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Feds OK Third Connecticut Casino

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The long, and often contentious, effort of the Mashantucket Pequot and the Mohegan tribes to obtain federal approval for their planned venture to build a third casino in Connecticut came to an end last week when the U.S. Department of Interior approved the revenue sharing compact amendment the tribes negotiated with the state.

Rodney Butler, the chairman of the Mashantucket Pequot tribe, said construction will now begin. A partnership of the tribes, MMCT, will initiate plans.

“Now that the approval of our amendment is secured and our exclusivity agreement with the state of Connecticut is reaffirmed, we will move forward with construction on Tribal Winds Casino in East Windsor and preserve much needed jobs and revenue,” he said.

In 2017, the DOI refused to issue any ruling on the amendment—required in legislation passed to approve another casino—the project stalled and lawsuits filed. The tribes charged that MGM Resorts, which owns MGM Springfield in Massachusetts, just 13 miles north of the MMCT project in East Windsor, Connecticut, unduly influenced then-Interior Secretary Ryan Zinke. MGM and Zinke denied the charge. Zinke later resigned over unrelated ethics charges.

And now that federal approval has been obtained, MGM is again threatening a lawsuit.

“The Attorney General’s office has repeatedly warned, as recently as last year, that pursuing a no-bid approach in East Windsor would expose Connecticut to significant legal risks,” said Uri Clinton, the president of Empire City in New York and the MGM Resorts International representative in Connecticut. “As MGM has always stated, we will continue to pursue all legal options, including litigation, to defend our right to compete in Connecticut.”

“While we assess the planned Interior Department publication, the fundamentals haven’t changed,” Clinton continued. “MGM remains steadfast in our view that Bridgeport is the best location in Connecticut for a commercial casino if the state is to maximize jobs, economic growth, tourism, and revenue—and a transparent, competitive process is in the state’s best interest.”

Meanwhile, the Connecticut legislature’s Public Safety Committee last week voted to advance bills that would allow 1) sports betting, 2) allow online lottery games and 3) allow private bids for a commercial casino in Bridgeport, the state’s largest city. Many details on the bills remain unfilled in, meaning that negotiations will be required before finished bills can be presented.

If the third item becomes law it would encourage MGM to propose a casino resort and hotel along Bridgeport’s waterfront. However, it would also lead to the state’s two gaming tribes holding back 25 percent pays from their Foxwoods and Mohegan Sun casinos.

This item is being pushed aggressively by the city’s legislative delegation. Bridgeport is economically blighted. Under the bill bidders to build a casino would have to commit to pay the city $8 million annually and hire at least 2,000 employees. It would have to invest $500 million in the casino. The casino operator would pay 10 percent of slot revenues and 25 percent of table game revenues to the state. The host city would be required to hold a referendum to approve it.

The unanswered question is whether the Bridgeport casino’s payments would make up for the approximately $260 million the tribes pay each year. The tribal state gaming compacts would allow them to stop those payments if the state ever allows commercial competition to their casinos.

The committee vote was required before the two houses of the legislature can consider the bills.

After the vote Senator Dennis Bradley, whose district includes Bridgeport, declared, “We want to be America’s playground. We will be America’s playground, where everyone can come and have a good time and be in a safe environment and enjoy not just casinos, but enjoy the entertainment that is going to come, enjoy the landscape that already exists, enjoy our harbor and our waterfront.”

Last year a similar bill passed the House, only to die without a vote in the Senate. This year the strategy of proponents is to start in the Senate.

Many lawmakers fear that even issuing a request for proposals could trigger the tribes to stop paying anything to the state. Former Attorney General George Jepsen last year issued an opinion that merely issuing an RFP would not violate the compacts. However, the tribes disagree and have threatened to withhold payments if any bidding process begins.

Rep. Pat Boyd warned, “This legislature needs to think long and hard about what we are doing long-term. There is a financial ramification that hits 169 towns… I am also very concerned that the market just won’t bear.”

MGM spokesman Bernard Kavaler hailed the committee vote. “Today’s committee action advances legislation that puts Connecticut’s interests front and center—creation of an independent state gaming commission, a transparent competitive process for a valuable commercial casino license, and a competitive sports betting marketplace that will benefit consumers and the state.”

