Tribes raise the specter of state losing years of slots revenues

Hartford — Up until lawmakers last Friday modified a casino-expansion bill that would have upended the Mashantucket Pequot and Mohegan tribes’ East Windsor casino project, the tribes were “100 percent against” the proposed legislation.

Now, with the provision that would have repealed the East Windsor casino authorization removed from the bill, the tribes are “99 percent against it,” Rodney Butler, the Mashantucket chairman, said Thursday.

“We appreciate the (Public Safety and Security) committee’s efforts to address the East Windsor repeal, but we can’t support the bill" in its current form, Butler told members of the legislature’s Government Administration and Elections Committee, which held an informational forum on the tribes' gaming agreements with the state.

The bill, HB 5305, would establish a competitive-bidding process that could lead to a fourth casino somewhere in the state by directing state officials to seek requests for proposals. If the state subsequently chose to accept a proposal, the legislature would have to pass further legislation authorizing a casino before one could open. Under the decades-old state–tribe gaming agreements, or compacts, that granted the tribes the exclusive right to operate casinos in Connecticut, the tribes could stop sharing their existing casinos’ slot-machine revenues with the state if another entity were granted a casino license.

The agreements require the Mashantuckets’ Foxwoods Resort Casino and the Mohegans’ Mohegan Sun to pay the state 25 percent of their slots revenue on a monthly basis. In the 2017 fiscal year, the payments came to more than $270 million.

Legal representatives of the tribes told committee members Wednesday that the tribes are assessing HB 5305’s potential impact on the state–tribe agreements, an issue state Attorney General George Jepsen most recently addressed in written testimony he provided last week to the Public Safety and Security Committee. Jepsen wrote that “the proposed legislation would not run afoul of our existing agreements with the Tribes.”

Tribal officials seemed less certain.

“It is setting up a process that leads to a lifting of the moratorium (on the authorization of more slot machines in the state) and a stoppage of the tribes’ payments,” Betsy Conway, the Mashantuckets’ general counsel, told the government administration committee.

It’s clear, she said, that the payments would stop when the state authorizes a commercial casino not operated by the tribes — not when such a casino opens.

Kevin Brown, the Mohegan chairman, said that once an operator obtains authorization for a casino, it could be three to five years before that casino opens and starts generating taxable revenue. That would mean, he said, that the state would have to forgo all casino revenue for that long.

“Do you really want to forgo $270 million a year for three to five years?” he asked. “That would be quite a gap in Connecticut’s revenue stream.”

The tribes’ payments to the state are expected to start dropping precipitously next year due to the competitive impact of MGM Springfield, the nearly $1 billion resort casino scheduled to open in September in Massachusetts. The tribes have pursued the East Windsor project to soften MGM Springfield’s impact on Foxwoods and Mohegan Sun.

MGM Resorts, the Las Vegas-operator behind the Springfield project, has indicated it will propose a casino in Bridgeport if HB 5305 becomes law.

The tribal chairmen sought to dispel any notion that the East Windsor project is being delayed by the U.S. Department of the Interior’s failure to act on amendments to the state–tribe gaming agreements forged after the East Windsor project was authorized.

“It’s not on hold,” Butler said of the project. “We’ve started demolition at the site, and we’re progressing with work on construction agreements and financing. It’s full steam ahead.”

The state and the tribes have sued the Interior Department in a bid to compel it to act on the gaming amendments, and members of Connecticut’s congressional delegation have asked Interior’s Office of Inspector General to look into the department’s inaction.

b.hallenbeck@theday.com

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