Why the tribes’ ploy makes no sense, ever
You’ve got to give credit to the tribes for trying to pull a fast one on Bridgeport and the taxpayers of Connecticut.
What a brilliant ploy: Approach the desperate city’s mayor and legislative delegation, who had no hope of progress on a casino development coming out of the General Assembly. Persuade them to turn their backs on a 3-year partner in MGM Resorts International, whose plan would create thousands of jobs.
Coerce them to buy into a scheme under which the tribes would gain total control of the gaming landscape — sports betting, online gambling, commercial casinos and for all we know, Hanukkah dreidel games at Congregation Beth El — for absolutely no hard promises in return.
The numbers — $100 million from the tribes for gaming assets — point to basically a glorified OTB parlor with maybe a few slot machines, a poker game in the corner and a bar-grub joint with fancy white columns.
And for this, the taxpayers would kick in $100 million! With no locked-in source of added money for the state! Look at the document circulating around the Capitol — it shows no increase in the $175 million the tribes are now obligated to pay the state, and no set payments for slots or table games.
Say what? Nothing for the state.
House Speaker Joe Aresimowicz, showing his strength and weakness in one move, declared the transparent power-grab worth a look at the last minute, though, to his credit, he didn’t endorse it. Thankfully, Gov. Ned Lamont acted like the adult he was elected to be and said no, certainly not in the waning hours of this session.
But the idea lives on as fodder for a special session, and that’s troubling. Forget the last-minute rush; even if we had 10 years to think about it, the terms of this deal make the Red Sox sale of Babe Ruth to the Yankees a century ago look like Ford’s rollout of the Mustang in 1964.
Coming as it did on the last day of a five-month legislative session, this nutty concept perfectly illustrates the frenetic way Connecticut and many other states make laws. It’s got fatal flaws in logic on the financial, legal and strategic fronts, any one of which would blow up the deal for anyone who’s ever played Monopoly.
Let’s start with strategy. If the Mohegan and Mashantucket Pequot tribes wanted to build a casino in Bridgeport, they’d have already stepped up with a plan in the nearly two years since MGM unveiled its $675 million concept for Bridgeport Harbor. Attention Connecticut: The tribes want no part of a casino along the Long Island Sound for the simple reason that that’s the main source of customers for their massively overbuilt resorts in New London County.
If they were to win this license for Bridgeport, they’d build first in East Windsor, then, years down the road, if ever, they would turn their attention to downstate.
Yes, Foxwoods and Mohegan Sun offer very attractive destinations and the tribes have spent billions keeping them up with new amenities. Credit them for that. But to the north and east, the Rhode Island casinos and the soon-to-open Wynn resort in Everett, near Boston, present a growing lure for gamblers.
To the northwest, up Route 2 to central Connecticut, MGM Springfield draws a lot of money and that’s why East Windsor makes sense for the tribes.
The local market to the south is fine but the real money going forward comes from New York, Fairfield and New Haven counties — exactly where Bridgeport would draw. The tribes will build something meaningful there on the day oceanic explorer Bob Ballard surfaces and rebuilds the Titanic.
Now let’s look at the legal picture. MGM already has a federal lawsuit over the no-bid East Windsor license, based on U.S. Constitutional claims of equal protection and interstate commerce, which the Las Vegas company withdrew and can refile anytime it wants. As Lamont suggested in a statement Wednesday, this new development would greatly boost that legal claim.
How? No tribe has ever moved forward with a state agreement based on a new, commercial venture, not on tribal land, that involves — as this deal would — an outside partner coming in with more equity than the tribes themselves. Yes, the outline has the unnamed, unsecured outside partner owning the hotel only, but why would anyone do that deal without money from gaming?
And even if they did, how could the development — presumably in one building — have separate ownerships enough to satisfy the famously persnickety U.S. Bureau of Indian Affairs, which regulates agreements between tribes and states? It couldn’t.
Now let’s look at the finances in the outline, which show no change in that minimum payment the tribes must make to the state. We’re looking at $230 million, maybe $240 million this year from 25 percent of slot revenues, and that will, of course, drop after Wynn opens in Boston. Credit the tribes and their well run operations for keeping the numbers as high as they’ve been, but the cash train runs into the roundhouse sooner or later.
Without a new, higher floor, the state is looking at nothing in the outline that shows more money from slot machines and table games. Eight percent for sports betting is fine, slightly lower than New Jersey but still in line with the industry. But that’s not where the money is, for the simple reason that sports betting margins are about 3 percent, compared with 8 percent for slots.
Here’s the math: The state would get about $2.50 for every $1,000 bet on sports, compared with $20 for every $1,000 dropped into slot machines.
As I said, and as anyone can see, $100 million for gaming operations isn’t enough to add up. By the time Bridgeport rises up, even without a lawsuit and environmental cleanup of an old industrial site, 1,000 video slot machines alone would cost $30 million or more, even without a building.
So where are the jobs for Bridgeport? Nowhere, mon frere. Just building East Windsor, a midsize casino that would not transform the state’s largest city, is proving a legal, logistical and financial burden on the stretched-thin tribes, especially the Mashantucket Pequots.
That’s why the delegation and Mayor Joe Ganim showed themselves to be useful idiots, as the Russians call dupes. The rest of us, neither desperate for a casino win nor sleepdeprived from weeks of late-night sessions at the Capitol, can see the deal for what it is: An admirable try by the tribes but hardly anything to take seriously.