HARTFORD, CT — The Finance, Revenue, and Bonding Committee jumped into the debate Monday over a third commercial casino with a public hearing on its own bill that would open bidding for Connecticut’s first casino off tribal land.
Connecticut’s two tribes and officials from MGM Resorts International went head-to-head again in an effort win support for their arguments.
The Mohegan and Mashantucket Pequot Tribes want to open up a $300 million satellite casino just off I-91 in East Windsor in order to capture convenience gamblers who may be heading up north to MGM’s new, $950 million casino in Springfield, Mass.
MGM Resorts International has an agreement with Springfield that won’t allow it to open a casino within a 50-mile radius. The former East Windsor Showcase Cinemas, the site the tribes have selected for the new casino, is on I-91 about 15 miles from Springfield.
MGM Resorts International wants to build a casino in southwestern Connecticut in order to capture customers from the New York market or, depending on whom you believe, they just want to kill the proposal to protect their interests in the Springfield casino, which is scheduled to open next year.
Connecticut lawmakers are concerned about losing its decades old revenue sharing agreement with the state’s two tribal casinos.
The tribes, through Pyramid Associates LLC economist Clyde Barrow, argued that if Connecticut opens up the bidding for a third casino it will lose revenue. Currently, Connecticut receives about $250 million a year through a revenue sharing agreement with the tribes. Barrow argues that using MGM’s own report, which says it could generate $721 million in gross gaming revenue by opening a casino in southwestern Connecticut, then Connecticut would still not break even if it taxes the revenue from the new casino at 25 or even 35 percent, which is proposed in the Finance Committee’s legislation.
A report compiled by Barrow found that if this new commercial casino was taxed at 25 percent of its gross gaming revenue, it would provide the state with approximately $180.2 million per year.
If the tribes did not win the bid for a third casino then the revenue it shares with the state disappears and Connecticut would thus lose approximately $85.6 million in annual revenue by violating the tribal compacts.
Barrow said for Connecticut to merely break even in terms of revenue, “a competitively bid third casino would need to generate $1.063 billion in gross gaming revenue annually.”
Barrow added: “There’s not a single commercial casino in the United States that generates that much revenue.”
Uri Clinton, senior vice president and legal counsel for MGM Resorts International, said the numbers Barrow put forth are “pure fantasy.”
He said once lawmakers decide to take the risk of building a third casino, the objective is no longer to keep money in the state of Connecticut, “but the objective, I would proposed, should be to add to your tourism infrastructure and to require a minimum capital investment that adds to the offerings.”
Going forward with a commercial casino, not operated by the tribes, would violate the tribes’ revenue sharing agreement with the state. The tribes said recently that they would guarantee that revenue, which would still need the blessing of the Bureau of Indian Affairs.
Sen. John Fonfara, D-Hartford, said the debate is about “a bird in the hand versus two in the bush.”
He said they’ve had a bird in the hand for many years with the tribal gaming agreement and “now we’re being dazzled by the potential of something else and that doesn’t leave a lot of people comfortable.”
He said they could end up reaching for something “shinier and it could end up being vacuous.”
Clinton said if they look at Attorney General George Jepsen’s opinion, regarding giving the tribes exclusivity over a third casino, “you’re in the same position of risk to the tribal payments as if you had an open process.”
The tribes disagree with that assessment. They don’t believe the Bureau of Indian Affairs would reduce the revenue sharing agreement with Connecticut.
The legislation giving the two tribes permission to move forward says they won’t go forward if the Bureau of Indian Affairs doesn’t approve an amendment to the revenue sharing agreement to allow for a third casino.
Mohegan Tribal Chairman Kevin Brown has put the odds of BIA approval at 99 percent. Mashantucket Pequot Chairman Rodney Butler said that in the history of the BIA, “they never have revoked a compact.”
Clinton was pressed on MGM’s position on whether it really wanted an open bidding process or if it was hoping to cast enough doubt to kill potential competition from an East Windsor casino.
MGM has been lobbying lawmakers to open the bidding process to allow it to bid on building a casino in the southwestern portion of the state near the New York border. They said a casino in or around Bridgeport will generate more revenue and economic activity for the state than a casino in East Windsor.
Clinton said MGM is not advising lawmakers to do nothing, but what we are saying is “that if you’re going to try and counteract the competitive forces that are in every state around you, not just the Commonwealth of Massachusetts, that you ought to do so in a way that maximizes the number of jobs.” He said the East Windsor location will not guarantee a substantial number of jobs.
At the same time there’s no guarantee MGM would bid on a casino in Connecticut.
Clinton said MGM has lobbied and spent money supporting an open bidding process for an “opportunity to look at the New York market.” However, he did not guarantee that the company would bid on a Connecticut casino.