MGM Resorts International is closing its intense lobbying campaign against a commercial casino proposed by tribal competitors by returning to its original strategy: a challenge to the constitutionality of the legislature’s awarding a license without competition.
Eric H. Holder Jr., the U.S. attorney general under President Obama, in a letter addressed to state Attorney General George Jepsen but aimed at House members weighing casino expansion, reiterates a warning he first made in 2015 at MGM’s behest.
“The bill presents a violation of the Commerce Clause because it awards a valuable economic opportunity exclusively to two in-state entities—the Tribes—while shutting out all out-of-state competitors,” wrote Holder, now with Covington & Burling in Washington, D.C., a firm hired by MGM. “The Commerce Clause ‘abhors’ such ‘economic protectionism.’ ”
The letter raises no new issues, but reminds legislators that Jepsen has warned of a legal risk in awarding the Mashantucket Pequots and Mohegans a license to jointly develop a casino in East Windsor to compete with MGM in Springfield.
Holder, who also said a non-competitive legislative award would violate the equal protection clause of the Constitution, told Jepsen: “I urge you to counsel the Governor and the General Assembly further about these serious risks. S.B. 957 is in fact unconstitutional for precisely the reasons given in your letters.”
Jepsen is unlikely to act on Holder’s letter.
“The attorney general has addressed these issues with policymakers, both formally and informally, most recently in his formal opinion to Gov. Malloy. We would decline further comment at this time,” said Jaclyn Falkowski, a spokeswoman for Jepsen.
Connecticut has a financial incentive to allow the tribes to develop the state’s first casino off tribal lands: For nearly 25 years, the state has been the tribes’ partner, granting them exclusive rights to casino gaming in return for 25 percent of the gross slots revenue generated at their Foxwoods Resort and Mohegan Sun casinos.
The deal has generated $7 billion for the state since 1993. But from a high of $430 million in 2007, the slots revenue has dropped each year in the face of growing competition in New York, Massachusetts and Rhode Island. It is expected to produce about $260 million this year.
The East Windsor casino is intended to stabilize slots revenue, or at least minimize further losses when MGM’s Springfield casino opens in 2018. MGM has tried to convince legislators the state could do better financially by seeking bids for a casino license in Fairfield County, near the New York market.
“There is only one proposal under consideration right now that presents a danger to the state, and it is MGM’s bill,” said Andrew Doba, a spokesman for the tribes’ joint venture, MMCT. “The governor won’t sign it, and we won’t particpate in any RFP process.”
Malloy said he would not sign any legislation jeopardizing the revenue generated by the state’s exclusivity deal with the tribes.
MGM earlier had suggested that even granting the tribes a commercial license could invalidate the revenue sharing. But the Bureau of Indian Affairs has told the state it was highly unlikely that the proposed legislation would jeopardize the tribes’ existing compacts with the state.
By a 2-1 margin, the Senate voted a week ago for a bill authorizing the tribes to develop the East Windsor casino, which would be a rare if not unprecedented instance of a legislature directly awarding a commercial casino license. An industry group, the American Gaming Association, says it is unaware of a commercial license being awarded by legislative action.
Malloy said the only casino expansion he would consider is a deal with the tribes that would preserve the current revenue-sharing agreement.
Given the Senate vote and the governor’s position on opening Fairfield County to casinos, the only two possibilities before the legislature adjourns at midnight Wednesday is House approval of the Senate bill — or no action on casino expansion.