Connecticut Gov. Dannel P. Malloy signed amendments to Tribal/State gaming compacts on Thursday allowing two of the state’s tribes to go ahead with plans to open a casino together in East Windsor.
The signing occasion didn’t go over well with the tribes’ key opponent in the venture, MGM Resorts International, who stated they would fight the new casino to the top of the U.S. legal system if necessary.
The Mashantucket Pequot and Mohegan tribal nations are federally recognized tribes with reservations and massive casino operations in Connecticut. The two sovereign nations have formed a commercial gaming company in a joint venture called MMCT. The purpose of the partnership is to create a third casino in the state in order to stem the flow of money headed out of state to a new $950 million MGM casino being built in Springfield, Ma.
The tribes’ current casinos feed CT state coffers with a percentage of gaming revenues. Those revenues have become increasingly important to the state’s economy. A third casino located in East Windsor would partially cannibalize the two existing operations by drawing existing patrons more than it would tap new consumer markets. However, it may also capture those existing customers before their money crosses the border to feed the multinational heavyweight MGM and end up as revenue for the neighboring state.
The governor didn’t mince words in a statement Thursday when he said, “Let there be no doubt that Massachusetts made a decision to do whatever they could to get as much gaming out of Connecticut and into their state,” Malloy said. “This [Thursday’s signing] was an appropriate response to what Massachusetts had done, and quite frankly what other states have done.”
MGM is fighting back saying that granting commercial gaming to the tribes gives them an unfair monopoly and violates the state and U.S. Constitutions. In essence, MGM argues that Connecticut does not have the authority to allow MMCT to expand their lucrative gaming enterprises beyond the borders of their reservations without entering a completely different area of federal law.
According to MGM, The Act violates the Equal Protection Clause as it is race-based and gives MMCT preference over all other tribes, races, and entities. The gaming giant also contends that it violates the dormant Commerce Clause because it favors in-state interests over out of state competitors. No entities other than MMCT were allowed to compete for the third casino license.
On the surface, an observer might think that the tribes would be seriously outgunned in any fight against the world’s second largest gaming company by revenue. MGM posted over US$9.5 billion in revenues for 2016, second only to Las Vegas Sands Corp. (NYSE:MGM 2016 Annual report .pdf) But the Mashantucket Pequot and Mohegan tribes operate two of the largest casinos in the country with Mohegan Sun and Foxwoods and have the full force and support of the state behind them.
The Mohegan tribe has also expanded far beyond Connecticut with multi-billion dollar ventures overseas. Their most notable exp 7BALL CX ansion project is located next to and is being developed in association with the Incheon International Airport near Seoul, South Korea. MMCT pockets and political clout run deep and the legal battle that is likely to come will be one for the history books if it plays out the way it looks for now.
The amendments signed by Gov. Malloy will now go to the state legislature and then on to the Bureau of Indian Affairs for final approval.
On Wednesday MGM Resorts filed an 18-page petition asking the 2nd U.S. Circuit Court of Appeals to rehear their decision a month earlier to uphold a lower court’s dismissal MGM’s claims that the law allowing MMCT to go forward violates the US Constitution. That court determined MGM had “failed to allege any specific plans to develop a casino in Connecticut.” MGMcitess case law that runs contrary to that requirement in their petition. MGM is seeking an “en banc” hearing in front of a large number of judges or the same three-judge panel that issued the June ruling.
The tribes expect the amended compacts to be approved by the legislature and the BIA within 45 days. The BIA has already tendered a letter stating that the administration doesn’t anticipate modifying the compacts.
