Gaming Official: Maximize Revenues With Competitive Selection Process

Uri Clinton MGM
Uri Clinton pitches legislative committee. CT Mirror photo.

MGM Resorts official Uri Clinton gave state legislators something to think about on Thursday. Don’t worry about breaking the exclusive gaming compact with two tribal nations that provides hundreds of millions of dollars to the state each year, albeit lesser amounts in recent years. Approve a competitive bidding process for a third casino in southwestern Connecticut and the economics will dwarf the money the state receives from Foxwoods and Mohegan Sun. It’s perked up interest for a casino in Bridgeport.

The state is considering a third casino in upstate East Windsor, a joint venture of the tribal nations to counter MGM Resorts nearly $1 billion casino under construction in Springfield, Massachusetts. Each side is protecting its economic turf. The legislature is contemplating two bills, one for a third casino joint venture and another for an open, competitive process for presumably a down-state casino. Clinton’s message is open up the process for a new commercial casino in southwestern Connecticut, the ultimate economic driver given its proximity to wealthy Fairfield County and a New York market. The cash flow guarantees, he asserts, will offset concerns about breaking the exclusive gaming compact.

Bridgeport State House members Chris Rosario and Ezequiel Santiago are pushing a bill to open up the process. Backers of the compact argue if the tribal nations are not involved the compact is broken. Clinton counters this East Windsor site is not on tribal land so that in itself could break the compact legally. Connecticut Attorney General George Jepsen is expected to issue an opinion on this soon. A legislative decision could hinge on Jepsen’s opinion.

But Clinton also threw out some numbers to back up the economics of a casino in southwestern Connecticut. From his Thursday testimony before the Public Safety & Security Committee:

MGM’s position is simply this: the State and its citizens deserve the maximum benefits that would flow from an open, transparent, and competitive selection process that adheres to the best practices in the industry.

Although we believe the Competitive Bid Bill is a step in the right direction, the key question for this Committee and the General Assembly to consider is how can the State structure the competitive process in a way that maximizes the number of jobs created and the tax revenue for the State?

We would suggest the following answer to that question: the Legislature should amend the Competitive Bid Bill to include market-based economic drivers, including:

· $15 million Deposit Payable After a Local Referendum;
· $500 million Minimum Total Investment for Commercial Gaming Facility;
· $50 million Non-Refundable License Fee; and
· 30% to 35% Market Based Gaming Tax to Offset Anticipated Losses to the Pequot Fund.

Both Bills Would Have the Effect of Placing the Current Tribal Payments At Risk

While the Competitive Bid Bill should include a market tax rate sufficient to offset the loss of the Tribal Payments, there is a substantial financial risk associated with Raised Bill 957, because the approval of the required amendments to the current Compact could result in a downward adjustment of the 25% the Tribes currently pay on their slot revenues.

Raised Bill 957 would grant MMCT Venture LLC–a private commercial entity, owned by the Mashantucket Pequot and Mohegan Tribes–the exclusive right to operate the State’s first commercial, off-reservation casino. As anticipated in Raised Bill 975, the only possible way to accomplish this would be to amend the current Compact with the tribes. However, the Compact amendment process would itself subject the state of Connecticut to a downward adjustment based on the fact that:

(i) the marketplace has fundamentally and dramatically changed since the Tribes’ 25 percent royalty rate was adopted over 20 years ago; and

(ii) the Mashantucket Pequot revenue sharing agreement was never reviewed or approved by the Department of the Interior in the first instance. This was only possible because it was entered into before the 2008 regulations issued by the Department of the Interior. Moreover, the proposed amendments are inconsistent with the structure and purpose of current federal law, because they are designed to facilitate expansion of off-reservation, commercial gaming, not on-reservation, tribal gaming.

If Adopted, Raised Bill 957 Will Not Allow the State to Create Value Through the Issuance of What Would Be its Only Privileged Gaming License.

There is no reason why Connecticut should settle for less than Massachusetts and Maryland required just a few years ago. Raised Bill 957:

· Does Not Create an Equal Playing Field for Negotiations for Connecticut’s Municipalities. It would ratify the East Windsor Agreement with an artificially low face value of just $7 million, as compared to the offer Mohegan made to Palmer of $60
million.

· Requires a Tax Rate That Amounts to a Public Subsidy of the Convenience Casino.

The 25% Gross Gaming Tax Rate is substantially less than the 49% tax rate Massachusetts has levied upon its Convenience Casino–Plainridge Park. Additionally, as a result of the fact that the East Windsor Agreement does not require any payments to support essential infrastructure, public funds will ultimately be required to subsidize the roadways and utilities required to support the casino.

On the contrary, a Competitive Bid Bill would allow for a market-based tax rate required to offset the loss of the Pequot Fund and mandate millions of dollars in annual payments.

In short, MGM believes Connecticut has a unique opportunity to enter a new industry in a way that can benefit the entire state and all its citizens. We believe Raised Bill 7239 has that potential, while Raised Bill 957 does not.

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23 comments

  1. The original slot deal was signed with a swift stroke of a pen by Lowell Weicker. It was never brought to the legislature. Uri Clinton is a very smart man. State Senator Tim Larson is a smarmy thug riding his dad’s coattails!

  2. Seated in the row of people behind Uri is Richard Velky who is suing the state of Connecticut over this matter. Surprisingly, his lawsuit is being bankrolled by MGM Grand.
    Isn’t that SPECIAL.
    Any way you want it, the end game is to delay, delay, delay.
    And MGM wins.

