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Jonathan ZaunMarch 28, 2019
March 28, 2019

Connecticut Gaming: Third Casino Cleared

After months of stalling by the federal government, Connecticut’s two federally recognized tribal organizations are now free to build the state’s third casino and expand the Connecticut gaming landscape.

Following two years of delays, the U.S. Department of Interior’s (DOI) Bureau of Indian Affairs (BIA) signed off on amendments to the state’s tribal gaming compact. The BIA had previously agreed to those amendments in principal, only for former Secretary of the Interior Ryan Zinke to block final approval in a controversial decision critics contend was driven by political motives.

The approval allows the Mashantucket Pequot Tribe and the Mohegan Tribe – which currently operate the Foxwoods Resort Casino and the Mohegan Sun casino, respectively, on an independent basis – to begin construction on a third Connecticut gaming venue on the Tribal Winds Casino in East Windsor.

Tribes and State Government Pleased to Gain Approval

Rodney Butler – who serves as chairman of the Mashantucket Pequot Tribal Nation – issued a statement celebrating the long-awaited approval:

“Today is a great day for the Mashantucket Pequot Tribal Nation and the state of Connecticut, especially given our 400-year history together.

Now that the approval of our Amendment is secured and our exclusivity agreement with the State of Connecticut is reaffirmed, we will move forward with construction on the Tribal Winds Casino in East Windsor and preserve much needed jobs and revenue.

The Mashantucket and Mohegan tribes have agreed to invest $300 million to build the Tribal Winds Casino, although they have yet to arrange the bulk of that financing. Per estimates put forth by Butler, a third casino in Connecticut would generate 2,000 permanent jobs, 2,000 more temporary construction jobs, and $70 million in annual revenue sharing payments to the state.

Under the state’s tribal gaming compact, the Mashantucket and Mohegan tribes enjoy the exclusive right to run casino gaming in Connecticut in exchange for sharing 25 percent of annual slot machine revenue.

Maribel La Luz, a spokesperson for Governor Ned Lamont, alluded to the importance of that revenue sharing in a statement issued on behalf of the state’s chief executive:

“We are very pleased that the Interior Department has decided to approve the amendments to Mashantucket Gaming Procedures and Memorandum of Understanding.

Approval of these amendments ensures that any state law authorizing MMCT to operate a commercial casino off of the tribal reservations will do no harm to the state’s existing revenue sharing agreements with the tribes.”

While casino gaming is limited to the two tribes as of now, the state House of Representatives passed a bill last year seeking to allow third-party commercial operators such as MGM Resorts to enter the market. That bill wound up stalling in the Senate, but a similar proposal has been introduced for the current session.

Connecticut Gaming: Casino Landscape Forced to Evolve

The Mashantucket Pequot Tribe opened the Foxwoods Resort Casino in 1986, with the Mohegan Tribe of Indians following up with the Mohegan Sun venue in 1996.

As federally recognized tribes under the Indian Gaming Regulatory Act (IGRA) of 1988, both the Mashantucket Pequot and Mohegan are authorized to operate Class III casino gaming. Both tribes forged gaming compacts with Connecticut under which 25 percent of annual slot machine revenue is diverted to state coffers.

Because commercial casinos are not allowed under Connecticut law, the tribes enjoyed a dual monopoly in the state, while dominating New England’s regional gambling industry until recently.

Foxwoods and Mohegan Sun are both located in the state’s Southeast region approximately 45 minutes from the state capital of Hartford. But after MGM Resorts entered the neighboring Massachusetts market with the opening of MGM Springfield last August – located only 25 minutes north of Hartford – the Foxwoods / Mohegan Sun duopoly faced unprecedented competition.

Almost immediately, the Mohegan Tribe attributed a 22 percent dip in annual revenue to this “new competition in the New England region.”

In anticipation of MGM Springfield’s arrival, the Mashantucket and Mohegan tribes joined forces to create a venture known as MMCT, one which called for the construction of the third casino in Windsor. Lawmakers approved a bill allowing for a third casino in June of 2017, but the federal approval process stalled until last week

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