Salazar: Tribal Legislative End Run Risks Hundreds Of Millions To State

UPDATE: statement from tribes. A rat’s loose in the state capitol. A legislative effort in the current state budget deliberations is underway to bypass federal approval of the state’s first commercial casino that would be operated in East Windsor by the state’s two tribal nations on non-tribal land. Former Secretary of the U.S. Department of the Interior Ken Salazar writes in a letter to Connecticut Attorney General George Jepsen that “In my view, this approach creates a substantial risk to the hundreds of millions of dollars that Connecticut receives annually from the tribes pursuant to their current compact and procedures.”

State legislative allies of the tribal nations are attempting to insert language in the budget–what’s commonly referred in the state capitol as a “rat”–that relieves the tribes of federal Bureau of Indian Affairs approval. Salazar, a lawyer who represents tribal gaming competitor MGM Resorts, declares in the letter to Jepsen that roughly $500 million in payments to the state over the next two years would be jeopardized. In exchange for a gaming monopoly the tribal nations that operate Foxwoods and Mohegan Sun provide the state 25 percent of the slot take.

MGM has proposed a nearly $700 million waterfront gaming facility in Bridgeport that officials assert would generate more revenue to the state than the current gaming compact.

Salazar letter:

I write to follow-up to my September 17 letter regarding the Interior Department’s decision to return, without approval, proposed amendments to the current gaming compact/procedures between Connecticut and its two federally recognized tribes. I understand that the tribes may seek to move forward with an off-reservation casino in East Windsor notwithstanding Interior’s decision. In particular, the tribes may seek to have both Public Act 17-89 and the amendments themselves changed so that state authorization for the casino no longer depends on Interior’s approval of the proposed amendments. In my view, this approach creates a substantial risk to the hundreds of millions of dollars that Connecticut receives annually from the tribes pursuant to their current compact and procedures.

The risk–as you explained to the General Assembly two years ago and again to Governor Malloy earlier this year is that while memoranda of understanding between the tribes and Connecticut provide that the tribes will annually pay the state 25 percent of Foxwoods’s and Mohegan Sun’s slot-machine revenue, that obligation continues only so long as Connecticut does not authorize “any other person” to operate a casino in the state. Because “any other person” includes the tribes as well as the joint venture they have created to operate the East Windsor casino, Public Act 17-89’s authorization for that casino would, in the absence of Interior-approved amendments to the tribes’ compact and procedures, end the tribes’ revenue-sharing obligation.

Indeed, that is precisely why the General Assembly made Public Act 17-89’s authorization of the off-reservation casino contingent on amendments to the tribes’ compact and procedures that would keep the revenue-sharing obligation in place. And because federal law provides that all amendments to tribal gaming compacts and procedures require Interior Department approval in order to be effective, the General Assembly made Public Act 17-89’s authorization contingent on the tribes securing such approval. (The need for federal approval also explains why the tribes twice sought technical assistance from Interior regarding amendments to their gaming agreements.) Now, however, it seems the tribes want to move forward despite not having secured such approval. That would threaten the large guaranteed revenue stream that Connecticut currently receives from the tribes.

In my view, this threat cannot be avoided either with unilateral promises by the tribes to continue the revenue sharing or with actual contracts to that effect between the tribes and Connecticut. Unilateral promises would of course provide no assurance; the tribes could change their minds at any time and discontinue the payments–as has happened with other similarly situated tribes. Even if the tribes did not discontinue the payments, moreover, their ability to do so would create substantial leverage, which could be exercised to Connecticut’s detriment in a variety of ways. Contracts between the tribes and Connecticut, meanwhile would not be enforceable because they themselves would constitute amendments to the tribes’ current gaming compact and procedures; as noted, under federal law any such amendments require Interior Department approval in order to be effective. Interior emphasized that rule in its May 2017 technical assistance letter, explaining that federal approval is required for all agreements that “affect the parameters of the Tribes’ existing exclusivity agreements with the State.”

Put simply–and as everyone involved previously recognized–preservation of the revenue-sharing arrangement following authorization of a new in-state casino requires Interior’s approval of compact amendments. That fact has not been changed by Interior’s decision not to approve the amendments. Attempts to circumvent the requirement of federal approval would only endanger Connecticut’s revenue stream.

Is the fix in to wire legislation to the tribes? No, says spokesman Andrew Doba:

MMCT Venture Spokesperson Andrew Doba released the below statement today regarding false reports of a fix in the Connecticut state budget and Ken Salazar’s latest and greatest misrepresentation of federal law.

Reports of a ‘fix’ for the East Windsor casino in the budget are completely false. The fact is that we don’t need one. Federal law makes it clear that if DOI does not reject an application, it is deemed approved. DOI did not reject our application. We are taking steps to make that point crystal clear and may have much more to say on this issue in the very near future.

“It’s also worth stating the obvious–MGM planted this story without a shred of evidence. This comes after they extensively lobbied DOI in Washington, so much so that their bought and paid for Congressman and Senator were actually CC’ed on our response letter. They know we don’t need a legislative change, and all the letters in the world from Mr. Salazar don’t change that fact. If they’re willing to lie about something as basic as this, why should anyone take them at their word on anything?”