Gov. Dannel P. Malloy said Tuesday he will try to resolve who has rights to sports gambling — the tribal owners of the state’s two casinos, licensed off-track betting parlors or other vendors chosen by the state, or a mix of the two — before calling the General Assembly into special session to consider legalizing wagering on sports.
Malloy is meeting Wednesday with legislative leaders to outline his intention to negotiate with the state’s two federally recognized tribes, who have exclusive rights to casino gambling under longstanding agreements and a right under the federal Indian Gaming Regulatory Act to offer other forms of gambling if allowed by state law.
The governor and legislature are reacting to a 6-3 decision by the U.S. Supreme Court last week that struck down a federal law banning wagering on professional and collegiate sports in states other than Nevada, whose casinos long have sports books. In the regular session that ended two weeks ago, legislators declined to act before the court’s ruling.
“The future is now. It’s happened,” Malloy said. “I think we need to definitively state what our position is. It is a little more complicated in Connecticut than it is in other states, given the nature of the compact we have with two Indian tribes.”
Malloy’s comments, which came after a bill signing of a pay equity law, indicate that sports betting is unlikely to come quickly to Connecticut, even if the legislature legalizes it this summer and establishes a process for selecting a vendor, as it has done for off-track betting now allowed in selected restaurants and betting parlors.
Negotiating an amendment to the state’s agreements with the Mashantucket Pequot and Mohegan tribes, the owners of Foxwoods Resort Casino and Mohegan Sun in eastern Connecticut, is only the first step.
Malloy said the legislature, should it decide to go forward with sports betting, must then take a broader of view of responding to various stakeholders, including a University of Connecticut concerned about wagering on its sports teams.
Legislation that never came to a floor vote in the regular 2018 session would have allowed the state’s casinos, licensed off-track betting facilities and the Connecticut Lottery Corporation to offer sports betting.
The tribes say they have exclusive rights to offer sports betting in Connecticut under compacts and MOUs, or memoranda of understanding. Attorney General George Jepsen’s formal opinion is they don’t, but he also warned they could argue in court that they do — and if they won, the tribes could stop paying a 25-percent tax on video facsimile machines — the modern gambling industry’s term for slots machines — that produce about $270 million for the state last year.
‘No exclusive right, but…’
In response to a request by House Speaker Joe Aresimowicz for an opinion, Jepsen wrote “it is our opinion that if sports betting were to become lawful in Connecticut, the Tribes would not have an exclusive right under the existing Compacts and MOUs to offer it. The Compacts set out a list of authorized games. Sports betting is not listed as an authorized game. By contrast, for example, pari-mutuel betting on horse and dog racing and jai alai games are authorized games.”
But Jepsen also offered a significant caveat.
“Those provisions state that the Tribes are relieved of their obligation to pay the State a portion of the gross operating revenues from the operation of video facsimiles of games of chance on their reservations if state law is changed to permit ‘video facsimiles or other commercial casino games.’ ”
Is sports betting, which long has been offered by Las Vegas casinos, a commercial casino game?
Jepsen called that an “open question. That term is not defined in the MOUs or Compacts. How a court might resolve that question is uncertain.”
Malloy’s position is he would rather not gamble. Instead, as the state did when it authorized the Connecticut Lottery to offer Keno, it negotiated with the tribes.
The revenue from the slots deal with the tribes is expected to drop rapidly once competing casinos open in Springfield and in Everett, Mass., just outside Boston. With MGM Resorts International seeking authority to open a casino in Bridgeport, offering an alternative source of casino revenue to the state, Connecticut conceivably could take a harder negotiating line withe tribes.
Malloy smiled when asked about such a prospect and said: “There is an adage about birds, some under a bush, some in hand.” In other words, he is disinclined to risk the current revenue-sharing deal with the tribes.
Rodney Butler, the tribal chairman of the Pequots, has said they are open to talks with the state, a recognition that negotiations offer the quickest path to the state and tribes to cash on on the Supreme Court’s decision.
Aresimowicz, a Democrat, said that House Democratic leaders favor a special session to enact a sports betting regulatory system.
“This type of gambling is going to happen,” he said. “If we can get out in front of it and provide safeguards, I think the better off we will all be.”
The National Basketball Association and Major League Baseball sent representatives to the state Capitol this spring to lobby for a portion of sports wagers to be transferred to professional leagues. This “integrity fee” would fund technological and security enhancements to statistical databases and other measures to safeguard contests from corruption.
The House Democratic bill included an “integrity fee” equal to 0.25 percent of all sports wagers.
One component of the House Democratic plan that might be scrapped in any special session, Aresimowicz said, was a proposal to allow online lottery ticket sales. “To me it is somewhat problematic,” he said, adding only that it likely needs further study in a future General Assembly session.