Connecticut Tribes Say BIA Illegally Blocked Casino
The Mohegan and Mashantucket Pequot tribes, who operate two casinos in Connecticut, and would like to open a third, satellite casino, say in court filings that the U.S. Department of the Interior’s Bureau of Indian Affairs illegally withheld certification of its amended tribal state gaming compact—and that it did it under pressure from MGM.
However, the tribes say that they intend to start building the $300 million casino, despite lacking official go-ahead from the BIA.
The tribes want to open a new casino in East Windsor, in a new defunct cinema building. The purpose of the casino is to blunt the effects of the $960 million MGM Springfield on the tribes’ gaming profits when it opens this fall just 14 miles from the boundary between Connecticut and Massachusetts. The tribes say thousands of jobs are at stake.
The location in north central Connecticut was chosen to waylay patrons driving on the Interstate 91 to Springfield.
The tribes need federal approval of any changes to a gaming compact. Normally the BIA has 45 days, as set by the Indian Gaming Regulatory Act (IGRA) to approve or deny such changes and then publish the new compact in the Federal Register. The BIA has taken far longer than that time and still hasn’t denied or approved the amended compacts. Politico reported last week that lobbyists for MGM and members of Congress from the Bay State had meetings and phone conversations with Secretary of the Interior Ryan Zinke.
The Politico report examined the secretary’s schedule, lobbying registrations and other documents that show that Zinke and other department senior officials had many meetings with MGM lobbyists and with Nevada Senator Dean Heller and Rep. Mark Amodei while the amended compact was being considered.
In a letter written to the department Amodei last July wrote “Under that framework, the tribes seek to expand off-reservation gaming without going through the procedures mandated by” the Indian Gaming Regulatory Act.”
U.S. Senator Richard Blumenthal called the department “derelict” for not giving approval and said he asked for meetings with Zinke about the issue without a response.
MGM’s Lobbying Efforts
Besides trying to stop the East Windsor casino from being started, MGM has also been lobbying members of the state legislature to promote its proposed casino is Bridgeport, the state’s largest city.
MGM rolled out the proposal for the $600 million casino in September. It would require that the legislature create a process for granting a new casino license. MGM argues that the state can no longer rely on casino taxes from the Mohegans and Pequots and that it ought to allow competition to them, even though that would violate their gaming monopolies, and thus end the 25 percent they pay in taxes on casino profits. MGM claims that the taxes it would pay on a Bridgeport casino would more than make up for that loss.
Last year the tribes paid the station more than $250 million, however those payments have been trending smaller in recent years due to a more competitive regional market. It its peak, the state was collecting $420 million a year.
In September MGM Resorts CEO Jim Murren told the people of Bridgeport: “We want to be here in Connecticut and we want to be here in Bridgeport. I believe this project could turn the economic tide in the state. We just need to the political commitment to make that happen.” Murren claimed the project would create 7,000 jobs. The casino would have 2,000 slots, 160 gaming tables, a 300-room hotel, a theater, retail shopping and restaurants.
In their lawsuit, filed in December, the tribes claim that the department changed its stance towards the gaming compact from early 2017, when it was positive, to an apparent change last September.
In a September 15 letter Acting Assistant Secretary for Indian Affairs Michael Black wrote the tribes that approving or disapproving of the compact was “premature and likely unnecessary,” and the department had “insufficient information” to issue approval.
U.S. Senator Chris Murphy last week told the CT Mirror last week: “MGM got to Secretary Zinke and convinced him to overrule the decision of a career public servant at the Department of Interior. The timeline is pretty clear.”
MGM doesn’t deny trying to influence Zinke’s decision-making. In court documents it concedes that it “participated in Interior’s review” through meetings and correspondence when it tried to persuade the department to either return the amendments without action or to disapprove them.
In their lawsuit filed in a D.C. District Court, the tribes argue, “IGRA and its implementing regulations leave the Secretary with no discretion to proceed in any other manner.”
