A decade ago, when the Foxwoods and Mohegan Sun casinos were at their peak, Connecticut reaped nearly $450 million a year in gambling taxes, spurring envy in New England and beyond.
But revenue from the twin Indian casinos has fallen drastically, deepening a state budget deficit that could soon cost thousands of state workers their jobs. With a major casino now being built just across the border in Massachusetts, Connecticut’s dwindling share of the region’s gambling market now faces another heavy blow.
In desperation, the state is fighting fire with fire, scrambling to open a third tribal casino to compete with Massachusetts’ MGM Springfield, due to open in two years. Without action, Connecticut proponents say, Massachusetts will siphon away even more gambling business from a state once flush with it.
“Are we looking to protect a revenue stream? Yes, of course we are,” said Connecticut state Representative Stephen D. Dargan, Democrat of West Haven. “It would be wrong not to.”
State Senator Tim Larson, Democrat of East Hartford, said he is confident that a third casino can be opened quickly to “get the jump” on MGM in the battle for market share.
“This will help save jobs in Connecticut and insulate against deteriorating revenue to the state,” he said. “I think we’ll know within 60 days where the casino will be located.”
MGM now faces a daunting situation: an alliance forged between two tribes and the state government for the explicit purpose of undercutting its business in a lucrative area.
The Springfield casino is less than 6 miles from Connecticut and bases its business plan on drawing about one-third of its customers from the dense, well-to-do Hartford suburbs along Interstate 91, just 30 miles away. Connecticut’s two flagship casinos, Foxwoods Resort Casino and Mohegan Sun, are in the eastern part of the state, nearly an hour’s drive from Hartford.
To fight the plan, MGM has hired one of the state’s premier lobbying firms and the firm of former US attorney general Eric Holder. Last year, it sued the state over the preferential treatment given to the two tribes, a lawsuit that remains active.
Yet MGM officials say a modest Connecticut casino without table games poses a minimal threat to a $950 million development.
“Would a slot parlor in the Hartford area impact Springfield? Of course,” said Alan Feldman, an MGM executive. But officials are “very confident that the $950 million investment in entertainment, restaurants, shopping, and gaming at MGM Springfield will compete with anyone — certainly with a small slot parlor in Hartford,” he added.
Plans for a third casino need final approval from Connecticut’s General Assembly, but the Mashantucket Pequot and Mohegan tribes, the two tribes that would jointly operate the casino, have already scouted out potential locations, including Hartford, East Hartford, and the small town of Windsor Locks. All are within a 30-minute drive from Springfield.
“If we do nothing to compete against MGM Springfield, Connecticut will lose more than 9,000 jobs and over $100 million in state tax revenue,” said Andrew Doba, a spokesman for the two tribes. “Those are the facts, and we appreciate the support we’re getting from the many legislators who want to make sure that doesn’t happen.”
In Springfield, which has long looked to the casino as an economic catalyst, officials are keeping a wary eye on developments.
“What happens in Connecticut clearly will impact Springfield,” said Springfield’s City Council president, Michael A. Fenton. “We are watching carefully.”
In light of Connecticut’s financial struggles, city officials are discussing ways to avoid becoming too reliant on casino revenue, keenly aware it might well decline over time.
“Connecticut clearly fell into the trap of expecting casino dollars to keep paying for basic services,” Fenton said. “That’s something, on the city level, we are going to avoid. We are not going to make the same mistake.”
Fenton said casino revenues, which are projected to exceed $20 million a year, will only finance infrastructure and special programs, not personnel costs.
“We’re going to find a way to restrict spending that casino money,” he said.
In Connecticut, lawmakers acknowledge that falling casino revenue has helped create the current budget crisis, and that the arrival of resort casinos in Massachusetts will only make matters worse.
“There’s just no way to make up the revenue,” Dargan said. “So you have to make cuts, and that’s a tough thing to do.”
Connecticut has collected more than $6.5 billion in casino taxes since the 1990s, when it gave the tribes exclusive casino rights in the state in exchange for 25 percent of their slot machine revenue.
But that was a different time. Casinos have proliferated in recent years, and specialists say the market is approaching saturation. Besides the MGM casino, Massachusetts has licensed a $2 billion Wynn Resorts casino in Everett and is considering a $677 million facility in Brockton.
This month, the Mashpee Wampanoag tribe broke ground on a $1 billion casino in Taunton. In Rhode Island, plans are moving forward for a casino in Tiverton, also on the Massachusetts state line.
“There’s a fixed number of gamblers to go around and all the casinos, built and planned, are competing for them,” said Paul DeBole, an assistant professor of political science at Lasell College in Newton who specializes in gambling regulation.