MGM warns third-casino 'side deals' jeopardize state's compacts with tribes

Gaming-expansion legislation that calls for slot machines at off-track-betting facilities in Bridgeport, Hartford and Waterbury “places in real danger” the state's revenue-sharing agreements with the Mashantucket Pequot and Mohegan tribes, an MGM Resorts International executive asserted Monday.

Although the Senate has approved a bill granting the tribes the exclusive right to operate a third state casino in East Windsor, it remained unclear whether the House would follow suit. With the legislative session scheduled to end by midnight Wednesday, a number of gaming-expansion wrinkles, including slots in OTB locations and a so-called “boutique” casino in Hartford, were reportedly up for discussion.

In a statement, Uri Clinton, MGM Resorts senior vice president and legal counsel, noted that the tribes never presented such “side deals” to the U.S. Department of the Interior when they sought the Bureau of Indian Affairs' preliminary approval of their third-casino plan.

“The legislation and compact amendments submitted by the Tribes to the Department for review earlier this year allowed only for an ‘entity jointly and exclusively owned by the [Tribes] to operate [slots].’ It did not indicate further expansion of gaming throughout the state,” Clinton said. “In response, a letter provided by the Department warned that the legislative process ‘may result in final documents that differ in substance or intent’ from the plan provided to them and that ‘[t]his letter…should, therefore, not be construed as preliminary decision’ on whether BIA would approve.”

The bill approved by the Senate makes the tribes’ development of an East Windsor casino contingent on BIA approval of any changes in the tribes’ agreements with the state. Those agreements call for the tribes to provide the state with 25 percent of the slots revenues generated by their existing casinos, Foxwoods and Mohegan Sun.

In fiscal 2016, those payments amounted to $265.9 million.

MGM Resorts, which is building a $950 million resort casino in Springfield, Mass., advocates legislation that would establish a competitive-bidding process for a third Connecticut casino.

The Las Vegas-based operator released a letter Monday in which former U.S. Attorney General Eric Holder Jr. calls the Senate-approved bill reserving a third casino for the tribes “unconstitutional.”

Addressed to state Attorney General George Jepsen, the letter mirrors one Holder wrote in October 2015 challenging the law that enabled the Mashantuckets and the Mohegans to form a joint venture and to solicit site proposals for a commercial casino. MGM filed a federal lawsuit over the law and appealed a district court decision in the state's favor to the 2nd U.S. Circuit Court of Appeals, which has yet to render a decision. The current Senate-approved bill, like the 2015 law, violates both the Commerce Clause and the Equal Protection Clause of the U.S. Constitution, Holder maintains.

Jepsen’s office received Holder’s latest letter late last week.

“The Attorney General has addressed these issues with policymakers, both formally and informally, most recently in his formal opinion to Governor Malloy,” a spokeswoman for the office said. “We would decline further comment at this time."

In his formal opinion, delivered in March, Jepsen indicated the state would be able to raise “potentially meritorious defenses” against the constitutional claims.

“However, the relative novelty of the legal issues such claims would present makes it difficult to preduct their outcome with confidence,” Jepsen wrote. “We caution that the potential of equal protection or commerce clause challenges succeeding in this context is not at all insubstantial.”



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