May 19, 2017

Malloy: Only realistic casino expansion option is the tribes'

Gov. Dannel P. Malloy moved forcefully Friday for the first time to focus the legislature's debate on casino expansion, saying the only measure he would consider signing is a bill granting the owners of Connecticut's two tribal casinos permission to build a commercial casino in East Windsor to compete with MGM Resorts International in Springfield.

In an interview with CT Mirror, the governor said he remains neutral on the question of whether to expand, but if the General Assembly is going to permit the state's first casino off tribal lands, then lawmakers should respect the state's long-standing exclusivity agreement with the Mashantucket Pequot and Mohegan tribal nations.

The tribes have paid the state $7 billion since 1993 under the terms of agreements in which Connecticut granted gaming exclusivity to the tribal casinos, Foxwoods Resorts and Mohegan Sun, in return for annual payments equal to a 25 percent share of gross slots revenues. The deal is expected to produce at least $260 million for the state this year.

"If I can help the legislature focus, it's do you want to work with the two tribal nations that employ thousands and thousand of people in our state? If that's what you're trying to do to help secure those jobs and that base, then there is one road to go down," Malloy said. "I will not sign a transaction or bill that puts into real danger our existing arrangement with the tribal nations, nor would anyone in this building who thought about it. And I'm not sure we've had that clear, crisp discussion."

The General Assembly is considered three options: Grant the tribes authority to jointly develop a casino just off I-91 in East Windsor, between Hartford and Springfield; create a competitive process to consider new casinos, including one in Fairfield County that could tap the New York market; or do nothing.

"I'm not pushing it, or pushing against it," Malloy said. "But I always believe you should have a realistic discussion about realistic outcomes, and it's not realistic to put $260 million or more at risk."

Without the Malloy administration's playing a role, the casino debate has been oddly unfocused. Legislative caucuses have included assumptions of new revenue — $100 million or more — based on fees they hope to collect for rights to a casino in East Windsor or competition for rights to develop a gambling resort in Fairfield County.

But numerous sources say the revenue numbers are not based on negotiations with the tribes, MGM or any other casino company MGM has enticed to look at the Connecticut market. An entry-level question that the legislature has not explored is: Could a casino near New York generate more revenue than is paid by the tribes?

The Senate Democrats caucused on Wednesday to discuss the status of casino expansion, sparking speculation the Senate was getting ready to take up a bill. But the Senate adjourned Thursday without action and will not meet in session again until Tuesday, when only two weeks and a day will remain until the adjournment deadline of midnight June 7.

"I don't think there's a casino package out there that is ready to go, because if it was, they'd be running it," Malloy said. "I don't think the idea that we re going to have an open process where people participate and, therefore, we lose right out of the box $260 million or more makes any sense at all."

MGM released a poll earlier this week trying to keep pressure on legislators to consider an open process. The poll found only 21 percent of residents favor granting the state's two federally recognized tribes the right to open a commercial casino, as opposed to the 71 percent who agree with MGM and favor an open competitive process.

But how many residents are aware that the tribes have exclusive rights to operate casinos in Connecticut, a privilege for which they pay annually?

MGM's pollster didn't ask, nor would they be expected to. The questions asked by the pollster, the Mellman Group of Washington, D.C., were meant to yield data helpful in the task of persuading legislators to vote against the tribe's bid.

"We've never said the tribes haven't been good corporate citizens," Uri Clinton, an MGM senior executive who has been leading the lobbying fight against the tribes' proposal, said earlier in the week.

MGM's larger point, he said, is that without the rigor of a competitive process, the state and East Windsor are not getting the best possible terms. The state should take a larger look at the gambling market to determine how to maximize revenues, he said.

In addition to arguing at the Capitol that competition could bring a better deal, MGM filed litigation, now on hold as premature, arguing that granting the tribes' right to a commercial casino without competition would be illegal.

The tribes say the East Windsor casino would help protect market share that's steadily eroded in the face of growing competition as New York, Massachusetts and Rhode Island have allowed gambling parlors with slots and other electronic games. Full casino resorts are under construction in Springfield and Everett, Mass., just outside Boston.

The tribes' struggles have been reflected in the falling slots payments, which reached a high of $430 million in 2007, the year before the recession. It's continued to fall, even as economy improved, to $359 million in 2010 and $267 million in 2015. With annual profits of more than $300 million, the Lottery has been a bigger money-maker for the state every year since 2013.

Casino expansion has been intensely lobbied since 2015, when the tribes first broached the idea of at least one satellite casino to compete with MGM and minimize the inevitable loss of market share. MGM hired Global Strategy, a consulting firm that played roles in Malloy's three campaigns for governor: his loss in 2006 and wins in 2010 and 2014.

Brian Durand, his current chief of staff, is a former Global employee. Roy Occhiogrosso, once Malloy's top political and communications adviser, returned to Global after working for the Malloy administration during the governor's first term.

Andrew Doba, the governor's former communication director, has been the messaging consultant for the tribes.

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