Malloy cools to Keno — or any major gambling initiative

The administration of Gov. Dannel P. Malloy appears to be cooling on Keno, a game the Connecticut Lottery has endorsed as a way to boost revenues in a lottery market that turns 40 this month.

Malloy has no intention of proposing Keno or any other significant expansion of gambling in his budget or State of the State speech, according to Roy Occhiogrosso, the governor’s senior adviser.

Occhiogrosso declined to call Malloy’s position a change of heart, although the governor told The Mirror in a story published Dec. 14 that he wanted a “more aggressive lottery,” and the Connecticut Lottery was working on Keno.

“He is an aggressive person. He believes that government should be moving faster and more efficiently,” Occhiogrosso said. “I don’t see a connection between that statement and Keno.”

Malloy told reporters Dec. 28 that the Connecticut Lottery was exploring Keno, an electronic drawing game that other states allow in bars, restaurants and Keno parlors.

“I think the Lottery wants to look at Keno,” Malloy said. “It certainly has to be one of the things on the table.”

In fact, a year earlier the Lottery’s board of directors voted unanimously for a resolution that “endorses the Connecticut Lottery Corp.’s effort to pursue appropriate state approval to implement Keno.”

As recently as Jan. 19, when Malloy met with the editorial board of The Day, Keno still was in the mix.

“We (are) talking about … whether we should have Keno, whether we should have online purchase of lottery tickets, which I actually do support just for convenience purposes,” Malloy told The Day. “If I want to buy a year’s worth of Lotto numbers and lock in my numbers now, and do it electronically, why shouldn’t I be able to?”

With revenues tight and a new tax increase off the table, Malloy was expected to embrace Keno as a way to improve on the record $289.3 million the lottery produced for the state in 2010, more than either Foxwoods or Mohegan Sun.

Anne Noble, the president and chief executive of the Connecticut Lottery Corp., said in a recent interview that the lottery will be hard-pressed to continue its growth, which is now heavily driven by a changing array of instant scratch tickets.

“The lottery industry is mature,” Noble said. “The primary growth in the last decade has been from increasing price points in instant games. We face a business challenge because of that.”

Noble said the most expensive scratch ticket costs $30.

Keno represents a new market, one that brings the lottery into bars, restaurants and social clubs, where patrons would fill out betting slips for fast-paced electronic drawings.

“It’s a social game,” she said. In the minutes of Lottery board meetings, senior executives said the game would be played in “pouring establishments,” a phrase that Noble says is a “term of art” in the lottery industry.

“Keno is most successful when it’s played with a group of people and in a social environment,” Noble said.

Noble could not be reached Thursday evening to comment on Occhiogrosso’s statement that the governor does not intend to pursue Keno.

Malloy’s predecessor, Gov. M. Jodi Rell, twice proposed launching Keno as a way to shrink a growing deficit in the last two years of her tenure, 2009 and 2010.

Her administration estimated the annual revenue from the game at $60 million, which it proposed to monetize, or borrow against, to immediately raise $400 million. The game would have been licensed for up to 1,000 bars, restaurants and other venues.

The Connectiut Lottery has taken the position that Keno is a form of a lottery, not a casino game that would violate the state’s compact with the two tribal casinos, Foxwoods and Mohegan Sun. The tribes, however, say they consider it a casino game that would require their participation.

The state and tribes have yet to resolve their differences.

“The long and short of it is that there is no deal,” said Charles Bunnell, chief of staff for the Mohegans.

Malloy set off a flurry of speculation about gaming changes when he said in December that online gaming seemed to be coming, based on a Justice Department legal opinion, and that the state must prepare for greater competition from new casinos in New York and Massachusetts.

Occhiogrosso said Thursday that the governor was commenting on changes in the marketplace, not necessarily setting up Connecticut for an expansion of gambling.

“I think the governor’s comments on gaming around the time the Justice Department issued its decision, I think those comments were misinterpreted,” he said.

In the legislature, there has been little support for online gambling, and Rell found Keno to be a political loser two years ago. In March 2010, after she proposed Keno, a Quinnipiac University poll found the game opposed by 70 percent of voters, with only 27 percent in favor.