Department Goes To Court
Last week the Interior Department appeared in court to defend itself from the tribes’ lawsuit—and it threw an entirely new wrinkle into the dispute.
Interior Department attorneys asserted that Connecticut’s refusal to negotiate a gaming compact with the Pequots three decades ago created the flaw in the state’s bill to assist the tribes. The attorneys said that agreement between the tribe and the state was done by “secretarial procedures” rather than by an actual compact as set out by IGRA.
The department argues that the 45-day requirement only applies to gaming compacts produced by state and tribal negotiation.
In its motion it says, “IGRA contains no mandatory deadlines — or any deadlines at all — for the approval or disapproval of proposed amendments to Secretarial procedures.” It adds, “In addition, this Court should hold that neither the state nor Mohegan have standing to assert claims with regard to Mashantucket’s gaming procedures, nor does Mashantucket have standing to assert any claims with regard to Mohegan’s compact with the state.”
The history of this goes back to the 1980s, when the state refused to negotiate a gaming compact with the Pequots after the federal government gave recognition, despite a federal requirement that it do so. The tribe sued, and a federal judge required the governor to enter negotiations. The negotiations failed and a court appointed mediator imposed a compact on the state, which refused to accept it.
Following IGRA procedures, the mediated compact was submitted to the Secretary of the Interior at that time, which authorized Foxwoods to open. According to the court filings “Mashantucket has been operating under those procedures since they were issued in 1991.”
The Mohegan tribe, on the other hand, did not have such problems with its compact.
This is all news to the two tribes, according to Andrew Doba, spokesman for MMCT, who declared, “For two years, the Department of Interior treated the compact and the procedures as two sides of the same coin. Simply put, one was equal to and the same as the other. Now, because of lobbying from outside parties, they’re changing their position.”
Despite the roadblocks placed in their path by a lack of a BIA approval, MMCT Venture, the joint tribal authority, plans to start construction of the off-reservation, commercial casino before the end of February. The casino has been approved by the state legislature, and does not require federal approval to open. But because they amended the wording of their compacts, the changed wording requires federal approval, according to IGRA. That federal approval is required for the tribes to legally operate their casinos because it is included in the bill approved by the legislature.
MGM says the tribes are trying to keep the benefits of operating exclusive Indian gaming while at the same time competing with it in a commercial casino. This constitutes unfair competition, it claims.
The tribes, once fierce competitors, have operated the Foxwoods and Mohegan Sun casinos within a few miles from each other since the 1990s. Others who have tried to copy their success, but with commercial casinos, have failed to persuade state officials to end the tribal exclusivity clause.
Last week Mohegan Tribal Chairman Keven Brown, who is also chairman of the Mohegan Gaming & Entertainment (MGE) said MMCT will begin demolishing the abandoned cinema building soon.
During his press conference Brown referred to “obfuscation,” by federal officials.
Even if the tribes ultimately prevail, MGM may have caused enough roadblocks along the way to delay the opening of the tribal casino way past the opening of the MGM Springfield, and perhaps prevent it from achieving its original purpose.
MGM maintains a lobbying office in Washington D.C. A spokesman for the company said last week, “MGM Resorts last year established a public policy office in Washington to engage more directly on Federal legislative and policy issues,” adding “Our advocacy activity reflected that increased engagement. As the largest employer in Nevada, part of that advocacy is routinely engaging our elected representatives.”
New Legislative Session
Meanwhile, the new legislature is in session in Hartford, Connecticut and MGM will renew its efforts to convince lawmakers to open a bidding process for new casinos, specifically its proposed Bridgeport casino.
Rep. Chris Rosario has introduced a bill that would repeal the license issued to the two tribes and open competitive bidding for the first commercial casino, which MGM proposes for Bridgeport. “The process will let every developer with an interest — whether it is MGM or the tribes or anyone else — give it their best shot. It is a process that is consistent with industry best practices, and it’s best for Connecticut,” he said in a release.
