Dr. Clyde Barrow & the Proposed Bridgeport Casino

Attorney General Jepson

Attorney General George Jepsen has advised Connecticut legislators to test the market for opening Connecticut to commercial casinos. He seems to think it wouldn’t jeopardize $260 million in slots revenue the state expects to collect this year under the exclusive deal with the tribal owners of Foxwoods Resort Casino and the Mohegan Sun.

But this is a questionable tactic in my mind, and so does Clyde Barrow.

Who is Clyde Barrow?

Dr. Clyde Barrow is considered a gaming industry specialist. In a comprehensive study, he stated that a new Connecticut casino (referring to the joint venture between the Mohegans & Pequots) would recapture 46 percent of the 9,300 jobs and $337 million in revenue that would otherwise be lost to out-of-state competition, especially that from Massachusetts.

Casino Consultant, Clyde Barrow

Casino Consultant, Clyde Barrow

Dr. Barrow goes on to say recently, “Precedent has already been set. According to Barrow, “in October of 2010, the St. Regis Mohawk Tribal Council “stopped sharing revenue from the casino along New York’s northern border with the state, claiming the exclusivity provisions of its gambling compact has been violated…..In other words: if the State of Connecticut grants a commercial gaming license to any operator other than the State’s two Indian tribes under an open competitive bid process, then the tribe’s current combined revenue sharing payments of $267 million annually could cease immediately (Connecticut Division of Special Revenue 2017).”

Connecticut’s Tribal Tax Revenue

Foxwoods Resort Casino has operated a Class III casino under a compact with the State of Connecticut since February 15, 1992 and Mohegan Sun Casino has operated a Class III casino under a compact with the State of Connecticut since October 12, 1996. Connecticut’s two tribes have a combined Gross Gaming Revenue that is the 4th largest in the United States.  The top three are California (where 62 of the 109 California tribes own 69 casinos), Florida (2 tribes operate and own 8 casinos) and Washington state (32 tribal casinos owned by 23 tribes). Remember, only two tribes with only two casinos in the third smallest US state.

But all that revenue from slots at both tribal casinos would be lost with a competitive process for the 4th casino in Bridgeport.

An artist’s rendering of the proposed MGM Bridgeport casino.(Image: MGM Resorts International)

As reported by Brian Hallenbeck, the Day staff writer, Dr. Barrow said “Assuming the third Connecticut casino gets built — and few consider that a slam dunk — a fourth, competitively bid casino would have to generate nearly $1.1 billion in annual gross gaming revenues to offset what the state would lose when the Mashantucket Pequot and Mohegan tribes stop sharing their casinos’ slot-machine revenues, a new report concludes. And the probability of a Bridgeport casino pulling in that kind of cash “is almost zero [because] not a single commercial casino in the United States currently generates that level of gross gaming revenue,,”

 

Let’s look at a few other considerations:

  1. The traffic from New York of prospective gamblers will cause studies and improvements in the dangerous, time consuming highway that is I-95. Improved infrastructure should be paid for by any perspective Bridgeport Casino project, or that will cut into Connecticut’s tax revenue, diminishing the already smaller revenue expected without the tribal tax revenue.

    I-95 traffic congestion on SW CT.

  2. Potential developments in New York, where a constitutional moratorium on New York City casinos expires in December 2022, also threaten the success of a Bridgeport casino, Barrow contends. “There is nothing to prevent the State of New York from locating a new casino even closer to the Connecticut border, where it could intercept casino traffic from New York City and capture traffic from Fairfield County. The anticipated traffic from New York City will never materialize for a Bridgeport casino because New York can easily and quickly pre-empt a new competitive threat from Connecticut by building an even more lavish casino that is more convenient to New York City customers.”
  3. If newly built New York Casinos and NYC close Empire and Resorts World Casinos are already cutting into the tribal revenue, what kind of a terrible impact would a border war with New York AND Massachusetts bring without the CT tribal revenue when the exclusive pact with the tribes is broken.

I believe Dr. Barrow’s analysis.  But maybe MGM International also believes he’s right.  I guess that’s how stalling tactics, and MGM is real good at not showing its hand. Meanwhile, MGM Springfield continues – full speed ahead, while Connecticut is still waiting for in first gear.

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Connecticut Casino Expansion Intensifies

 

MGM  Bridgeport rendering top. Proposed MMCT joint venture casino between CT’s Mohegan & Pequot tribes for East Windsor, CT. below.

To add a casino or not add a casino? – That is NOT the question. To add two casinos? – Now that’s the question!

To get the prequel for this post, click on the the post “Wynn, MGM, Bridgeport & MMCT – Questions Abound.”  

