Last August, the Mohegan Tribal Gaming Authority opened its Far East-themed Sunrise Square gaming area at Mohegan Sun resort.
Just a few months later, it is the near east that has casino officials worried.
In October, Massachusetts Gov. Deval Patrick filed legislation for the state to back the construction of three, $1 billion casinos, including one on the outskirts of Boston and another near the gateway to Cape Cod. The Massachusetts bill would not restrict casinos to tribal land.
Mohegan Sun”™s owners have expressed interest in investing in a third site, tentatively planned for Palmer, Mass., 50 miles north of Hartford.
The bill threatens revenue for the existing Mohegan Sun and Foxwoods Resort Casino in eastern Connecticut according to a new report by University of Connecticut researchers, who say the state might have to consider its previous record of discouraging new casinos.
Combined with the newly renamed Twin River slot machine complex at a Rhode Island racetrack, a similar facility at Yonkers raceway in Westchester County, N.Y., and a proposed venue in New York”™s Catskill”™s region, Connecticut”™s casinos face a “profoundly” changed market according to Arthur Wright, a retired UConn economist who was an early consultant to the Connecticut casinos.
In the 1990s, former Connecticut Gov. Lowell Weicker erected a “classic barrier to entry,” in Wright”™s words, discouraging developers from opening a casino in Bridgeport ”“ an easy train trip from New York City.
Besides the potential blow to Foxwoods and Mohegan Sun, opponents of a casino in Bridgeport have argued that a major tourist venue would overload already congested Interstate 95, and could possibly damage the already strained social fabric in one of Connecticut”™s poorest cities.
The latter point is disputed by UConn economist Steven Lanza, who says the casinos generate few “spillover” effects, but allowed that could be due to the relative isolation of the facilities in leafy eastern Connecticut.
With a de facto monopoly on full-service gaming, Foxwoods and Mohegan Sun have rewarded the state for that handshake arrangement, expanding at a rapid rate.
Foxwoods is currently adding a $700 million hotel, the MGM Grand at Foxwoods, which it is styling a “third casino” for Connecticut. Mohegan Sun has its own $925 million expansion under way.
Mohegan Sun this month attributed a decline in earnings in part to competition from the “racinos” in Rhode Island and New York
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The casinos funneled $435 million from slot machine revenue into the state”™s coffers during the 2007 fiscal year; the year before, Connecticut”™s corporate tax netted $754 million in revenue, according to UConn economist Dennis Heffley and Maryjane Lenon, a fellow researcher at Providence College in Rhode Island.
With the prospect of new casinos across the Massachusetts border, Wright said it may be time to reopen the ticklish question of disrupting the status quo ”“ which could have the unintended effect of encouraging Foxwoods and Mohegan Sun to consider other regions for future investment, which both have already done.
For now, the rising sun still illuminates the casinos in eastern Connecticut before any others in the United States ”“ but any change in Massachusetts law could cloud their outlook.
“Suppose that, instead of doing nothing, Connecticut instead authorized two new commercial casinos,” Wright stated in his paper, published in a UConn quarterly called The Connecticut Economy. “Connecticut would lose all of its (reduced) slots royalties, but start earning a share of the win at the new commercial casinos ”¦ It could even be worthwhile for the tribal casinos to seek a new deal with the state of Connecticut over the terms of the new casinos, in exchange for not cutting off the entire current slots royalties payments.”
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