Lamont seeks path around ‘legal mud’ of gambling wars

With the new year, the drama over the expansion and control of legal gambling in Connecticut enters its fifth season, a convoluted story in search of an ending. There are new cast members and old feuds, whiffs of scandal in Washington and intrigue in Hartford, and millions spent on lobbying and litigation in both places.

At stake are casinos proposed for East Windsor and Bridgeport and the rights to sports betting. Shifting political and market factors have undermined prospects for the new casinos, but sports betting is the hottest segment of the gambling market since the U.S Supreme Court lifted federal restrictions last year. 

On one side are the Mashantucket Pequot and Mohegan tribes, old rivals and casino competitors in eastern Connecticut now allied in a fight for market share against a common enemy: MGM Resorts International, the Las Vegas giant that recently opened a casino in Springfield, Mass., and purchased one in Yonkers, N.Y.

New to the show for 2019 is Ned Lamont, a governor intent of finding a way to resolve the question of casino expansion and the newer issue of sports betting. Another gambling company, Caesars Entertainment, just hired Hartford lobbyists to position the company for a piece of sports betting business, should Lamont succeed.

“I know what I want to get accomplished, which is to get something done,” Lamont said in an interview. “I just think sports betting and internet gambling is going to be part of America’s economy. And why should Connecticut get left behind?”

The question is simple. The answer is not.

Over five years, MGM and the tribes have fought to a stalemate that complicates passing any gambling bill in the legislature, even one that focuses on only sports betting — something the tribes are eager to offer to build traffic at their Foxwoods and Mohegan Sun casinos. Rhode Island recently allowed sports gambling at its casinos, and Massachusetts is expected to follow suit.

Gov. Ned Lamont: ‘I want a solution.’

“I’ve got a lot of moving parts, and it’s my job to make sure we don’t get mired in the legal mud for the next five years. What does that accomplish? So, I don’t have any preconceived notions,” Lamont said. “I know the tribes have been great partners for us for a long time. I want them them to be part of the solution — but I want a solution.”

If that sounds like a plea for the tribes and MGM to talk settlement, no one has publicly suggested grounds for a compromise or who might broker a deal. Lamont already has met separately with MGM and the tribes, but Ryan Drajewicz, the governor’s chief of staff, notes that the new administration is a week-and-a-half old with a daunting to-do list.

“This is a complex issue with multiple constituencies,” Drajewicz said. “His responsibility is to understand them all and find a path.”

A quick summary: After lobbying in 2015 and 2016, the tribes won passage in 2017 of a state law authorizing them to jointly build a casino on a hillside overlooking I-91 in East Windsor, an effort to blunt the loss of customers to nearby Springfield, which opened last summer. 

But MGM outflanked them in D.C., convincing Interior Secretary Ryan Zinke to withhold approval by the Bureau of Indian Affairs, even though staff had indicated it was forthcoming. Connecticut had made its authorization of the East Windsor plan conditional on BIA approval as a precaution against jeopardizing its longstanding slots revenue-sharing deal with the tribes.

The tribes essentially are in a business partnership with the state, paying more than $7.5 billion for exclusive rights to casino gambling at Foxwoods Resorts Casino and Mohegan Sun over the past quarter century. Based on a 25 percent share of gross slots revenue, the payments peaked at $430 million in 2007. They totaled $263 million last year and were originally projected to fall to $203 million after MGM opened in Springfield, but the latest estimates are that Connecticut will collect $248 million in the current fiscal year.

At about the same time Zinke made clear that the tribes had a problem in Washington, MGM urged Connecticut to terminate the tribes’ exclusive casino rights and allow it to build a waterfront gambling resort in Bridgeport, one it promised to staff with employees from Bridgeport and New Haven. The plan gave MGM an instant urban coalition of backers in the General Assembly.

Plot twists in 2018: The disappearance of federal restrictions on sports betting set off a new fight, this time involving the tribes, MGM, the state’s off-track betting vendor, Sportech, and others; MGM bought Empire City Casino in Yonkers; and Zinke abruptly resigned in the face of multiple investigations, including one related to his role in the Connecticut casino fight.

