A proposal by the Mohegan and Mashantucket Pequot tribes to jointly develop Connecticut’s first casino off tribal lands raises significant legal dangers and uncertainties, Attorney General George Jepsen told legislative leaders Wednesday.
Jepsen warned that legislation giving the tribes exclusive rights to a new casino was itself a gamble, potentially endangering the current profit-sharing deal with the tribes and exposing the state to claims of illegal favoritism.
“In light of this uncertainty and the attendant risks, the legislature should carefully weigh the anticipated benefits of the proposed legislation against the risks it poses to the current arrangements,” Jepsen told the legislators in a six-page memo.
Jepsen delivered the memo, which he also distributed to Gov. Dannel P. Malloy, at a meeting Wednesday afternoon with the top Democratic and Republican leaders of the House and Senate.
The attorney general’s letter is bound to complicate the tribes’ push for legislation permitting them to jointly develop a casino in the I-91 corridor north of Hartford to compete with the MGM casino resort being developed over the state line in Springfield.
Legislation before the Senate would permit the tribes to develop as many as three casinos, but Senate President Martin M. Looney, D-New Haven, told The Mirror recently he expects the bill to be narrowed to authorizing one casino north of Hartford.
Jepsen, a Democrat re-elected last fall to his second term, said his briefing and memo were not intended to dissuade legislators from pursuing casino expansion, but to inform them of potential complications while the legislation still was being developed.
His memo addresses two main issues: The potential impact on the state’s existing tribal compacts, which allow slots at the Mohegan Sun and Foxwoods Resorts Casino in return for 25 percent of gross slot revenues; and what would happen should another tribe win federal recognition in Connecticut.
“Both of these issues pose significant uncertainties and potentially serious ramifications for the existing gaming relationships between the State and the Tribes,” Jepsen wrote.
Another issue, which also has been raised by the legislature’s Office of Legislative Research, is whether a third-party could challenge the casino legislation as illegally favoring the tribes.
While the legislative analysts raised an anti-trust concern, Jepsen warned that granting the tribes exclusive rights to a casino or casinos off tribal lands could violate either the commerce or equal protection clauses of the U.S. Constitution.
“We are unable to predict with any certainty how a court would resolve such issues,” he wrote.
He recommended including language in the casino bill that would void the law in its entirety if a court deems any portion to be void, unconstitutional or otherwise unenforceable.
The tribes issued a joint statement Wednesday night that did not address Jepsen’s specific concerns.
“We have been actively engaged for many weeks with the Attorney General and lawyers for legislative leadership, working to identify the best way to protect nearly 10,000 Connecticut jobs and hundreds of millions in tax revenue that will be lost when a new casino opens in Springfield in 2017, while also addressing any legal and technical issues with the state. We appreciate that the Attorney General has provided possible avenues to mitigate those risks.
“Our commitment has been consistent, throughout those meetings, to work together with the state as partners as we have for many years, and to protect jobs and increase revenue for our state. We look forward to working with the state to address any of the perceived technical legal risks identified, in a way that works for both the state and the Tribes.”
Jepsen questioned the tribes’ assertion that the new casino could be authorized outside the terms of the compacts reached with the state in the early 1990s after the Mashantucket Pequots and then the Mohegans won federal recognition.
He said the existence of a new casino, even if operated by a new business entity owned by the tribes, could violate the state’s exclusive slots deal with the Pequots and Mohegans if the gaming compacts or memoranda of understanding are not amended.
“It would be prudent, therefore, to condition the effectiveness of any legislation upon an agreement among the State and the Tribes that such legislation is not a violation of the existing MOUs,” Jepsen wrote.
But a new agreement raises further complications.
Jepsen said a new MOU or compact might not be enforceable without approval by the secretary of the interior, who oversees the Bureau of Indian Affairs. There is “no certainty as to whether the Secretary would approve the amendment or what the scope of the Secretary’s review would be.”
“Given the unique nature and history of the State’s gaming relationships with the Tribes, there is very little in the way of legal precedent or guidance that allows for a confident analysis of these complex and uncertain legal questions,” he wrote.
Foxwoods and Mohegan Sun rose from woodlands in eastern Connecticut and grew to become the two largest casino resorts in the western hemisphere, profiting from being within driving distance of New York City and Boston.
The Pequots were the first to open a casino with only table games under the provisions of the Indian Gaming Regulatory Act, which permits federally recognized tribes to offer any gambling permitted by the states in which their reservations are located.
The legal basis for the Pequots was a law that allowed blackjack and other table games for charitable purposes. The administration of Gov. Lowell P. Weicker Jr. later struck a memorandum of understanding giving the tribe exclusive rights to slot machines in return for 25 percent of the gross.
After winning federal recognition, the Mohegans reached the same agreement, with the consent of the Pequots.
Three other tribes were denied federal recognition: the Eastern Pequot, Schaghticoke and Golden Hill Paugussett. But Jepsen noted that the Bureau of Indian Affairs “is currently in the process of considering significant changes to the existing acknowledgement regulations.”
In 2003, fearful that another tribe might win recognition, the General Assembly repealed the charitable gaming law that allowed the Pequots and Mohegans to open their casinos.
Jepsen said the pending casino legislation, if passed, “would significantly increase the likelihood that newly acknowledged tribes would succeed in asserting the right to casino gaming under IGRA.”