Business Deals | Connecticut | Legislation

Connecticut lawmakers move fast on bill for new tribal casinos

Friday, March 20, 2015

Mashantucket Pequot Tribal Nation Chairman Rodney Butler, left, and Mohegan Tribe Chairman Kevin Brown appeared at a hearing on March 17 to support a bill to authorize more tribally-operated casinos. Photo from CT Jobs Matter / Twitter

Lawmakers in Connecticut are moving quickly on a bill to authorize more tribally-operated gaming facilities.

The Public Safety and Security Committee voted 15 to 8 on Thursday to approve Senate Bill 1090. The action came just two days after leaders of the Mashantucket Pequot Tribal Nation and the Mohegan Tribe came together to respond to increasing competition in New England.

"Even though our tribes have a long history of fierce competition and even though we are competitors in business today, this threat is serious," Mohegan Chairman Kevin Brown said at a hearing on Tuesday, the Associated Press reported.

Both tribes have seen revenues suffer in the wake of the national economic recession in 2008. Since then, gaming options have expanded in New England and more are on the way -- including a commercial facility in downtown Springfield, Massachusetts, just a few miles from the border with Connecticut.

The Mohegan Sun Casino on the Mohegan Reservation in Connecticut. Photo from Facebook

To counteract the threat from Massachusetts, the tribes are envisioning a casino near the border. Two more facilities could be located in other locations around the state, including one near New York, where commercial casinos are also expanding.

The text of the bill states that the tribe shall "act jointly to establish and operate" the casinos under licenses issued by the state. The tribes will be required to secure local approval in any host community.

That means the tribes will not operate the casinos under their existing Class III gaming compacts or the Indian Gaming Regulatory Act. Instead, they would execute a "memorandum of understanding" with the state that includes revenue sharing provisions.

"The memorandum of understanding shall provide that if the tribes receive a license to establish and operate a casino gaming facility, the tribes shall contribute, on an annual basis, a specified amount of money to the Connecticut Council on Problem Gambling, a specified percentage of gross operating revenues to the state and a specified percentage of gross operating revenue to the municipality in which the casino gaming facility is proposed to be located," the bill states.

As a result, the tribes would not have to try to have land placed in trust for new casinos, a process that could take years in the face of serious legal hurdles. Both tribes gained federal recognition after the passage of the Indian Reorganization Act of 1934 so they might be restricted by the U.S. Supreme Court decision in Carcieri v. Salazar.

The tribes fall under land claim settlements that appear to authorize additional acquisitions but the issue has never been tested. Generally, IGRA bars gaming on land placed in trust after 1988.

IGRA also requires a tribe to retain "sole proprietary interest" in a casino. Two tribes operating the same facility could pose problems under federal law that would be avoided under the process envisioned by Senate Bill 1090.

The Foxwoods Resort Casino, owned by the Mashantucket Pequot Tribal Nation, celebrated its 23rd anniversary in January. Photo from Facebook

The bill still faces further action in the state Legislature. But time appears to be of the essence -- Pequot Chairman Rodney Butler pointed out that MGM Resorts International is already starting work on its Massachusetts casino.

“They’re breaking ground this week on that facility, and that’s going to impact, by their own numbers, 45 percent of the current gaming market in Connecticut," Butler told WNPR. "We have to do something to combat that, as well as take advantage of the opportunities throughout the state.”

As they continue to deal with slumbering revenues, both tribes have attempted to diversify their non-gaming options. The Mohegans recently signed a slew of franchise deals for eateries across New England while the Pequots are getting ready to open an outlet mall on the reservation.

The Pequots also just signed a deal to manage a proposed commercial facility in the southeastern part of Massachusetts. The project requires state approval and there is no guarantee the license will be awarded because the Mashpee Wampanoag Tribe is waiting for federal approval on its casino in the same region.