U.S. Rep. Joe Courtney, D-2nd District, said the departure of Zinke might clear the way for federal approval, but that would not end the threat of litigation by MGM or close division in the General Assembly, which are evident in the committee that oversees gambling legislation, the Public Safety and Security Committee

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Rep. Joe Verrengia: ‘It can’t be played out in the courtroom.’

The new Senate co-chair is Sen. Dennis Bradley, a Democrat from Bridgeport, a city rooting for MGM. He succeeds former Sen. Timothy Larson, whose district included the site of the East Windsor casino, a project he vehemently backed. The vice chair is Sen. Cathy Osten, D-Sprague, who represents an eastern Connecticut town where the success of the tribal casinos is paramount.

“The dynamic between the two chairs and the Senate vice chair is something that you can’t make up,” said Sen. Tony Hwang of Fairfield, the ranking Senate Republican on the committee.

Osten said she favors legalizing sports betting now. Rep. Joe Verrengia, D-West Hartford, who is returning for another  term as the House co-chair, said he wants a comprehensive approach involving all gambling, including the extent to which sports betting would be allowed via the internet.

Legislators said they hope the administration can avoid what MGM promises would be an extended legal fight if East Windsor goes forward — or if the state goes ahead with sports betting without resolving whether it is a casino game, exclusively controlled by the tribes.

“We’ve got to get all this gaming stuff out of the courtroom, whether it’s exclusivity or the East Windsor casino or now sports betting,” Verrengia said. “It can’t be played out in the courtroom. We have to get all the stakeholders together and work out a compromise. That’s so important, and hopefully the governor’s going to take the lead.”

Verrengia, a retired cop who is now a part-time legislator, said the legislature needs more information about the viability of the proposals for East Windsor, Bridgeport or anywhere else in Connecticut.

The only gambling concerns lobbying for casino expansion in the state are MGM and the tribes, each trying to protect existing investments. Caesars, which recently hired Roy & LeRoy, is interested only in sports betting, said Richard Broome, the company’s senior vice president for government affairs.

“It makes you scratch your head. If this is such a viable market, why aren’t other operators competing here in the state of Connecticut?” Verrengia said. “As legislators, we haven’t had any objective in-depth analysis of what another casino would look like here in the state of Connecticut. All the information we have received is tainted, because it comes from one side or another.”

MGM Springfield has captured less of the Foxwoods and Mohegan market than originally anticipated. In fact, the state’s Office of Policy and Management on Friday upgraded its estimates of revenue expected from the two tribal casinos by $25 million in the fiscal year that ends on June 30. It was the second upward revision since the start of the fiscal year.

Even if the political and legal obstacles to the East Windsor casino can be resolved, does the competition from Springfield still justify an investment by the tribes of $300 million in East Windsor when it faces another threat for the larger Boston market from a Boston-area casino scheduled to open in June?

And, with MGM’s acquisition of the Empire City Casino in Yonkers for $850 million, how intent is it on spending more than $600 million in Bridgeport, whose attraction to MGM was providing a foothold for the company in the New York regional market? 

The casino offers slots and electronic blackjack games on the grounds of the Yonkers Raceway, which still offers harness racing and simulcasting of thoroughbred racing. It is expected to seek a full gaming license, allowing table games, upon the expiration in 2023 of a downstate New York casino moratorium. 

Chuck Bunnell, chief of staff to the Mohegan Tribal Nation, said the tribes’ joint venture, MMCT, is ready to proceed.

“The reality is Connecticut has a shovel-ready project that was approved by the House, the Senate and signed by the governor,” Bunnell said. But he added the tribes need sports betting to remain competitive.

Uri Clinton, a senior counsel who has led the MGM lobbying campaign in Connecticut and was recently named as president and chief operating officer of Empire City, said MGM has not wavered in its interest in Connecticut since the Empire City purchase was announced in May and finalized this month.

“The market in New York is underserved,” Clinton said. “The moratorium in New York, when it is lifted and full resorts are allowed down state, there will be only three licenses.”

But he, too, is working on sports betting, saying MGM has a national data base and brand recognition.

“Connecticut needs to have access to national brands, and there should be multiple licenses,” Clinton said. “The tribes should have sports betting — and so should the national brands.”

Slots payments to state by Foxwoods and Mohegan Sun peaked in 2007. Source: Department of Consumer Protection.