  3. The powers who are in place DO NOT WANT a casino in Bridgeport. There is one reason and one reason only. A casino in Bridgeport would take away all or most of the medium-salaried jobs in lower Fairfield County. If this happens the companies now using the workers from the Bridgeport area will actually have to pay higher wages.

  4. The Golden Hill Paugussetts have BEEN AT BOTH MEETINGS, where were the legislators from Bridgeport? EVEN Gomes WHO IS ON THE COMMITTEE WAS A NO-SHOW. Read the damned testimony. I didn’t see you there J Gonzalez. I’m tired of all the fence-sitters who bitch and moan but never participate to make things better.

    1. Charlie, much like you, I was there all day. In defense of Senator Gomes, he was in his Labor Committee meeting all day. He sits as the co-chair of that body and they were shorthanded.

      Please find below the written testimony of Rep’s Rosario and Santiago.
      www .cga.ct.gov/2017/psdata/tmy/2017SB-00957-R000309-Rosario%20and%20Santiago,%20Christopher%20and%20Ezequiel,%20State%20Representative-Connecticut%20General%20Assembly-TMY.PDF

      1. Follow the Money, I understand that. But Gomes and Moore have had plenty of free time to come out and state their position. How long does it take to put out a press release? Av Harris said to the Post that Joe Ganim is waiting to see what happens? How convenient, they all are waiting for us to go out and build the roads and the vehicles and after we’re done, they’ll take the keys and take the driver’s seat.

        1. Ed takes his lead from Bob Walsh! Just kidding. Really Joel, Ed was tied up all day in that meeting. Ask Chris Rosario? That had over 75 people waiting and/or presenting written testimony. Ed uses a chisel and hammer for his press releases.

    2. charlie, go back and read my post on why I said I wasn’t going. Whom do you think you are, charlie? Are you the OIB Indian Chief who’s giving orders to people to attend this meeting? I’ve been on the front line fighting for years like many other OIB friends. If you insist I give you an explanation, here it goes: I’ve put many hours fighting the good battles here in Bridgeport. Many moons ago, I lost a finger and $500,000 in one fight. I kept fighting and as a soldier I had to do a lot of walking and running to the point that I suffer from “Wounded Knee.”

  5. Remington with a new train station in the heart of this city would be the best place to locate a casino. It has easy excess from I-95, the ferry boat and now a new train station.
    The Shot Tower Casino can be seen from I-95 and just like Bass Pro will draw thousands of people to it.
    It’s a fabulous location that doesn’t need a whole lot of approvals to clean up the property or to build a bridge to get there.
    New York State now has 21 Casinos and employs tens of thousands of people.
    When we started talking about a Casino for Bridgeport, New York had just seven.
    If Mr. Clinton is right and I think he is, we owe it to ourselves to create jobs for Bridgeport!

    1. If Jepsen signals more definitively that an East Windsor tribal casino would put at risk the payments on reservation slots, that would put more life into a second bill before the committee, the one that would foster competition for a new commercial casino gambling license in the state, possibly for Bridgeport.

  6. Uri Clinton really did his homework. Raised Bill 7239 accounts for opportunity costs in the context of a good deal for the State. Now, if we examine the provision of the bill for an open bidding process and open gambling markets, we have a situation of real leverage for Connecticut and more competition ($) for a Bridgeport site, which could be accommodated at any number of waterfront locations that could be made accessible to multi-modal transportation options and transformed into among the most alluring casino/resort/recreation sites anywhere. If MGM is playing us in order to isolate its Springfield market, it would seem that Bill 7239 could backfire on them by drawing in other big players who could really develop a one-of-a-kind gold mine/gambling mecca out of Bridgeport’s sludge and ashes.

    There is no plausible rationale for tentativeness from Bridgeport’s political leadership in coming out on this issue and mounting an aggressive initiative for the passage of this bill, or a better, amended bill that would make provisions for the location of a casino/resort in Bridgeport via a competitive process.

    I would start to look for very big money to start snooping around Bridgeport and the LOB in the very near future. This big money can, given the desperation mode of the state’s largest electorate, start to move things in favor of alternative candidates for Bridgeport mayor and Connecticut governor. This big money can rival anything down-county has to play with and can eclipse anything the rest of Connecticut’s collapsing economy can muster in response (even in a resonant situation with the down-county $).

    If I were a politician seeking the Bridgeport mayoralty or the Connecticut governorship, I would be thinking in terms of playing ball with the gambling industry. People in Bridgeport and the rest of the state, especially in the I-95/Route 8 corridor (a politically prodigious region of the state), are looking for real economic movement and political change. This is not lost on MGM or the rest of the gambling industry. (Indeed, if a Bridgeport casino could provide enough additional revenue to the state to allow for a significant increase in state aid/stimulus money to effect real economic progress in Greater Hartford, they would capitulate, politically to a Bridgeport casino.) And some of our big, down-county hedge funds can stand to gain big-time by getting in on a Bridgeport casino, which would greatly weaken the Bridgeport “labor exploitation syndicate” based down-county. Big money for the hedge funds will trump the elitist rationale regarding the manner in which Bridgeport is exploited. I would hedge my bets with the hedge funds and gambling interests in this go-’round. The political center of gravity is shifting to Bridgeport. Smart politicians should see this coming. The writing has been on the wall for some time. The DNC failed to see it. Will the Connecticut DCC and Bridgeport DTC also fail to see and readjust their momentum accordingly?

  7. I have spoken with Uri a few times plus their NY attys. Of course Bridgeport is wanted, the estimated gross is $1 billion. Occasionally politicians must have courage and speak up in public. There will be more hearings, because MGM has this tied up in the second circuit court of appeals. If they are too scared to take a position, then resign and let others speak for you.

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