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State says MGM casino to cut tax revenue by $68 million

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The state stands to lose $68.3 million a year in tax revenue when the MGM casino in Springfield, Mass., opens two years from now, according to an estimate by the Office of Fiscal Analysis.

The estimate, first done in April and released earlier this month because of a legislative request, is down from the $95 million in tax losses the state had expected in a 2011 report on the MGM effect because the industry as a whole has not been as robust lately.

But it's still a significant loss, officials noted, in a state that is scraping for money and facing millions of dollars in revenue shortfalls.

"Without any efforts, MGM is going to siphon away a lot of revenue," acknowledged state Sen. Paul Formica, R-East Lyme.

A spokesman for MMCT Venture, a joint company of the Mohegan and Mashantucket Pequot tribes formed to build a casino that would compete with MGM Resorts International in Springfield, said Tuesday in response to the report that the local gaming operators are "fully aware" of the effects a Massachusetts casino so near Hartford would have on state coffers.

"A hit like this to the state's bottom line will lead to more cuts to essential social services, and more tough choices for our state leaders," said Andrew Doba, the MMCT spokesman, in a written statement. "We need to get this right, and make sure that losses of this magnitude never come to fruition."

Without getting into specifics, Doba added in a separate phone interview that the state report lends credence to the idea that a casino run by the Mashantuckets and Mohegans in the Hartford area would help mitigate losses to Massachusetts. The legislature, however, has not yet given its approval for the plans.

Last year, the tribes released an economic report that estimated they would lose some $703 million annually in casino revenues once four new gaming operations in Massachusetts and New York are up and running. About $100 million of losses would be due to setbacks in slot machine revenues, the report said.

According to the website CTJobsMatter.com that advocates for a new Connecticut casino run by the tribes, the $950 million MGM casino only 36 miles from Hartford would lead to the loss of 9,300 state jobs. Nearly half of those jobs and 80 percent of lost revenues could be recaptured if the legislature OKs a new casino near Hartford, according to the website.

By the tribes' estimate, the state would gain nearly $78 million in new taxes under their casino plan.

"We have to try something," said Sen. Formica, though he added it's unclear whether placing a casino on the I-91 corridor near Hartford is the answer. "Jobs are a big priority."

Estimates for lost revenue related to Massachusetts casinos were based on several assumptions, according to the initial 2011 report, including that about 86 percent of Foxwoods and Mohegan Sun patrons living in the Bay State and other parts of northern New England would choose to visit Massachusetts casinos rather than Connecticut gaming meccas.

Data also indicated that Foxwoods would be more heavily affected than Mohegan Sun by the Massachusetts casinos. According to the Center for Policy Analysis at the University of Massachusetts Dartmouth, 31 percent of Foxwoods patrons are from the Bay State, while Mohegan Sun counts only 19.5 percent of patrons in the same category.

l.howard@theday.com

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