Just to show that it wasn’t taking sides, the committee also voted to advance the bill that would allow the tribes to build their third, satellite casino in East Windsor with approval of the Department of the Interior. This requirement had proven an insurmountable roadblock so far to the casino, which has failed to get a nod from the department to its amended state tribal gaming compacts.

This prompted one of the tribes’ most steadfast supporters, Senator Cathy Osten, to observe, “It doesn’t take rocket science to figure out that something was terribly amiss with that process.” It was her bill that also advanced in the voting.

Finally, the committee also advanced a bill. HB 7331, that would allow sports betting at the tribal casinos, while authorizing the Connecticut Lottery to offer it online and at four brick and mortar locations. Off-track-betting locations would also be able to obtain licenses to offer sports bet.

The gross sports wagering would be taxed at 10 percent. This is attractive to many lawmakers, but not all. Senator Tony Hwang, a longtime opponent of any gaming expansion, commented, “I would rather we as a state did it more cautiously, more wisely.”

Under the bill no one under 21 could make sports bets. Bets on college games would be banned, although Rep. Kurt Vail rhetorically asked “Why not all college sports?”

Senator Craig Fishbein asked why not wait to see what experience other states how with sports betting without experimenting. “I don’t see this being a benefit to our state other than monetarily. And I think that’s wrong.”

Currently new Governor Ned Lamont is engaged in negotiations with the tribes on both casino gaming and sports book. He has declined to answer questions about the status of the talks.

This didn’t satisfy Rep. Pat Boyd, who declared, “I know that there’s a lot more people than in this room that need to be part of this discussion.” He added, “This is like we’re in chapter two of a pretty long book. This legislature needs to think long and hard about what we’re doing long-term.”

Before the vote, the Committee on Public Safety and Security held another very long session that jumped from issue to issue, from sports betting to teenage car thefts and school safety. But it did spend a good chunk of the time on HB 7331.

The noisiest part of that discussion came when a representative of Sportech, which has the exclusive license for off-track betting, and George Henningsen, chairman of Foxwoods Tribal Commission, both testified.

Rep. Craig Fishbein quizzed Sportech chief legal counsel about various facets of sports betting. At one point he asked, “Off-shore gambling of this ilk is going on in this state. Certainly you wouldn’t sit here today and say that that will go away?”

Pingel responded, “We’d like to think we’ll get a lot of it, in addition to some people who weren’t placing bets before. We’ve seen … people driving down to NJ, when they could (sports bet) just as easily on the black market. So there is an appetite for legal, regulated sports betting. There is a bit of confusion now with our neighboring states offering this, people want to do it here legally.”

In discussing the “integrity fee” that sports leagues seek as part of a sports betting package, Fishbein demanded “Because integrity is at the core of this … are we creating an issue for the leagues for people to bring lawsuits? I’ll be on the phone and filing lawsuits, I don’t know that we’ve really thought this thing through. I’d be more comfortable with seeing how other states are handling this.”

Pingel responded, “Even if we were to acquiesce to the leagues and pay them an integrity fee, there is nothing set up to compensate you. If you think that setting up an integrity fee is going to further to protect you, that was never contemplated.”

The representative also quizzed the tribal representative, asking, “Is your position that, OK, Connecticut now has legal sports betting, and we (the tribes) have the right to choose to have it. But we aren’t going to pay you additional money?”

“It’s more complicated than that,” answered Henningsen during a long exchange that left the impression that Fishbein was not interested in negotiating with the tribes.

Another representative, Dan Champagne, commented, “I think we should protect the, what, $271 million that we get from the tribes. The tribes have been there, they’ve worked with us well. Does that mean that everything that comes along they get exclusivity on? Maybe not. But I think we should sit down at the table to talk about it. I don’t think that state of Connecticut is in a position to lose a couple hundred million dollars, and I don’t think we will be any time soon.”

Lottery CEO Gregory Smith led off testimony on sports betting, arguing that the Lottery should have a place at the table. He asserted that the Lottery is “fully customizable” and could easily offer sports betting at its nearly 3,000 retailers. He speculated that the state could return up to $20 million to the state “in the early years.”

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