enfield was the next. Windsor’s vote “no” was by a 9-0 majority. The council made it plain that the city would not provide any incentives to developers thinking of bringing gaming there.
Enfield Assistant City Manager told the Hartford Courant, “We’re only eight miles south of the massive casino that’s already a done deal,” referring to the MGM Springfield, “We’re already a regional shopping destination…there would have to be some sort of entertainment, gaming and food option, not just slots.”
Two other towns, Windsor Locks and East Windsor, have not closed the door on hosting a casino, but say that they want to hear more details on what it would mean for them.
On April 15 lawmakers began discussing a bill that would authorize casinos mainly aimed at staving off inroads from the MGM Springfield that recently broke ground.
The bill is being considered first in the General Assembly, where it has been assigned to the Planning and Development Committee.
Some question whether the tribes, whose casino finances have been feeble since the Great Recession, have the funds to build new casinos, which would cost an estimated $300 million each to build. Keith Foley, a service analyst for Moody’s told the Courant, “You’ve got to wonder. Where are they going to get it?” He added, “The financial situation of both is not the strongest.”
Of the two, Foley considers the Mohegan Sun to be the stronger since it recently negotiated an agreement with its lenders that allowed it to defer payments on its $1.7 billion debt. The Tribal Gaming Authority reported an increase in first quarter profits in January as a result of rising income.
The tribes, which operate Foxwoods and the Mohegan Sun in the southeastern part of the state, have said they will be able to find the funding for the three smaller, slots oriented facilities, but that it is also too early to discuss that aspect of it.
Robert Soper, president of the Mohegan Tribal Gaming Authority told the Associated Press last week, “We’re going to take it step by step,” while Felix Rappaport, chief executive officer of Foxwoods, said that Foxwoods has “great relationship with lending sources,” and added, “When and if we get to that point, we will certainly find a way to fund a project that’s good for Connecticut.”
Foley concluded, “If this is happening, they’re thinking of ways to do it. It would be silly if they’re pushing it without knowing if they can do it.”
They may not have any choice in the matter considering the findings of a recent report by the consulting firm of Pyramid Associates, which concluded that the two tribes could lose $700 million by 2019 as the cumulative effect of new casinos opening outside of the state. The report compared the projected “transfers of gaming revenue,” to that suffered by New Jersey between 2006 and 2014.
Meanwhile, Connecticut’s Attorney General George Jepsen last week warned legislative leaders of both parties that the bill could prompt legal challenges by those who claim that it violates the U.S. Constitution. Jensen, who met with the lawmakers, also worried that it could, “pose significant uncertainties and potentially serious ramifications for the existing gaming relationship between the state and the tribes.”
He followed up the meeting with a detailed letter to the lawmakers.
A challenge could come from a third party who could claim that granting exclusive rights to the tribes violates the Equal Protection Clause of the U.S. Constitution, said the AG and that it might also violate the Commerce Clause of the Constitution in that it would interfere with interstate commerce.
He also hit a hot button with lawmakers who fear more Indian casinos by stating that the bill being considered could make it much easier for tribes other than the Mohegans and Pequots to open their own facilities. Several tribes have long sought federal recognition, and new federal regulations by the Bureau of Indian Affairs that may go into effect this year would likely make it easier for them to do so.
The AG wrote, “The enactment of the proposed legislation, authorizing the tribes to conduct casino gaming under state law, could serve as a new trigger and would significantly increase the likelihood that newly acknowledged tribes would succeed in asserting the right to casino gaming under IGRA (the Indian Gaming Regulatory Act.”
Both tribal leaders, Kevin Brown of the Mohegans and Rodney Butler of the Pequots said last week that they are working with Jepsen and lawmakers and promised to work out all of the legal problems with the purpose of saving the estimated 10,000 jobs that some experts claim could be lost when the competition opens in Springfield.
Butler told the Associated Press: “I think in general, folks have been receptive. They understand the challenges that it means for not only for both nations but for the entire state of Connecticut. And everybody is focusing on addressing those challenges.”
Senate Minority Leader Len Fasano told the Associated Press last week that the legislature should take the attorney general’s concerns into consideration but added, “The ultimate decision is ours because he’s not the legislative branch. But I think he made it pretty clear in the letter, going forward wouldn’t be one of the wisest votes taken in the Capitol.” He suggested further consulting with the AG to include “more safeguards,” and added that the tribal leaders may need to come up with other ways for the law to work.
Fasano is a Republican, however, and the majority Democrats appear to be moving full speed ahead with the bill. According to a spokesman for that caucus, “We will review the Attorney General’s letter. The gaming bill will continue to move through the legislative process as we examine ways to preserve jobs in eastern Connecticut.”
You can tell that casino operators are starting to feel the heat from the pending battle for the Northeast by the things they are starting to say about each other.
A the groundbreaking for the MGM Springfield in Massachusetts, MGM Chairman and CEO Jim Murren referred to the casinos that neighboring Connecticut is mulling over opening in self-defense to the MGM’s opening: “The people of Massachusetts would vastly prefer to go to a brand new luxury resort than a box of slots on the Connecticut border.”
This prompted Mohegan Chairman Brown to respond, “That’s just plain nonsense” and to insist that the smaller casinos proposed by his tribe and his possible partner the Mashantucket Pequots will be just as high quality as the their flagship operations.
In a separate but related development, the legislature is also considering a bill, H.B. 7054 that would allow the Connecticut Lottery Corporation to offer keno in up to 700 restaurants and taverns in addition to the 3,000 vendors who currently offer the lottery. The bill is first being considered by the Finance, Revenue and Bonding Committee, which began holding hearings last week.
Committee Co-Chairman Jeffrey Berger last week noted that the state collects more from the lottery than it does from the casinos. “If we’re going to allow for this expansion of the casinos, we cannot disallow the expansion of the Connecticut lottery into keno,” he said. “One cannot be done without the other.”
The bill is causing some concerns with the Mohegan tribe, which is raising red flags because the bill would not require play slips for the gaming and might allow electronic keno. It also doesn’t like that the bill doesn’t specifically rule out an online lottery. Both tribes currently offer keno at their casinos.
Both tribal chairmen have said that they do support allowing the Lottery to offer keno, under which each tribe would get 12.5 percent of the payments.
The bill was first proposed last year. Other keno bills have been proposed over the years, but were shelved over fears that they might violate the state’s compact with the tribes.
The lottery has lobbied lawmakers strongly for the bill, saying that it needs to expand its market to remain competitive, sustainable in a competitive market and expand the revenue it puts into the state’s coffers.
Lottery President Anne Noble last week told lawmakers, “There’s a conversation about the casinos expanding off the reservations. That could have a negative impact on the lottery. We want to make sure that $319 million is something that is sustained over time.”
Other state lotteries in the region that offer keno include Rhode Island, Massachusetts and New York.
The lottery estimates that an additional $5 million annually could be raised the first year, rising to $30 million in three years.
This is an opportune time to raise the issue since the state budget is growing apace and could rise to $172.8 million by the end of the fiscal year, according to Governor Dannel Malloy.
However, Senate President Martin Looney, one of the chief sponsors of the casino expansion bill, is not so enthusiastic about the keno bill. He commented last week to the Associated Press “I haven’t heard of any active promotion of (keno) as an alternative or as an additional source of gambling. I don’t think it’s really on anybody’s priority list at this point.” He added, “I haven’t been aware of anybody advocating for that. Things can change obviously, but there was a lot of pushback the last time it was considered.”
