Connecticut bets on keno, maybe more slots

The Connecticut Lottery took a step Thursday toward bringing keno to bars, restaurants and other outlets next year, while legislators in Hartford began a study of the feasibility of introducing video slots to pari-mutuel facilities in Bridgeport, New Haven and Windsor Locks.

Keno seems a sure thing: The General Assembly granted its authorization in June, the Malloy administration is negotiating profit-sharing terms with tribal casinos and, now, the lottery’s board has authorized developing the infrastructure necessary to produce the game by June 1, 2014.

The odds are less certain for the introduction of video slot machines at three pari-mutuel facilities. The study was initiated by lawmakers in those communities who say slots might be necessary to hang onto gambling revenues in the face of growing competition in New York and Massachusetts.

The confluence of the day’s events underlined the importance and the volatility of the gambling industry in the Northeast, where a rapid expansion of casinos and other betting facilities is undercutting Connecticut’s two tribal casinos, Foxwoods and Mohegan Sun.

“The fact of the matter is the state of Connecticut is in the gaming industry, and we’ve been seeing revenues continue to drop,” said Sen. Andres Ayala, D-Bridgeport, as lawmakers began their public look at video slots.

From a high of $718 million in 2006, the state saw its annual gambling income drop to $612 million last year. The revenue comes primarily from two sources: the shrinking slots revenue from the tribal casinos and the growing profits of the lottery.

Keno represents a twofold expansion for the lottery: It is a new game, and it also is expected to expand the existing network of 2,800 lottery vendors by as many as 600 new outlets, primarily bars and restaurants. The new outlets would be expected to sell all lottery products, not just keno.

“All of our retailers typically sell all of our games,” said Anne Noble, the lottery’s president and chief executive officer.

Keno is considered a social game, where patrons in bars and restaurants watch video monitors that produce results as frequently as every four minutes, as is the case in New York. Typically, 20 numbers are drawn from a field of 80 numbers, and patrons bet on which numbers will be drawn.

Lottery officials have yet to produce a full marketing plan for keno, nor are they estimating the degree to which the game would expand its customer base, as opposed to drawing customers from its scratch ticket business.

“Whenever the lottery launches a new game, it’s looking for a new audience,” Noble said. “And whenever the lottery launches a new game, there is some cannibalization of existing games. We wouldn’t expect this game to behave differently from that model.”

The lottery has authorized the expenditure of $5.4 milion over the next two years for its main vendor, Scientific Games, to develop software and hardware necessary for keno.

Noble said the lottery had no comment on the legislative study of possibly installing video slots at pari-mutuel facilities, a move that would require approval by the the Mashantucket Pequots and Mohegans, the owners of Foxwoods and Mohegan Sun.

In return for granting the tribes exclusive rights to slot machines, the state collects 25 percent of the gross profits. The deal negotiated by Gov. Lowell P. Weicker Jr. has generated $6.4 billion for the state since slots were offered at Foxwoods in 1993.

The tribes also claim exclusive rights to keno, an assertion disputed by the state. The state’s Office of Policy and Management is about to begin negotiating a keno deal in which the tribes would share up to 25 percent of keno revenues after the payment of prizes.

The slots handle has been shrinking under the twin pressures of a recession and competition in Massachusetts, Rhode Island and New York. From a high of $430.5 million as the recession hit in 2007, the state’s share of slots revenue shrank to $296 million last year.

Over the same period, the lottery has boomed: It returned $312 million to the state on sales of $1.1 billion last year, up from $279 million in 2007. Lottery officials announced Thursday at their monthly board meeting that sales for the first two months of the current fiscal year show growth of 7 percent.

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