Over the bor­der line

Stamford Advocate (Sunday) - - Front Page - DAN HAAR

At the new MGM Spring­field, Con­necti­cut cus­tomers make up a sub­stan­tial portion of the Mass­a­chu­setts casino’s cus­tomers. That could have a ma­jor im­pact not only on this state’s ex­ist­ing casi­nos, but any plans to build a new one.

Push­ing 11 p.m. on a Fri­day night in the packed park­ing garage of the new MGM Spring­field casino, Josh Jeri­cho had to set­tle for a shrunken spot along­side a struc­tural sup­port. Not where he wanted to place his red Corvette on a date, but hardly a sur­prise.

It was less than a 40minute drive from Sims­bury to the ur­ban gam­ing mecca carved into down­town Spring­field. “I go to Foxwoods and Mo­he­gan Sun all the time but this is more con­ve­nient,” he said.

The Ma­rine Corps vet­eran saves his big-money, overnight casino trips for Mo­he­gan Sun, but on this night he was part of a pa­rade up In­ter­state 91 from Con­necti­cut to MGM.

How big a pa­rade? On two trips, mon­i­tor­ing cars leav­ing the 3,500-space garage and parked in some of the seven decks, I counted an av­er­age of 25 per­cent of all ve­hi­cles with Con­necti­cut li­cense plates.

Twenty-five per­cent. It’s less than I guessed be­fore the tally and less than some fore­casts. But, said Matt Landry, a mar­ket­ing con­sul­tant work­ing for MGM, “That seems to be some­where in the range that you would ex­pect.”

And it’s a big num­ber when you con­sider that just about ev­ery one of those cars car­ries money that won’t come back home to Con­necti­cut.

I counted al­most no cars from Ver­mont and just a small hand­ful from New York.

It’s too soon to say what all this means for Foxwoods and Mo­he­gan Sun and for Con­necti­cut cof­fers, as the state col­lects 25 per­cent of slot ma­chine rev­enue from the tribal, ru­ral casi­nos in New Lon­don County. We don’t know how many of those MGM cus­tomers would have gone to the Con­necti­cut casi­nos, and how many are adding gam­ing vis­its they wouldn’t oth­er­wise have made.

What we know is that in Septem­ber, the first full month of op­er­a­tion for MGM Spring­field, both Con­necti­cut casi­nos saw their largest year-over-year slot ma­chine rev­enue de­clines in at least two years — 9 per­cent at Mo­he­gan Sun, 6 per­cent at Foxwoods.

Re­think­ing strat­egy

For the econ­omy as whole, it could eas­ily be $130 mil­lion a year or more if the 25 per­cent count proves cor­rect, if it holds up over time, if traf­fic at MGM stays strong, and if Con­necti­cut cus­tomers such as Josh Jeri­cho set­tle in as reg­u­lar bet­ters.

That’s a lot of ifs, and let’s be clear: My two vis­its to MGM Spring­field, with a tal­ly­ing pen and le­gal pad in hand, do not con­sti­tute a sci­en­tific study. That would re­quire dozens of vis­its at dif­fer­ent times and days.

Still, there’s no deny­ing the ex­o­dus of cash from Con­necti­cut, which is al­ready leak­ing money in lots of ways, to a state that hardly needs our help. The rough

fig­ure of $130 mil­lion amounts to one-half of 1 per­cent of the Con­necti­cut econ­omy.

“We work out of state, we play out of state, we travel out of state,” said Univer­sity of Con­necti­cut econ­o­mist Fred V. Carstensen, an ex­pert on de­vel­op­ment mod­el­ing. “We still live in Con­necti­cut.”

Some of us, any­way.

As the pa­rade of money con­tin­ues — aug­mented by soon-to-open mar­i­juana sales and what­ever other ac­tiv­ity the com­bi­na­tion of gam­bling and pot gen­er­ates — it will be­come all the clearer that Con­necti­cut needs to get its act to­gether un­der a new gov­er­nor when it comes to sanc­tion­ing and reg­u­lat­ing com­mer­cial casi­nos, sports bet­ting, mar­i­juana sales and other life­style changes.

That could mean re­think­ing the strat­egy that has left Con­necti­cut with no com­mer­cial casi­nos and none about to be built any­time soon. A planned East Wind­sor casino would be op­er­ated by the Mo­he­gan and Mashantucket Pe­quot tribes un­der the ban­ner of MMCT. But that project could be tied up in court for years, as the

fed­eral gov­ern­ment, prod­ded by MGM, has held up a cru­cial li­cense and a judge last month sided with the gov­ern­ment.

