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November 17, 2014 Editorial

More slots won’t heal CT’s ailing gaming industry

As the gaming industry faces an intense wave of new competition, Connecticut casinos and state lawmakers are talking about the need to add new gambling sites in the state to protect market share.

We urge an abundance of caution. The business case for new bricks-and-mortar gambling establishments seems suspect at best. They will cater to a declining customer base and likely just saturate an already oversaturated market.

If Connecticut really wants to fortify its gaming industry, the addition of a new slots parlor, or any other type of gambling venue, won't be a cure-all. The more logical step, whether state lawmakers want to admit it or not, may be to legalize Internet gaming, like New Jersey recently did, and allow the state's casinos — Mohegan Sun and Foxwoods — to run them.

There is a lot at stake for Connecticut. Not only are Mohegan Sun and Foxwoods major employers, but a quarter of their slot revenues help fill the state's budget coffers to the tune of $250 million-$300 million a year. Casino revenues, however, have been steadily declining from the aftershocks of the Great Recession and new competition in nearby states.

The problem will be exacerbated when MGM Resorts International opens its planned $800 million casino in Springfield in 2017. That cross-border threat recently spurred state Rep. Peggy Sayers (D-Windsor Locks) to urge lawmakers to protect and expand Connecticut's gaming industry before the Springfield casino comes online. Meantime, Mohegan Sun officials last week hinted they would be interested in adding slot parlors along I-91 near the Massachusetts border to protect some of their Connecticut revenues.

Part of the strategy, Mohegan officials said, is to sate people's desires to gamble closer to where they live. But if that's the main argument for adding new gaming sites, it makes more sense to legalize online gambling. There is, after all, no greater convenience than being able to place a bet on red while sipping tea and wearing a bathrobe in your own home on an early Saturday morning.

State lawmakers considered legalizing online gambling in 2012, shortly after the U.S. Justice Department ruled that the 1961 Wire Act prohibits online sports betting, but not all forms of Internet gaming. Gov. Dannel P. Malloy and other key state lawmakers, however, raised concerns over how it might disrupt the state's legal compact with, and the businesses of, Mohegan Sun and Foxwoods.

But the logical way to get around those issues would be to allow Mohegan and Foxwoods to run the state's online gaming operations. That would help boost and preserve their respective customer bases. There is, however, a threat that the federal government will ban more forms of Internet gambling in the future.

Safeguarding Connecticut's gaming industry poses serious challenges with no easy fixes. Lawmakers are right to begin discussions about how the changing competitive landscape will impact the state, but they must take a comprehensive view of how to react.

There are moral considerations as well. Many studies have shown that gaming activities turn out to be regressive taxes because lower-income groups spend a higher percentage of their income on such activities. We've raised concerns in the past about Connecticut's overreliance on sin taxes to pay its bills. Lawmakers, too, are aware of the negative consequences.

To help close a projected budget deficit, the legislature sneakily adopted Keno in 2013 only to repeal the bingo-like game less than a year later, after anti-gambling factions voiced their concerns. The state's improved financial position at the time also played a role in the repeal.

Whatever path state lawmakers choose, there are no safe bets. But that's a gamble legislative leaders will have to live with.

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