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Tribes claim state will lose big if new casinos are allowed

A cost analysis by a consultant to the Mashantucket Pequot and Mohegan tribes warns lawmakers that the state stands to lose over a billion dollars if the much-discussed Bridgeport casino, much less a fourth casino, opens.

The two tribes – which oversee the Foxwoods and Mohegan Sun casinos, respectively – operate under exclusive revenue-sharing agreements that require them to pay 25 percent of their casinos’ slot-machine revenues to the state. That amount came to $270.7 million last year, a 1.8 percent increase over 2016’s $265.9 million.

Rendering of proposed MGM Casino in Bridgeport, CT. Not everyone is a fan of the project.

According to the report by Clyde Barrow, entitled “Competitive Bid for a 4th Casino? Why Connecticut Would Be the Biggest Loser,” the passage of new commercial gaming legislation in Connecticut could result in the tribes placing annual revenue sharing payments into escrow until litigation was resolved.

“Should the state lose that litigation it could result in an upfront permanent loss of more than $1 billion in revenue over a four year period ($270.7 X 4 years) while potential casino sites are identified, bids and proposals are submitted to the state, the state reviews proposals and issues a license, and a casino is eventually constructed,” according to the report.

Those revenue sharing payments would “at best be offset by approximately $180.2 million in gaming tax payments by the fourth casino — assuming that the commercial casino is taxed at 25 percent of gross gaming revenues — which is equal or higher than the tax rates being paid by most other resort casinos in the United States (e.g, Nevada, New Jersey, Mississippi, Michigan, and Massachusetts),” the report added.

The result would be a permanent net reduction of state revenue of $90.5 million annually, even after a Bridgeport casino is fully operational, according to the report.

However, it goes on to say that that loss “is the most optimistic scenario,” as it is based on MGM’s original commitment to invest $1.1 billion in a Bridgeport casino. That commitment was lowered to $675 million in September 2017.

Pending bill HB 5305 further reduces the required capital investment in a fourth casino to $500 million.

Even for the state to break even in terms of revenue, a competitively bid fourth casino would need to generate $1.083 billion in gross gaming revenue annually, “far more than the gross gaming revenue forecast by MGM Resort’s own consultants,” the report said.

The tribes’ researchers told lawmakers the probability of a Bridgeport casino generating $1.083 billion annually in gross gaming revenue “is almost zero considering the fact that not a single commercial casino in the United States currently generates that level of gross gaming revenue.”


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