The Register Citizen (Torrington, CT)
MGM files federal lawsuit over tribes’ casino approval
Everyone watching the slowmotion policy wreck of gaming expansion in Connecticut knew MGM would sooner or later file a lawsuit over the Native American tribes’ license to open a casino in East Windsor. That action came Wednesday but not in the form most people expected.
Instead of a constitutional case in Connecticut, claiming the state denied it the right to compete, MGM Resorts International brought a lawsuit in U.S. District Court in Washington, D.C., saying the Department of the Interior erred in the way it approved changes to the pacts between the state and the two tribes.
The core of the case is MGM’s claim that the federal agency was only authorized to approve amendments related to casinos on tribal land or on parcels carefully selected under a specific “landintrust” process, as spelled out by the Indian Gaming Regulatory Act. The East Windsor location, picked by the tribes for its proximity 13 miles south of the 1yearold MGM Springfield casino, is neither.
“The amendments thus confer a statewide, perpetual competitive advantage to the joint venture, MMCT,” the MGM lawsuit says, referring to the tribes’ business entity.
So it’s less sexy than the constitutional claim, and more technical. But the effect is the same: A court action that will throw an already chaotic process into a yearslong battle making the prospect of new slot machines and table games in a commercial casino – which Connecticut’s economy could use right now all the more remote.
It’s no coincidence that the filing comes just a few days after legislators supporting the Mashantucket Pequot and Mohegan tribes rolled out a bill that would give the tribal MMCT venture exclusive rights to build a casino in Bridgeport, and to operate sports gaming and online wagering throughout the state.
That apparently threw MGM over the top. It’s not that the proposed Bridgeport bill, led by Sen Cathy Osten, DSprague, presented a new legal claim for MGM. That bill is far from seeing a vote.
Rather, the latest effort by Osten and the tribes illustrates how the East Windsor license and federal approval can send Connecticut further toward a permanent, unbreakable lock on the industry by the tribes that operate Foxwoods Resort and Mohegan Sun casinos.
MGM also sees the steppedup claims by the tribes over sports and Internet gambling as a threat that must be cut down immediately, now that talks organized by Lamont appear fruitless, at least for the time being. “This is really about the authorization for sports betting and online betting,” Uri Clinton, an MGM senior vice president, ranking lawyer and regional executive, said of the latest Bridgeport bill.
Is a tribal lock on all gaming best for the state? The tribes and their supporters say yes it is, because they are the homebased employers and they have paid nearly $8 billion to Connecticut under the agreements dating to the 1990s that guarantee them exclusive rights.
The revenue figure for the current fiscal year is expected to drop to close to $200 million as neighboring states, especially Massachusetts, expand commercial casinos.
MGM says the only way forward is for the state to seek bids. Wednesday’s lawsuit, along with the promise of other legal action, proves that Gov. Ned Lamont’s warning last week was correct. Any solution, preferably a negotiation, must eliminate these lawsuits. Now the quagmire is real, not just a threat.
“As I have consistently said, our state needs to reach a global resolution that will mitigate years of litigation and that will position the state to capitalize on a comprehensive gaming platform,” Lamont sasid in a written statement about the lawsuit. “Our administration remains committed to these goals and looks forward to working towards a solution that moves the state forward.”
We might expect Sportech, plc, operator of 16 offtrack betting locations in Connecticut and a developer of automated parimutuel gaming equipment, to stake its own legal claim to online and sports betting, if the tribes’ bill, which ices out Sportech, moves ahead.
The Department of the Interior, which includes the U.S. Bureau of Indian Affairs, issued a statement saying it does not comment on ongoing lawsuits.
The lawsuit follows a long and contentious process leading up to the federal approval for the amendments, including an onagain, offagain position by the Department of the Interior, accusations by the tribes that MGM used improper influence and a lawsuit by the Mashantuckets and the state of Connecticut when it appeared the approval for that tribe was not coming.
MMCT is not a defendant in the 33page lawsuit.
“MGM pursues litigation because that's what MGM does,” said Andrew Doba, a spokesman for MMCT. “The choice for Connecticut policymakers can't get any clearer. We can either let a Las Vegas company that generates not one dime of revenue for the state push us around or we can stand strong with the tribes and an industry that's generated more than $8 billion in tax revenue and currently employs 18,000 people.”
As if we didn’t already know it, the lawsuit shows that only a negotiated deal will work because the tribes have too much political muscle for MGM to win open bids and MGM can tie up any commercial casino for years, even if the tribes were able to secure financing to build. But replacing that casino money with other ventures would take time and giving full statewide rights to the tribes would preserve the entire payment.
MGM all along has said it only wants a flat playing field to compete equally.
And thus, we have a stalemate.
Both sides say the other has no intention of actually opening a commercial casino in Bridgeport. Notably, the Osten bill requires only a $100 million investment from the two casinos, an amount that doesn’t create a significant attraction, doesn’t bring many jobs and would not yield much money for the state in revenue sharing.
Then there’s the specter of that constitutional claim by MGM against the state. The worldwide company filed a lawsuit in 2016, citing violations of equal protection and the commerce clause, which says the federal government regulates trade relations with Indian tribes. The U.S. Court of Appeals in New York threw out that case in mid2017, saying MGM lacked standing because there was no approved license for the tribes and MGM had no proposal in the state.
Three months later, in September, 2017, MGM pitched a $675 million casino on Bridgeport Harbor – and has been pushing ever since for an open bidding process in which everyone competes equally. That lawsuit can happen anytime, and it’s the legal action many people expected to see.
Instead, the MGM lawsuit charges violations of the Indian Gaming Regulatory Act and of federal administrative rules in approving the amendments to the state agreements with the tribes.
The MGM lawsuit paints the approval as an outlier in Native American gaming.
“No other tribe has ever used IGRA’s amendment procedure to authorize the operation of a commercial, offreservation casino. No state has ever implemented a hybrid commercialtribal gaming scheme similar to Connecticut’s,” the lawsuit says.
It seeks a reversal, which would revoke the tribes’ license in East Windsor and make it impossible for the General Assembly to grant a license in Bridgeport the same way.