UPDATE: CT finalizes sports betting agreement with Mohegan tribe; Mashantuckets could soon follow suit

Gov. Ned Lamont and Mohegan Tribe Chairman James Gessner Jr. have announced an agreement that would allow the state of Connecticut to modernize gaming options available to state residents, including allowing for sports wagering and online gaming.

The announcement comes a few hours after Lamont”™s chief of staff, Paul Mounds, indicated that it was nearly a done deal.

The pact “would generate tens of millions of dollars in new revenue for the state, while keeping Connecticut competitive with gaming changes currently being offered or considered in neighboring states,” according to Lamont”™s office.

The agreement also provides the inclusion of the Connecticut Lottery Corp. (CLC) as a partner in the effort to modernize the state”™s gaming landscape.

Key components of the agreement include:

• A 20% tax rate on new online gaming, or “iGaming,” offerings.
• A 13.75% tax rate on sports wagering.
• Connecticut Lottery shall have the right to operate 15 retail sports betting locations, as well as operate an online sports betting skin.
• Connecticut Lottery shall have the right to sub-license some of those locations to the state-licensed pari-mutuel operator, Sportech.
• Connecticut Lottery will undertake new retail sports betting venues in Hartford and Bridgeport.
• License agreement to be for 10 years with a five-year extension option.

“This agreement represents months of hard work and dedication to getting a deal that”™s best for the residents of Connecticut and moves our state forward when it comes to the future of gaming,” Lamont said. “We are incredibly fortunate to have such a devoted partner in these efforts like the Mohegan Tribe, as they have been open to negotiation, honest discussion, and a positive path forward that is beneficial for both their tribe and the State of Connecticut.”

“This path will allow Connecticut to generate tax revenues from sports and online gaming that are competitive with other states,” Gessner said, “and help keep Connecticut with those states when it comes to growing our economy and benefiting the state budget.”

The move significantly amends the decades-old compact the state has with the Mohegan and Mashantucket Pequot tribes, which has allowed them to exclusively operate non-lottery gaming at their casinos. The Mashantuckets, who operate the Foxwoods casino, are reportedly close to an agreement as well.

This afternoon”™s announcement follows a Public Safety and Security Committee hearing this morning, where Mounds indicated an agreement with the owner/operators of the Mohegan Sun casino was imminent.

“We are close,” Rodney Butler, chairman of the Mashantucket Pequot Tribal Nation, said at this morning”™s hearing. “We are literally on the one-inch line.”

Calling the matter “a generational issue,” Butler said he was concerned about maintaining a secure future for his tribe, including the ability to pay for eldercare and education.

Even so, “I know we”™ll get there, and we”™ll get there soon,” he said. The final terms will be “incredibly favorable” to the state, Butler added.

Mounds said the Lamont administration hopes to have an agreement with both tribal nations before the current General Assembly session concludes on June 9.

“There”™s a lot of urgency,” added Department of Economic and Community Development Commissioner David Lehman. “It”™s really important that we get this done this year.”

Connecticut Secretary of the Office of Policy and Management Melissa McCaw said that it is “the governor”™s intent to modernize gaming” in the state, which will also include iLottery. She noted that Lamont”™s biennial budget includes $47 million in anticipated revenue in its second year. That estimate came from studying the New Jersey model, she said.

“The future of gaming is now,” said Lehman, noting that although New Jersey saw a nearly 20% decline in overall gaming in 2020, its online gaming component doubled in revenue to about $1 billion. More than 92% of the gaming in New Jersey last year was done online, he added.

State Rep. Kurt Vail (R-Somers) wondered this morning why Sportech had apparently been left out of the latest round of negotiations. (“There hasn”™t been any progress,” Sportech President Ted Taylor told the Business Journal yesterday.)

Lehman acknowledged that DECD has not had a conversation with Sportech, maintaining that discussions with the tribes were critical ”“ “the first step” ”“ and that negotiations with that company will follow.

“Sportech has been very vocal,” agreed McCaw — who said the Lamont administration will “certainly be taking that into consideration” in the future ”“ while Mounds reiterated that the priority is to reach an agreement with the tribes “and then branch out,” indicating that Sportech could have a larger presence than the one guaranteed with the CLC outlined above.

Sportech, however, expressed its disappointment with a statement that read: “One year ago, Governor Lamont stated he would seek a fair resolution regarding gaming expansion involving existing gaming operators that ”˜must be designed to avoid and withstand endless legal challenges.”™

“Regretfully,” the statement continued, “the Governor”™s announcement this afternoon, that principally excludes Sportech from expanded gaming, leaves us with little option but to pursue legal recourse on behalf of our 400 Connecticut employees.”

As for the CLC, it “feels ready and prepared to be part of online gaming,” Mounds said.

In the fiscal year ending June 30, 2020, the CLC realized sales of $1.3 billion, which resulted in a $347 million profit for the state and $822 million for gamblers.

CLC Chairman Rob Simmelkjaer noted today that the lottery routinely has provided more revenue to Connecticut than do the tribes; in 2019, it produced $370 million for the state, versus the casinos”™ $255 million.