It was a fruitful pre-season for teams competing for the right to launch online and sports gambling in Connecticut. Amid the pandemic, coaches and commentators speculated 2021 could yield great results with a breakthrough deal after three years of failure.
Now the regular season has its first high-profile matchup at 1 p.m. today, Tuesday. The tribes that run Mohegan Sun and Foxwoods; the company that runs OTB locations; and the Connecticut Lottery Corp. will all line up to address the General Assembly’s public safety committee, which oversees gaming.
And oh yes, the Connecticut Council on Problem Gambling will have ten minutes of airtime too. They’ll make a strong argument for controls and they might say a pandemic is a bad time to launch a new vice. But don’t worry, the number of lawmakers hellbent on stopping this juggernaut is dwindling.
Four weeks into 2021, everyone still seems to believe this is the year the state will usher in sports betting and casino games for mobile devices and laptops.
The forces are all in place. We have a coronavirus cash crunch on both sides, bad enough that Foxwoods had to give the state an extra $716,766 in December just to meet its minimum payment under a 29-year-old gaming compact. We have a willing governor and a legislature no longer divided between the tribes and MGM, now that MGM has exited the scene.
And we have surrounding states moving toward their own deals to tax companies that are able to beat money out of residents sitting at home, riding in cars or waiting in line at the supermarket.
All we’re missing is a deal, or any imminent sign of one — but the calendar is the tribes’ enemy.
The informational hearing will look and feel important but nothing the General Assembly does will matter until and unless Gov. Ned Lamont signs a new online and sports gaming pact with the tribes and anyone else he deems important enough to cut in on the action.
Lamont has dispatched four of his top aides — economic czar David Lehman, budget boss Melissa McCaw, chief lawyer Bob Clark snd chief of staff Paul Mounds, the captain — to do the bidding.
One quick thing while we’re on the subject of Lamont and the hospitality industry. Governor, you could show goodwill toward ailing restaurants by suspending the 10 p.m. curfew for the Super Bowl on Feb. 7. Just a thought.
No deal yet
Back to online casinos and sports gambling, no one is packing champagne on ice just yet but Lamont’s public comments, most prominently in his Jan. 6, pre-recorded State of the State address, indicate optimism is in the house.
Then again, so is the old stalemate. The Mohegan and Mashantucket Pequot tribes have shown no public willingness to back off their claims that they alone hold the rights to online “casino games,” which, in their view, include sports betting as well as internet gambling. That knocks out all other players, some of which might file lawsuits — tying up the state for years even if the legislature backs the tribes’ claims.
That’s the issue other states don’t have. Connecticut promised the tribes an exclusive duopoly on all casino games back in the ‘90s as long as the state collects 25 percent of the gross winnings from slot machines. Those payments peaked in 2006 at more than $400 million, fell to $255 million in fiscal 2019 and dropped to $193 million in the year ending June 30, 2020 and $164 million for all of 2020.
Falling as they are, those dollars matter to the state. And considering the threat from MGM Springfield followed by the shutdown last spring, that $193 million shows the tribal casinos have a whole lot of life left.
Later today we will see Rodney Butler, chairman of the Mashantucket Pequot Tribal Nation, bring his charm and his politically friendly status as a 2020 Biden delegate to the online forum. He will remind lawmakers that the tribe’s Foxwoods Resort Casino isn’t just another company like, oh, let’s say MGM Resorts International or even Aetna.
The Pequots are tied to Connecticut land as immovably as the river that gave the state its name, he might declare. The two tribes did manage to wait out MGM, which no longer wants to build a casino in Bridgeport — not that anyone wants to build a casino anyplace in Connecticut these days.
And the tribes have a bill co-sponsored by 17 lawmakers from both parties endorsing pretty much everything they want.
This is a bit of inside baseball but you don’t see Reps. Toni Walker, D-New Haven, and Doug Dubitsky, R-Chaplin, lining up as co-sponsors of the same controversial bill very often. I wouldn’t have guessed they’d agree the sky is blue.
How it might happen
Logic would say Lamont can get this done by agreeing to pay a fee to the tribes of a few percentage points of sports betting and the much larger i-gaming. That’s what happened a few years ago with Keno, in which the tribes split a 25 percent cut for a game they don’t run. That would allow the Connecticut Lottery to do its thing online and New Haven-based Sportech, which runs the OTB locations and Bobby V’s sports bars, to expand into broader sports betting, online and in-person.
But not so fast. The team of, Mounds, McCaw, Clark and Lehman might not need to pay off the tribes. No one is hurt more by time passing than Foxwoods and Mohegan Sun, which issued a warning on its debt at the end of 2020. That $716,766 Foxwoods had to pay the state last month is a huge deal and it signals that we might see the tribes willing to share the bounty in exchange for a fast deal, with little or no licensing fees.
Ted Taylor would love to see that. He’s president of Sportech in Connecticut. “We definitely feel that we’re at te table,” he told me Monday night, ahead of the hearing. “Nobody apart from the tribes believes that the tribes have exclusivity.”
It takes a wide marketplace to make sports betting work, Taylor has argued for three years now, since the U.S. Supreme Court allowed it to spread. That means more bookmakers in the game, not fewer.
And just over the state lines, we’re seeing the marketplace line up. New Jersey is minting nearly $200 million a year on the digital gambling habits of its residents and visitors.
Massachusetts seems poised to join in, according to the salivating gaming press; New York’s gaming commission just produced a report predicting something like $1 billion in revenue for a state deep in the hole from COVID.
Now Lamont is just a couple of weeks away from his deadline to present a budget to lawmakers and he would look strong with gaming deal in hand, preferably one that includes more players while keeping the tribes happy.