Bridge­port is the ob­vi­ous place for a casino, whether that hap­pens through MGM’s pro­posal for open bids or by a ne­go­ti­ated so­lu­tion. We’ll have the whole 2019 leg­isla­tive ses­sion to de­bate that. For now, it’s enough to fig­ure out the ef­fect of MGM Spring­field.

Ef­fect on Con­necti­cut econ­omy

The $130 mil­lion is not a gar­gan­tuan hit and it’s way less than a 2015 study com­mis­sioned by the tribes, which pro­jected a fully ma­ture MGM could take more than $300 mil­lion a year in gam­ing rev­enues from the tribes’ casi­nos.

“It’s one of these sub­tle, cu­mu­la­tive kinds of things,” Carstensen said, de­scrib­ing the lost rev­enue for Con­necti­cut.

Some of the money leak­ing to Mass­a­chu­setts comes back in the form of wages and salaries paid to Con­necti­cut res­i­dents work­ing at MGM, but un­for­tu­nately for Con­necti­cut, they pay in­come taxes to Mass­a­chu­setts.

And some of the money comes back through the MGM sup­ply chain if, for ex­am­ple, the com­pany hires a Con­necti­cut elec­tri­cal con­trac­tor.

We’d like to think of the whole Con­necti­cut River Val­ley and I-91 cor­ri­dor, from cen­tral Mass­a­chu­setts to the Long Is­land Sound, as one linked re­gion. It would be big­ger than metro Pitts­burgh, big­ger than greater St. Louis or the sprawl­ing area in and around Port­land, Ore.

A large new casino should help that su­per-re­gion, or at least help the gam­ing in­dus­try, if it brings in new money.

But does it? The an­swer isn’t easy. “Some of those peo­ple from Con­necti­cut prob­a­bly weren’t go­ing to make that trip if it weren’t for a well-placed casino,” said Landry, the MGM con­sul­tant, whose com­pany, Strate­gic Mar­ket Ad­vis­ers, is in Portsmouth, N.H.

Clyde Bar­row, the Univer­sity of Texas pro­fes­sor and casino ex­pert who con­dusted the 2015 study for the tribes, be­lieves most of MGM Spring­field’s traf­fic from Con­necti­cut will siphon dol­lars that would have gone to the tribal casi­nos.

Clearly, the first month of op­er­a­tions at MGM, $27 mil­lion in rev­enue from ta­ble games and slot ma­chines, or about $330 mil­lion a year if it were a typ­i­cal month, is less than MGM plans to see, Bar­row and oth­ers said.

“If you spent $950 mil­lion to gen­er­ate $330 mil­lion a year, that’s not a very good in­vest­ment for a casino,” he said.

Count­ing cars

By all ac­counts, MGM’s roll­out pre­dicts ris­ing rev­enues as cu­rios­ity gives way to cash out­lays. The place was packed when I vis­ited.

In a half-hour between 10 p.m. and 10:30 p.m. on a re­cent Fri­day night at the main gates of the garage, I saw the plates on 156 ve­hi­cles ex­it­ing. Those in­cluded 48, or 31 per­cent, from Con­necti­cut, 64 per­cent from Mass­a­chu­setts and just eight cars from other states.

In­side the garage, on Level 2, 92 of the 328 cars I counted hailed from Con­necti­cut — 28 per­cent. Mass­a­chu­setts claimed 61 per­cent and the rest were from a dozen other states.

This past Thurs­day, at 3 p.m., I counted 331 cars on Level 3 (dubbed the “New York, New York” level), in­clud­ing 64, or 19 per­cent, from Con­necti­cut. Six­ty­nine per­cent had Mass­a­chu­setts plates and 16 other states were rep­re­sented, in­clud­ing 12 cars from New York.

Com­bined, all of that equals 25 per­cent from Con­necti­cut. My cruise through the other lev­els ap­peared to re­veal about that per­cent­age.

If we as­sume MGM will even­tu­ally reach at least $500 mil­lion a year in gam­ing rev­enue, and cus­tomers spend a bit more on food and other en­ter­tain­ment, Con­necti­cut’s spend­ing could eas­ily top that $130 mil­lion fig­ure.

MGM will have to do bet­ter than it did with Michelle Newell, who drove up there from Ver­non with a friend, Chryssy Mid­dle­mass, and spent money only on a cup of cof­fee.

Like Jeri­cho, they’re cu­ri­ous, for now. “It’s the nice, new, shiny thing,” Mid­dle­mass said, “the kid with the toy ... peo­ple will keep com­ing, ab­so­lutely.”

Dan Haar / Hearst Con­necti­cut Me­dia

An ex­te­rior view of MGM Spring­field, the $960 mil­lion casino com­plex that opens Fri­day.

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