Opening a new casino along the I-91 corridor will cannibalize existing business at the two tribal casinos in southeastern Connecticut, but it’s better than losing business to Massachusetts, the chairmen of the two tribes told the Hartford business community Monday.
Mashantucket Pequot Tribal Nation Chairman Rodney Butler and Mohegan Tribe Chairman Kevin Brown told a crowd of about 80 people gathered Monday for a MetroHartford Alliance breakfast that it’s likely a new casino would cannibalize some of their existing business.
A report commissioned by the tribes found the two casinos in southeastern Connecticut will lose about 9,300 jobs by 2019, if gambling facilities in New York and Massachusetts cannibalize $703 million in gaming and non-gaming revenues. Clyde Barrow, the author of that report, estimated that by building a casino north of Hartford “there’s $253 million from Connecticut residents that can be blocked.”
Barrow is expected to release another report this week with greater analysis of the impact of casino expansion along the I-91, I-95, and I-84 corridors.
Mark Hichar, a gaming attorney with Hinckley Allen, said “it seems as though there’s a finite number of gamblers all of the casinos are fighting over.”
Robert Soper, president of the Mohegan Tribal Gaming Authority, acknowledged there is going to be “cannibalization.” But he said with the right investment they will be able to capture the gamblers who may head up to the new MGM casino in Springfield, Mass.
“We agree with MGM that the best part of the market for Springfield is the Connecticut market,” Soper said.
How will the new Connecticut casino be financed?
“It’s going to be done on the backs of the two tribes,” Soper said.
The financial health of at least one of the tribes was questioned last month by Wall Street analyst Moody’s Analytics.
Butler dismissed the report from Moody’s that said the MGM Springfield casino could have an impact on the Mashantucket Pequots’ “ability to refinance its maturing bank debt with a rate and terms that provide it with the long-term financial flexibility needed to compete.”
Butler said the interest from the financial community to build another casino is there and “the financial markets will be there to support it.”
The tribe defaulted last year on the terms of a 2013 restructuring and reached a “forbearance agreement” with lenders that expires June 30.
“We’ve been talking with our investor group and we’ll continue to do so,” Butler said. “. . . we’ll resolve that as we have the past forbearance issues.”
Brown said the Moody’s report took a narrow view of casino expansion and didn’t consider the other non-gaming businesses being explored by both tribes.
Felix Rappaport, president and CEO of the Mashantucket Pequot Tribal Nation, said in order to survive and thrive as a business “you have to change” and react to market conditions. He said the tribes are doing that by expanding their entertainment and food options.
“If we’re smart business people and I believe that we are, we will continue to add other reasons for people to visit our properties,” Rappaport said. “We’re really in the entertainment business.”
He said being “gaming-centric” may have worked 20 years ago when the casinos were the only casinos on the east coast, but that’s no longer the case.
No matter what happens, in order to build any gaming facilities off the reservations, the General Assembly will need to pass legislation. The bill making its way through the legislature would allow for the construction of three new casinos, but the one along the I-91 corridor north of Hartford would be the most urgent.
“We’re open to all discussions,” Butler said regarding the location of the new casino.
East Windsor has expressed interest. A developer has put together his own plan to open a casino along I-84 in East Hartford. The Enfield Town Council decided to keep its options open and postponed passing a resolution in opposition to casino expansion. As a border town, Enfield is the closest to the new MGM casino in Springfield.
Brown and Butler said they are open to all proposals at the moment and are not yet in negotiations with any municipalities. They said they are focused on getting the enabling legislation passed.
“We’re not going to roll three double-wides in with 100 slot machines, make a little bit of money and then fold it up and take it away,” Brown said. “We would not go into this with a short-term goal in mind.”
He said it’s not a “stop-gap measure,” but a recognition of industry competition and where demand exists.
