No sure bets in expanded casino gaming

As the legislative session nears its climatic end, the fate of one of this years most controversial bills — expansion of casino gaming — remains in limbo.

While the Senate passed a bill allowing the Foxwoods Resort Casino and Mohegan Sun joint venture to build a third casino in East Windsor, the House is still toiling with the idea.

The biggest hangup, among other issues, is whether the state should assess a licensing fee — as high as $250 million — for the right to operate a third casino in the state. The Senate bill didn't include such a fee, but the Democratic majority in the House is vying for one, which we think is a smart move.

The casino debate has taken up a considerable amount of attention from state lawmakers, but we agree it's an important issue to focus on. Expanded gaming won't come close to solving Connecticut's budget deficits, but there is a need to protect the $267 million in annual casino gaming revenues that fill the state's shrinking coffers.

The biggest threat to those revenues is the new $950 million MGM casino under construction in Springfield, which is expected to sap revenues from Mohegan Sun and Foxwoods.

The casino debate is a complicated one, and we've been lukewarm to expanded gaming. The casino industry is becoming oversaturated and adding more gambling halls will only make it worse. However, if casino operators are willing to invest their own money to construct new facilities and employ additional workers, we say let it ride.

But the East Windsor site, home to a former Showcase Cinemas off I-91, doesn't seem like the ideal location. It will be too close to MGM's much more grand casino and near no major local entertainment venues, limiting its economic development impact.

In an ideal world, we'd like lawmakers to approve up to three smaller boutique casinos, with guaranteed locations in Hartford/East Hartford and Fairfield County, possibly Bridgeport. We believe gaming facilities in those locations could spur further economic development. Last week, Mohegan and Foxwoods sweetened their bid by agreeing to put slot machines in off-track-betting parlors in Waterbury, New Haven and Bridgeport and pay an upfront $25 million fee.

Gaming could provide another entertainment option for Hartford and we think co-locating a facility within a renovated XL Center makes sense. We'd also require some casino revenues to help pay for XL Center's needed $250 million renovation. A renovated facility with additional entertainment and restaurant/retail options could help the XL Center attract more concerts and events, which have increasingly been fleeing to the casinos in recent years.

We'd also be open to the former Showcase Cinemas site in East Hartford, which was originally under consideration.

We also agree that any additional casinos should come with a hefty licensing fee to help the state close its projected two-year, $5 billion deficit. Some of that money should also be set aside to provide additional funding to problem gambling programs, because there is a societal cost to allowing easier access to slots and table games.

Regardless of what lawmakers choose to do, any bill that gains approval by both the House and Senate will likely be headed to court. Mohegan Sun and Foxwoods have been lobbying for a no-bid casino license. Outside groups including MGM and the Schaghticoke Tribal Nation have been pushing for an open-bid process that would allow all interested parties to vie for another casino.

Foxwoods and Mohegan say opening up the bidding to outsiders would threaten their longstanding revenue-sharing agreement, in which they pledge 25 percent of their slot revenues to the state. MGM says it will challenge the constitutionality of any law allowing for a no-bid deal.

What's clear is there is no easy bet here. But we hope lawmakers don't view this simply as a gaming expansion but a broader economic development opportunity.