Connecticut Council Presses for Online Gaming
The many small communities that make up southeastern Connecticut support the state’s two gaming tribes in their push to offers online gaming. Governor Ned Lamont shot down their request last week, but many think it has legs, including state Senator Cathy Osten (l.).
The Southeastern Connecticut Council of Governments (SCCOG), which represents 22 municipalities in the region served by the state’s two tribal casinos, last week urged Governor Ned Lamont to allow by executive order—if temporarily—the Mashantucket Pequot and Mohegan tribes to offer online gaming. They see it as a way to staunch some of the hemorrhaging of funds due to the closure of Foxwoods and Mohegan Sun.
They weren’t being altruistic. The cities are tied to the casinos with umbilical cords because they are among the largest employers in the state; and they pay into a fund that directly benefits the cities’ budgets.
Lamont dismissed the idea as impractical: “Authorizing online gaming and enabling consumers to more easily access gambling is a significant policy decision that has not yet been embraced or acted upon by our legislature. Doing so at a time when so many Connecticut residents are in financial distress would be a particularly significant policy decision to make without legislative approval.”
In the letter to Lamont the SCCOG Chairman Mark Nickerson, who is also First Selectman of East Lyme, wrote, “This public health emergency has altered their livelihood in an unprecedented way. We need to do everything we can to assure that they are able to survive now and thrive again in the future. This is why we are respectfully requesting that you issue an Executive Order to allow the two casinos to begin utilization of online gaming during this time that they have voluntarily closed their doors.”
The letter argued that the immediate infusion would help tribes “immediately offset the losses they are facing,” adding, “It will help get people back to work more quickly when the pandemic ends. It will help assure that the many municipalities that depend on revenue from the Pequot Fund are able to continue to receive this much needed funding.”
The Pequot Fund, aka the Mashantucket Pequot and Mohegan Fund, is funded by the 25 percent of slots revenue the tribes pay to the state.
Lamont’s letter noted that he had taken steps to “alleviate the financial distress” of the tribes by deferring their slot contributions. “We have also agreed to reduce the amount of the regulatory assessment for the time period of closure for which such services were not provided.”
Legislation by state Senator Cathy Osten would give tribes the exclusive right to offer sports betting and a monopoly on online gaming. Lamont prefers something less all-encompassing. Osten’s district includes both Mohegan Sun and Foxwoods.
GGB News spoke to Senator Osten, who clarified that the effort by SCCOG is not her initiative and she wasn’t involved in the request to the governor. As a former first selectman from North Stonington, a member city of SCCOG, she can empathize: “I know why the council is interested in doing this. They’re very worried. We have some 12,000 workers in Eastern Connecticut that are out of a job right now. I understand their concerns. iGaming is working well in other states that have it now, and I’m supportive of the idea, should we ever get to that. I’m not certain that the governor will ever approve it. He came out right away and said no.”
Osten added, “The Norwich, New London labor market was the ninth worse in the country five or six years ago, and we’re all very concerned that that’s where we are going to end up being again—one of the worst in the country. I get they think it’s a way to return jobs at both casinos and salvage the industry. The governor is allowing home delivery of alcohol and medical marijuana, why not this?”
She said her bill “incorporated sports betting and online gaming, online keno, online lottery. All the others are already being done. We just need to facilitate the online form of it. I know the council thought it was the right way to go. Maybe the governor will change his mind.”
Lamont prefers to address sports betting in a bill that includes nothing about online gaming.
The Mohegan and Pequot tribes say they would be able to introduce online gaming quickly because they have already created “free-play” online sites.
Fred B. Allyn III, mayor of Ledyard, Connecticut, near Foxwoods, explained why he agreed to the letter. “The two tribes are both in the top ten employers in the state,” he said. “We felt that we understand that the online gambling mechanism and legalities need to be put in place. That a short term solution to help the tribes with their operations would be a good thing to do. When the pandemic is pulled back, then we could pull back the gaming. The governor declined.”
He hopes the governor changes his mind. “His response to the council was that he has other things to do in this pandemic. He indicated that it wasn’t as simple as turning on the switch that a number of legislative maneuvers would be needed. It’s still a possibility.”
His city, like the others, depend on the 25 percent of slots paid by the tribes to the Pequot Fund.
“They distribute that in a formula that I maintain is flawed, because it’s not done to address the impact to the nearby municipalities but on population. So Hartford gests $6.5 million from the Pequot fund and we get $850,000 a year, even though we are next door,” said the mayor.
Allyn said the reservation makes a major impact on the city. “One hundred and fifty of their kids attend our schools. They live on untaxed property, and we’re fine doing that, but it comes at a cost.”
According to Allyn, Ledyard will receive $1,391,000 from the Pequot Fund, but spend $3.6 million schooling the reservation’s children. “What I wanted to get through to the legislature is an inequity there,” he said. “We have a pretty substantial impact from the students. We do get federal impact aid $556,000 for those children. The formula is not in balance but it’s difficult to make headway when I’m a town of 15,000 unlike the cities of Hartford, New Haven and Bridgeport which each receive on average over $6 million annually from the Pequot Fund.”
That was one reason the cities that make up SCCOG appealed to the governor, said Allyn. “We are thinking because March and April are closed and we don’t know what May will bring. Two of the 12 months are gone, and potentially more.”
He concluded, “The relationship between the tribe and town has been up and down over the years but it’s an important employer in our area and the state. While we need to mitigate the spread of the virus we need to be good partners with them because they are as important to the state as the state is to them.”
Michael Passero, mayor of New London, Connecticut, told GGB News, “I’m not a fan of gambling but if you live here in Southeastern Connecticut you can’t avoid the casinos because they have all the large ballrooms. They are beautiful places.”
His city collected $1.7 million revenue last year from Indian gaming via the Pequot fund. “That is significant revenue,” he said. “Our budget is $97 million. Half of that is school, half of the school budget comes from state grants. If we lost that $1.7 million it would add more than a million in taxpayers’ support.”
It’s budget time, he said. “All the municipalities are adopting our budgets. Normally that money is secure. We started working on our budget before the pandemic struck. We are going to leave it in and hope the tribes get back to work soon. At least by the beginning of the new fiscal year that they will be up and running.”
Sports betting has become an important income stream for casinos all over the country, he said. “If it adopted, it would provide them with an immediate stream that they don’t have—to help with the Pequot fund. There must be some money in sports betting because both tribes were strongly behind it and encouraged us to do this. They are very appreciative that we are supporting this effort and making this request to the governor.”
Passero says “it’s been a heavy lift” trying to get a sports betting bill through the legislature. “There are legal issues about whether the exclusivity deal that the state has with the tribes covers online gambling that didn’t even exist when the tribes negotiated their compacts with the state. Plus the commercial gaming conglomerates, such as MGM, wants a piece of it. Candidly, that’s going to be the problem with getting that approved.”
Nevertheless, said the mayor, “Our motives are clear. The casinos help us sustain the local economy in southeastern Connecticut.” When Mohegan Sun and Foxwoods first opened in the 1990s the economy of that region of the state had crashed because the Navy had stopped building submarines there. “They laid off everybody. It was terrible.” The casinos helped alleviate that problem, he said. “Those jobs didn’t replace on the same pay and benefits as the union trade jobs but it was employment and it was good employment and eventually the casinos were unionized and its’ an important part of our revenue here.”
The tribes have non-voting representatives on the SCCOG. “We are all part of a team. They attend the meetings and participate. They sit at the table,” he said.