The battle at the border between MGM Springfield and the MMCT joint casino venture by the Mohegan & Pequot tribes is going on three years now. But events in March took the conflict to a new height. Highlights?  Sure, there are plenty:

  • CT Attorney General George Jepsen advised legislators on Thursday to consider and test the market for opening Connecticut to commercial casinos, believing that commercial casinos would not jeopardize the $160 million in slots revenue that the state expects to collect in 2018 from the exclusivity deal signed with tribal owners Mohegan Tribe and Mashantucket Pequot Tribal Nation, owners of Mohegan Sun and Foxwoods Resort Casino.

    Attorney General Jepson

  • According to MGM, Connecticut left tons of money on the table by accepting the first casino proposal that came their way. MGM has argued for the past year that the casino proposal process should be open to commercial interests. MGM would also pick a different location – Bridgeport, which is further from the MGM Springfield than East Windsor.
  • MGM wants to build a casino and hotel on the Bridgeport waterfront – the only place MGM is interested in. A bill to support this was in jeopardy after committee leadership refused to hold a vote on it, but it was passed with one major change – Foxwoods and Mohegan Sun will still be allowed to develop their own casino in East Windsor, CT, minutes from the Massachusetts border and from MGM Springfield. Due to the change in the billMGM isn’t so so sure it’s interested if the MMCT casino in East Windsor is allowed to be built.

    Connecticut State Capitol

  • Then, Connecticut lawmakers approved a revised bill that could pave the way for the construction of the state’s fourth casino. The piece of legislation nearly died in the General Assembly’s Public Safety and Security Committee, but last-ditch efforts from lawmakers supporting the idea helped it survive with a 21-3 vote in favor. If approved in the Legislature, the bill would allow for the opening of a new bidding process for operators interested in building a casino in Connecticut. In case the proposed commercial casino bill reaches the desk of Governor Dannel Malloy and he signs it into law, the state of Connecticut would then subsequently allow the local Indian tribes, casino developers, and other qualified entities to submit their respective proposals for establishing the fourth legally authorized gaming venue in the state.

You can’t make this stuff up!  At any given time, either side sound like adolescents not getting their way, only this is different – there’s a lot of money at stake!

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CT Should Try the “Massachusetts Model for Casino Expansion”

In a previous post, I suggested what was, at the time, a rediculous suggestion on casino expansion in CT.  It was based on how things eventually turned out in Massachusetts.  But it doesn’t seem so far fetched now.  Matter of fact, the latest CT legislature bill resembles my silly suggestion. Let’s call it the “Massachusetts Model for Casino Expansion.”  This is what I suggested a year ago:

  1. Set up a process for  accepting license applications similar to Massachusetts.
  2. Begin the bidding process for both the Bridgeport casino & East Windsor Casino in the mix.  We’ll call them the Southwest license and the Nithern license.
  3. This will stop the 25% guarantee on slots to the state from Mohegan Sun and Foxwoods, but later on, (hopefully) this will not be a problem due to two new casinos.
  4. Allow MMCT to bid for East Windsor & Bridgeport, as well as anyone else, such as MGM, CET, & Boyd. MGM couldn’t bid even if it wanted to on East Windsor because its Massachusetts license has a radius restriction on building new casinos nearby……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. So, because MMCT would be considered a company interested in a commercial casino in East Windsor, it would have to cover the new fee together (25% of table games & slot revenue.)
  5. If chosen, Mohegan & Pequot tribes would stop their deposit to the state coffers, but would now cover 25% of slots and table games at the East Windsor site.  If they decide they aren’t interested, someone (but not MGM) will build a casino in northern CT, at the same 25% slots and table game status. (remember, the previous pact with the tribes covered 25% of only slot revenue)
  6. Meanwhile, all applications, similar to Massachusetts, will be accompanied by stringent background checks and $500,000 application fee (higher due to the inflation of 6 years).  Eight companies were interested for the Springfield and Boston region casinos.  An application fee of $400,000 immediately brought in over $3 million dollars in revenue before the process had begun!
  7. In the end, it seemed obvious to me that the MGC were leaning towards Wynn & MGM. I’m not suggesting the process be skewed toward our tribal casinos, but am established working relationship should go a long way compared to unknown relationships with commercial casino companies.
  8. The need for a casino in Bridgeport could change or be voted down. A south-western CT casino could eventually be a moot point, if CT decides it doesn’t want it any more. In Mass, Brockton & Rush Gaming were held hostage until the MGC dropped the Region C license due to the litigation troubles the Mashpee Wampanoags were going through.
  9. In the end, the two tribal casinos would be still standing alone, only the state of CT would have made extra revenue on the process.

So much for daydreaming.  Next, I’ll dream about 99% video poker and 2/1 Blackjack as the expectation for the future.

Thats all for now.

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