MGM bill is a net loser for Connecticut
Right now, in Hartford, state legislators are facing a decision that will have repercussions for Connecticut workers and taxpayers for years to come. The General Assembly is considering three different bills regarding the future of Connecticut’s gaming industry, and while they deliberate, thousands of jobs and millions of dollars in casino revenue sharing hang in the balance.
If state legislators pass House Bill 7319, or House Bill 7239, which would both open a competitive bidding process to those potentially interested in building an in-state casino, these jobs and dollars will continue be lost as new or expanded casinos in New York, Rhode Island, and Massachusetts steadily pillage Connecticut’s casinos. In the short term, Connecticut will be delayed for several years from competing with MGM Springfield, located just five miles across the border in Massachusetts. In the long term, the state will dishonor its existing tribal compacts with the Mashantucket Pequot and Mohegan Tribes, and will find it nearly impossible to recoup the tribes’ slot revenue payments.
As someone who has been studying the casino gaming industry in the Northeast for 22 years, I can say with full confidence that these bills are the wrong choice for Connecticut. They’ll benefit MGM, not the state and its residents, and they will cost Connecticut $85.6 million a year.
To avoid this crippling blow, state legislators should authorize the Tribes’ plan to build an East Windsor gaming facility by passing the third bill in front of the General Assembly — Senate Bill 957.
The wisdom of the tribes’ plan has been apparent to me since fall 2015, when they first joined together to form MMCT Venture. Several months earlier, the Mashantucket Pequots and Mohegans commissioned me to study the impact that MGM Springfield would have on their flagship facilities and Connecticut’s economy.
What I found was shocking. If MGM Springfield remained unchecked by competition from a third Connecticut casino, my research showed, the state would lose 9,300 jobs as the casinos lost $700 million in revenue, while the state would lose up to $100 million per year in revenue sharing payments
Not content to sit back and accept this fate, the tribes soon set to work planning a Hartford-area casino that would recapture more than 46 percent of these jobs and generate almost $78 million in tax revenue.
Now, in 2017, their mission has come incredibly far — they’ve selected a site in East Windsor, and signed a development agreement with the town. The tribes’ project has also become more important than ever as Connecticut’s economy continues to suffer and companies like GE take business away from the state by leaving for Massachusetts.
State legislators have an easy opportunity to make this vision a reality by passing Senate Bill 957. Doing so would let the Tribes break ground in East Windsor, and would give Connecticut a chance of competing with MGM Springfield when the facility opens in 2018. So far, however, they’ve continued weighing this bill against two others, both of which would have terrible consequences for the state.
A recent report that I released reveals the scope of these consequences. If Connecticut passes a bill allowing a competitive bidding process, it will be acting in violation of its longstanding compacts with the tribes, who contribute 25 percent of their slot revenue to the state. These payments add up to nearly $267 million each year. If the new, competitively-bid casino taxed is taxed 25 percent of gross gaming revenue – the same tax rate for resort casinos in Massachusetts and New York — it will contribute approximately $181 million to the state per year.
It’s not hard to see how this math works out: if Connecticut pursues an open process and breaks the tribal compacts, it will lose $86 million annually. For the state to simply break even in terms of revenue, the new casino would need to generate $1.063 billion every year in gross gaming revenue. No commercial casino in the country currently generates that much gaming revenue — including MGM’s properties.
Connecticut can’t afford this revenue loss, and it can’t afford the additional job losses that will occur if a third casino is needlessly delayed. If the General Assembly wants to fight back against MGM, rather than playing into their hands and suffering as a result, they need to act quickly and make the right decision. SB 957 must be passed before the end of session, allowing the Mashantucket Pequot and Mohegan Tribes to start construction on their East Windsor facility.
After studying gaming for over 22 years, I know what will and won’t work for a particular state. And I know, beyond a shadow of a doubt, that a tribally owned casino is the only thing that will truly work for Connecticut.
Clyde W. Barrow, Ph.D., is Professor of Public Policy at the University of Texas Rio Grande Valley and General Manager of Pyramid Associates, LLC.
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