Casino moves: Can the tribes outflank MGM?

Two bills to expand casino gambling in Connecticut came out of a skeptical Public Safety and Security Committee earlier this session of the General Assembly looking pretty much dead on arrival.

Indeed, the bills — one to allow the Mashantucket Pequot and Mohegan Indians to build an off-reservation casino in East Windsor, the other to open bidding for a commercial casino license elsewhere — both came wrapped with more warnings from Attorney General George Jepsen than a biohazard shipment.

Some committee members who voted the bills out of committee admitted they were punting, moving the conversation along. There were few ringing endorsements for the legislation.

The bills, as written, virtually are unpassable in either the full state House or Senate. Both have the potential to endanger the current payments to the state by the tribes for the slot machines on their reservation, part of an exclusivity deal.

The bill to give the tribes a no-bid license for East Windsor also is guaranteed to trigger costly litigation, because MGM, protecting its new Massachusetts casino, sees the measure, without competitive bidding, as unconstitutional.

The attorney general has wrung his hands a lot over the MGM lawsuit threat and isn’t promising the state could win.

Clever maneuvering by MGM lobbyists and lawyers seems to have smartly put the tribes at this dead end, waiting for the new Massachusetts casinos to eat their buffet lunch.

Still, there does seem to be some small amount of wiggle room for the tribes to pull a commercial casino license out of the General Assembly hat with some deft, last-minute politicking.

At risk, the tribes say, is a substantial amount of gambling dollars and tax revenue that may soon migrate from Connecticut up the Interstate 91 corridor, once MGM opens its new destination casino in downtown Springfield.

I’m not a lawyer, but it seems to me the tribes could pretty easily address the attorney general’s prime warning, that a new off-reservation casino in East Windsor could lead federal authorities that regulate the tribes’ gambling agreements with the state to tinker with the part of the deal that guarantees the state 25 percent of reservation slot revenues.

Why can’t the new tribal entity formed to pursue the commercial license simply guarantee it will pay the equivalent of 25 percent of the reservation slot revenues? That would be a simple business deal that would not fall under the purview of federal Indian gaming regulators.

After all, it was the guarantee of annual payments of at least $100 million from tribal slot machines that first sold then-Gov. Lowell Weicker on the deal.

There’s nothing like making a $100 million promise to a politician, and that is probably even more true now than it was in Weicker’s day.

It’s also appropriate in that the $100 million guarantee appealed to Weicker because it also helped him stop a Vegas-crafted casino in Bridgeport, a dynamic that could be in play again this year with a tribal guarantee.

The tribes’ existing slot payments also probably make the second bill before the General Assembly, one to launch a competition for a new commercial casino license, a non-starter.

The tribes’ slot machine payments would stop with the first new law granting a license, as early as next year, and that would probably leave too much lost revenue to make up, from the time a new casino were legalized and when it actually opens its doors.

It would take some big licensing fees for a commercial operator, heavy number crunching and a leap of faith for lawmakers to land safely after abandoning the tribal slot payments.

As for the other major legal warning from the attorney general, about the tribe’s East Windsor proposal requiring a lot of lawyering to defend, some clever legislative strategizing might provide a way out.

What if, for instance, the state were to open a competition for a new casino license and limit it to northern Connecticut? And what if the terms of that deal were that the successful operator would have to guarantee the equivalent of what the state gets now from the tribal slot machines?

I think there are few commercial operators willing to launch a casino between the new MGM Springfield and the tribes’ big destination casinos on the reservations, especially if it also meant matching the state’s revenue from those tribal casinos.

MGM couldn’t bid even if it wanted to, because its Massachusetts license has a radius restriction on building new casinos nearby.

MGM and the tribes both have spent a lot of lobbying money and time on this issue, and it would seem unlikely for it to end in a whimper at this stage.

Look for some fireworks as the session rolls on, with revenue generators like legal marijuana and new casinos looking more appealing day by day.