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December 9, 2020

With Lamont bullish on gambling expansion, the odds improve

Photo | Mohegan Sun Mohegan Sun's Sky and Earth Tower at its Connecticut casino.

The last time Gov. Ned Lamont and the tribal owners of Connecticut’s two casinos tried to reach a deal on sports betting and online gaming, the effort ended in acrimony.

But the gambling, economic and political environment is vastly changed.

For the first time, the administration is intent on putting forward a proposed framework rather than react to the legislature or tribal casino owners. And the focus is on making a deal with the tribes, not placating commercial competitors, such as MGM Resorts International.

Perhaps most significantly, Lamont also is dropping his opposition to so-called iGaming and is ready to emulate New Jersey and Pennsylvania, where the states’ gambling laws allow every adult the convenience of turning their smartphone, laptop or iPad into a virtual 24/7 casino.

“This is something that’s going on all around us, and I think Connecticut should participate,” Lamont said Monday. “If we found out anything in the course of this horrible COVID cycle, more and more of the world is going virtual, more and more of the world is going online. That’s tele-health and tele-learning, but it’s also iGaming and sports betting. And I don’t think you want Connecticut left behind.”

Another factor is that the pandemic has left the state and the casinos hungry for new revenue sources. Due to COVID-19, the two casinos, Foxwoods Resort and Mohegan Sun, closed on March 18 for the first time since they opened. They have since reopened at  limited capacity, but revenues are sharply down.

The previous round of gambling talks effectively ended in March, just days before the novel coronavirus was detected in Connecticut, the General Assembly suspended operations and the governor turned his attention to managing the public health challenges of a pandemic.

In March, the state of play was this: 
Sen. Cathy Osten, D-Sprague, whose district is home to both tribal casinos, was pushing a bill that would have given the tribes exclusive rights to take bets on sports, open a casino in Bridgeport and offer a broad array of virtual casino games on smart phones and computers.

Lamont was opposed to online casino gaming and supportive of sports betting. But his administration was wary of giving the tribes exclusive rights to sports betting, and it also was trying to coax the tribes to give up their rights to jointly develop a casino in East Windsor to compete with nearby MGM Springfield, in favor of a facility in Bridgeport.

With the pandemic-induced recession, no one is talking seriously about a new casino, at least in the immediate future.

MGM has eliminated thousands of jobs during the pandemic, and James Murren of Connecticut no longer is the chief executive of the publicly traded gambling company. After spending millions in recent years opposing the East Windsor casino, MGM does not currently have any Connecticut lobbyists on its payroll.

The politics suddenly seem a little simpler.

“This feels like the stars are aligning,” said Rodney Butler, the tribal chairman of the Mashantucket Pequots, the owners of Foxwoods Resort Casino. “We’ve had ongoing conversations with the governor. He has been engaged, and we’re looking forward to getting into much more detailed conversations.”

“We deeply value our partnership with Connecticut that is generational and historical,” said Chuck Bunnell, the chief of staff of the Mohegan Tribal Nation, owner of Mohegan Sun. “Certainly the pandemic has been a challenge to all of us globally, but I think it has brought some clarity to this industry and what the future may hold for our partnership.”

The tribes and Connecticut have had a de facto gambling partnership under agreements struck in the early 1990s by Gov. Lowell P. Weicker, Jr. The state promised the tribes exclusive rights to casino games. In return, the tribes agreed to pay the state 25% of gross slots revenue, a deal that has produced more than $8 billion for the state since 1993.

The partnership was tested in Lamont’s first two years as governor, when he declined to move forward on any gambling expansion. 

The tribes assert that sports betting, which was first offered legally in the U.S. at Nevada casinos, is a casino game covered by their agreements. MGM and other commercial interests advocated an open competition. Either path seemed to invite litigation.

Lamont sought a grand bargain, a consensus on the competing commercial and tribal interests. His staff says Lamont is ready to proceed, and the governor clearly is making a deal with the tribes his preference.

“We have a natural partnership when it comes to gaming with the tribes, and I believe this is the foundation,” said Rep. Sean Scanlon, D-Guilford, the new co-chair of the Finance, Revenue and Bonding Committee. “I believe it is going to happen.”

House Speaker-designate Matt Ritter, D-Hartford, said Scanlon and Rep. Maria Horn, D-Salisbury, the new co-chair of the Public Safety and Security Committee, will take the lead on passage of any gambling legislation in the coming session. Horn noted that only the governor can renegotiate the terms of the gambling agreements with the sovereign tribes.

Like Scanlon, Ritter favors dealing with the tribes.

“They are large large employers here in the state of Connecticut, so I lean toward giving them more authority in terms of sports gaming. But also understand there are others who have different viewpoints,” Ritter said.

Rep. Jason Rojas, D-East Hartford, the new House majority leader, said online casino gambling is a major cultural change, as well as a legislative issue.

“It’s a huge change, especially when you put it in the context of problem gambling,” said Rojas, who added that added gambling can amount to a new tax on the poor. “It’s concerning to me.”

David Lehman, the former Goldman Sachs partner who is the governor’s commissioner of economic development, already has conducted preliminary market studies about online gambling, and he will be part of the team leading the talks with the tribes, said Paul Mounds, the governor’s chief of staff.

The others will be Melissa McCaw, who oversees the state’s budget as secretary of policy and management, as well as Mounds and Bob Clark, the governor’s general counsel. 

While the politics are simpler, they are hardly simple. 

Legislative leaders say they believe sports betting can win passage in the General Assembly, but the prospect of allowing casino games to be offered on smartphones is uncertain. Other interests will oppose giving the tribes exclusive rights to sports betting.

Sportech PLC, the British company that owns the Connecticut rights to pari-mutuel betting on horses, dogs and jai alai, would like to offer sports betting at its OTB facilities and online. It already is permitted to take OTB bets by computer or smartphone.

“It’s still very important to us,” said Ted Taylor, the president of Sportech in Connecticut.

Sports betting would be a relatively small revenue source for the state and tribes compared to online casino gambling and the prospect of allowing the Connecticut Lottery to conduct its games online.

Connecticut made $628.9 million in gambling last year: $370 million from the lottery, $255 million from the casinos, and $3 million from OTB.

“This is something we should have done a long time ago,” said Osten, who is filing a revised version of her legislation in the coming session.

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