He added, “It’s the elephant in the room. If the BIA (Bureau of Indian Affairs) approved it, then we’d be working on other opportunities for Bridgeport to get jobs.”
The bill calls for first seeking bids and then selecting the license recipient. Similar bills died in the legislature last year. It requires that the developer invest a minimum of $500 million and employ at least 2,000 workers. The licensing fee would be $50 million, nonrefundable, and a $8 million fee to the host community.
The operator would pay 25 percent of gross and table games to the state with another 10 percent subtracted to help fund education.
The bill was written with the MGM proposal in mind, since it mirrors many of that company’s proposals, such as employing 2,000 people and paying $8 million to the host city.
MGM was quick to hail the new bill. “We look forward to pursuing this opportunity as soon as the bill passes,” said MGM spokesman Uri Clinton said in the statement. “We are fully prepared to present a compelling proposal that will create thousands of jobs, boost the state’s economy and drive tourism, offer significant opportunities for local businesses, and provide substantial revenue to the state and its municipalities. And we continue to believe that Bridgeport is the best location for a commercial casino … to achieve all of these objectives.”
Bids would be due by January 1 and would have to include a host agreement with the city or town, and a positive referendum. The bid could be for any location in the state. The state’s commissioners of consumer protection and economic and community development would recommend a winner by April 2, 2019. The legislature would vote whether to approve of the bid.
Without coming down for or against the bill, the office of Governor Dannel P. Malloy reiterated his support for the gaming tribes and their satellite casino.
“With that said, we have consistently stated that we should aim to prioritize job retention and growth while also ensuring that we don’t violate our state’s existing agreements,” said a spokesman.
MMCT spokesman Andrew Doba quickly disparaged the bill: “Let’s call this bill what it is, the MGM Massachusetts Protection Act. A bill that will cost Connecticut $1 billion dollars in revenue and eliminate 4,000 jobs was a bad idea last year and is still a bad idea.”
The tribes have said that if the state does open Bridgeport to a commercial proposal that they want to bid on it. However, they insist that must be kept separate from their East Windsor casino.
In December, when Murren was making his pitch, the tribes issued a statement: “If circumstances have changed and there is now real interest in putting a casino in Bridgeport, we want to be a part of that discussion.”
Rep. Ezequiel Santiago, whose district includes Bridgeport, said last week, “With its strategic location right in the center of the transportation hub including highway, rail, bus and ferry, Bridgeport is uniquely poised to become an entertainment center that can attract patrons far and near.”
MGM’s spokesman and senior vice president reacted to the bill favorably: “That’s really all MGM has asked for from day one — a fair chance to compete for Connecticut’s first commercial casino license rather than seeking an exclusive no-bid handout.”
The state’s labor unions have thrown their weight behind the Bridgeport casino. Last week UNITE HERE held a rally at a New Haven church attended by several state legislators, a candidate for governor, and workers from several casinos operated by MGM, including in Detroit, Atlantic City and Washington state.
MGM calls Bridgeport the best spot in the state for a casino since it would be able to tap trains that serve Manhattan and ferries that serve Long Island.
The sweeten the deal, MGM has proposed a workforce development center in New Haven.
At the rally Bob Proto, president of the union, declared “This state needs new ideas, and now, a private investor wants to come in, who won’t put a burden on taxpayers.” He added, “But we have some folks that are cynical and narrow-minded in this state. Ask the folks in this region, in Bridgeport, if they want a good job with benefits. Because if you go against this project, you’re going against opportunity. And the fact is we’re not going to let that happen.”
Union organizer Scott Marks told about 85 members, “This is real. Bring the jobs, that’s what we need. Bring the jobs, that’s how our family eats.” They followed with a song, “We are the union, the mighty, mighty union.”
Rep. Toni Walker, a co-sponsor of the bill, referencing the tribes’ current stalled effort, said, “It could take years, and we don’t have years. We need to get these jobs and training. We need to move forward and allow other business.”