How certain is the slot money from the tribes?

I still remember the wonder of it all when I read last year in The New York Times that Scott Butera, chief executive officer of Foxwoods, referred to the fiscal haircuts being required of the casino's creditors as "magic."

"We have six layers of creditors and, within each layer, 20 to 40 institutions," Butera was quoted as telling The Times. "It's unbelievable. What you have to do is convince them that $2.3 billion of debt is not worth $2.3 billion. And it's not.

"Our junior debt is trading at 5 cents on the dollar.

"So you want to come to a place where even though the lenders are getting a haircut on the face value, they know they're getting an incredible lift on what it's actually worth. That's the magic."

Magic. The wonder of it all, as the Foxwoods slogan would have it.

Tell creditors they are going to get a lot less than they are owed and that they should feel good about it.

More recently, as Gov. Dannel Malloy continues to make concessions to the tribes, like withdrawing state police casino coverage that the tribes are supposed to pay for and now paying the tribes 12.5 percent of new state keno winnings, you have to wonder what else may lie down the road.

What kind of new magic is being planned for state taxpayers?

Of course, the magic of paying your creditors less than you owe is related to the tribe's unique protection from creditors. Lawyers seem to agree you can't force the tribes into bankruptcy, and even if you could, no one would have the authority to take over a big casino business on sovereign land.

So what happens if one of the tribes decides that paying 25 percent of slot win to the state is no longer reasonable?

Maybe if the tribe says you will get 10 percent and be happy for it, the state would be expected to see the magic of that.

I have heard some people suggest that Malloy has been an especially easy mark for tribal demands because he and Butera of Foxwoods used to be neighbors in Stamford. That seems like a long stretch.

Maybe Malloy has been busy making concessions, like working to give the authority to tribal police to arrest non-Indians, because he sees a squeeze on slot machine revenues coming?

I am sure neither tribe would make any move to compromise promises for paying 25 percent of slot revenues while each is vying for one of the new Massachusetts casino licenses.

Cutting payments to Connecticut while competing for new licenses in Massachusetts wouldn't seem like magic there.

But down the road, I am not sure the state of Connecticut would have much recourse - any more than tribal creditors - if a tribe suddenly started paying less.

Sure, maybe the state could go back to the federal court that imposed the compact in the first place. And maybe even a federal judge could order the gambling stopped.

But then the slot money to the state would completely stop. And lots of state residents would lose their jobs.

For politicians, that would be the equivalent of taking less than five cents on the dollar. Suddenly 10 percent of slot revenues might look like magic.

The state and some state politicians have already put the slot deal and its hundreds of millions of dollars in revenue into play and made it negotiable.

In the backroom deal that just put keno into the new state budget, state leaders agreed to pay 12.5 percent of its keno winnings because of the tribe's exclusive right to gambling.

Another way of looking at that deal is that the state took a small haircut on its slot deal.

More recently, some legislators have called for a task force to look into installing slot machines at three Connecticut pari-mutuel parlors. They suggested sharing revenue between the pari-mutuels, the municipalities, the state and the tribes.

In other words, they suggested, let's renegotiate the slot deal and exclusive gambling rights for the tribes.

When the state flirted with a new casino in Bridgeport, the Mashantucket Pequots made it clear they would stop paying on the slot deal as soon as the ink was dry on the enabling legislation.

That pretty much killed the deal and put a chill on new casino proposals since, because the fiscal pain of doing without the tribal slot revenue for the years that it would take to build a new casino would be too much for the state to bear.

But clearly, as we saw with this month's secret keno deal, the slot deal is negotiable.

And maybe we will be asked to see some magic, too, in what comes next.

This is the opinion of David Collins.

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