April 17, 2017

Lawmakers consider open-bid process for third casino

Rendering | Contributed
Rendering | Contributed
The proposed third casino in East Windsor.

A new bill with implications for the future of casino gaming in Connecticut faces one of its first hurdles today.

Members of the legislature's Finance Revenue and Bonding Committee kicked off a public hearing late this morning on H.B. 7319, which would require the state to issue a request for proposals to secure a tribe or entity to develop, manage, operate and maintain a possible third casino in the state, with a minimum mandated price tag of $500 million.

The Mohegans and Mashantucket Pequot tribes oppose the bill and are hoping the legislature authorizes a casino at an East Windsor site they have jointly selected.

MGM, which unsuccessfully sued Connecticut over a 2015 law that laid the foundation for a third casino to be operated by the two tribes, argues that the state should open the process to other bids.

MGM's casino in Springfield is slated to open next fall, and an East Windsor casino would likely siphon away some of its customers.

At issue in the Connecticut debate is $267 in annual revenue the state receives under a compact with the two tribes operating Foxwoods and Mohegan Sun, which pay 25 percent of their slot revenues to the state.

Both sides have warned that the state could risk losing that revenue, depending on how the situation plays out.

On Monday ahead of the FRB's public hearing, Mohegan and Foxwoods' joint venture, MMCT, issued a new study by casino analyst Clyde Barrow that argued opening the bidding process would lead to a "certain loss" of the $267 million and that the net cost to the state would be $85.6 million annually.

"There is no math that makes Connecticut's first commercial gaming enterprise work for the state if it's not operated by the two federally recognized tribes," Barrow wrote. "For the state of Connecticut to merely break even in terms of state revenue, a competitively bid third casino would need to generate $1.063 billion in gross gaming revenue annually. There is not a single commercial casino in the United States that generates that level of gaming revenue."

In March, it was MGM's hired gun raising concerns about the state's compact with the tribes, arguing that the Bureau of Indian Affairs might void it for being overly generous -- a position MMCT disputed.

Besides MGM, the Schaghticoke Tribal Nation, which wants to develop a casino in the southwestern part of the state, also endorsed H.B. 7319 on Monday.

"The state needs to realize the full potential of commercial gaming here – millions more in new annual revenues and thousands of well-paying jobs – rather than treat this as a spoiler for a new casino just over the border," Richard Velky, the Schaghticokes' chief, wrote in submitted testimony

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Read gaming consultant Clyde Barrow's report

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