Goodwin Gaming
May 18, 2017

Struggle Over New Casino In Connecticut Continues Unabated

Just recently, Connecticut’s two federally recognized tribes released a letter from the Interior Department, their latest salvo in a struggle with MGM Resorts International over a new casino in the state. The letter has the potential to tip the scales between MGM and the tribes. But first, some background:

MGM and the tribes are locked in a legal and public relations battle over state authorization for a casino in East Windsor, CT. The proposed casino would compete with MGM’s own casino currently rising across the border in Springfield, Massachusetts.

Keen on keeping casino dollars from flowing to its northern neighbor, Connecticut originally passed legislation in 2015 facilitating the formation of a tribal business entity, comprised of the Mashantucket Pequot and Mohegan tribal nations, which would ultimately establish the state’s third casino. But the tribes require further state legislation before they can legally build and run it. Last week, the tribes jumped another hurdle when the Appropriations Committee approved such legislation, sending it on for a full vote by the House and the Senate.

In the past few months, various political and legal actors have presented their opinions on the matter. Meeting with Connecticut’s governor in March, MGM lobbyists presented former Interior Department Secretary Kenneth Salazar’s opinion of the “legal risks” facing the state if authorizing legislation were to pass. Days later, Connecticut’s Attorney General presented his own formal legal opinion. A primary concern of both opinions is the continuing status of Connecticut’s annual 25 percent cut from tribes’ slots revenue at Foxwoods and Mohegan Sun. The current payment scheme stems originally from agreements in the 1990’s between the tribes and Connecticut.

It may seem odd that another casino operated by the tribes would jeopardize the current payments. But the reason is buried in the details of federal Indian gaming regulation. Interior Department regulations provide that tribal-state agreements (called “compacts” under federal law) as well as any subsequent agreements require Interior Department approval. 25 CFR 293.4.

Connecticut legislators are understandably uncomfortable gambling in a game of high-stakes with a potential wildcard that risks ending the existing payment stream.

So, tribal leaders in turn have upped the ante, “guaranteeing” that they will continue the payments from their two existing casinos and also promising to share 25% of revenues from not only slots but also table games at the proposed casino. This is over and above what the tribes now share. Especially in light of Connecticut’s current budget deficit, the promise of added revenue carries extra weight.

And so it is in this context that the tribes presented what appears to be a winning hand on the issue: a letter from Acting Deputy Secretary of Interior, James Cason, confirming that the Department does not “anticipate” disturbing the prior agreements. Playing with a potential wildcard seems a bit less risky now.

But as MGM is reminding Connecticut legislators, the letter does not constitute an approval, let alone preliminary approval. Also, MGM noted in a response to the Cason letter that any new agreements approved by the Interior Department can be (and no doubt will be) challenged in court.

Yet, the tribes’ latest push might be enough. Facing growing deficit woes, Connecticut legislators may wager that this wildcard bet is the only bet worth the gamble.

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