Stakeholders still at odds over specifics of new gambling legislation

Connecticut Tribes, Governor Still Miles Apart On Expanded Gambling

When a state legislature fails to pass online gambling legislation, it can be for a variety of reasons.

Sometimes it’s because of opposition from groups that don’t want to see an expansion of gambling in any form. Other times, however, it’s because two or more groups all agree that it should be legalized but end up in a stalemate over the specifics.

Connecticut is a clear example of the latter, having been mired in such a situation since 2017.

Following a private meeting on Monday and a public hearing on Tuesday, stakeholders appear no closer to a resolution than they were two years ago.

Another push for Connecticut sports betting

Gov. Ned Lamont publicly maintains that he’d like to sign a CT sports betting bill into law during this legislative session, which ends in May.

The problem is that there are two proposals in play, and the one he favors is unpopular with the tribes that run the state’s only casinos.

The Mohegan and Mashantucket Pequot have threatened to sue if that open-market version passes, and Lamont said he won’t sign any bill that will face litigation.

Senator Cathy Osten championed her own version of the bill, which is favorable to the tribes, at this week’s meeting. The governor rejected it, however, implying that he’d rather let the session expire with no bill than sign off on that one.

Thus, the standoff continues.

Compacts ignore sports betting

The disagreement relates to the gaming compacts the state and tribes have in place.

Connecticut has no commercial casinos. In the 1990s, it struck a deal with the tribes guaranteeing them the exclusive right to provide casino gaming. In return, they share hundreds of millions of dollars of annual slot revenue with the state.

The trouble is that the compacts make no mention of sports betting one way or the other. At the time they were drafted, the issue wasn’t even on the table. It was, until 2018, outlawed at the federal level by the Professional and Amateur Sports Protection Act.

Only when that law faced a constitutional challenge from New Jersey did sports betting became relevant in Connecticut.

Exclusivity the heart of the issue

Should the issue be brought in front of the courts, the question they would have to answer would be: Is sports betting a form of casino gaming or a distinct activity? Since it hasn’t been brought to court yet, however, it’s a matter of opinion.

Unsurprisingly, everyone’s opinion turns out to be the one that would mean more money for them.

The tribes argue that sports betting is a casino game, since that would give them exclusivity. According to those in the governor’s camp, however, it isn’t. They would like to make sports betting available via the lottery and off-track betting parlors, as that would drive more revenue to the state.

Both positions have their merits.

Most states with legal sports betting also have casinos, and those are generally the places where retail sports betting is conducted.

On the other hand, some states (like Kentucky and Virginia) are attempting to legalize sports betting in the absence of land-based casinos. For that matter, Tennessee already did.

OTBs furthermore seem like logical homes for retail sportsbooks despite US law treating racing and sports wagering separately.

Choose your own gambling adventure

The Connecticut legislature is actually considering three separate bills at the moment.

The bill Lamont supports is the House bill, H 5168, co-sponsored by Rep. Joseph P. Gresko. It is solely and specifically a sports betting bill, containing no provisions for other forms of online gambling. It would allow the Connecticut Lottery to offer sports betting and permit both tribal casinos and OTBs to apply for licenses.

The other two are Senate bills S 21 and S 212.

The former is the one Osten co-sponsors, and it’s similar to the one she proposed last year. It adds approval for online casino gaming in CT and Keno, and it would grant the tribes exclusivity across the board. It also includes authorization for a Connecticut online lottery, however, so the state would get something out of the expansion as well.

The latter bill, which has no co-sponsors, is the broadest of the three. It includes the lottery and OTBs like the House bill, but it also includes provisions for online lottery, casino gaming, and Keno similar to S 21.

Compromise for Keno; why not sports?

This isn’t the first time the state has butted heads with the tribes over the exclusivity arrangement.

The Connecticut Lottery now offers Keno, which was once offered exclusively by the tribes. Legislators once considered passing a bill unilaterally allowing the lottery to offer the game before then-Attorney General Richard Blumenthal issued an 2009 opinion affirming that Keno was exclusive to the tribes.

It took six years to reach a compromise.

In 2015, the two tribes agreed to modify the compacts to let the lottery offer Keno. In return, the lottery surrenders 25% of revenue to the tribes — the same rate those tribes pay the state for slot machines.

It’s possible that such a compromise could be made for sports betting. In fact, the tribes might even prefer such a deal to having exclusivity. Given how much more lucrative sports betting stands to be than Keno, however, it’s unlikely that the state would want to give up such a large percentage.

Both sides would rather reach some sort of compromise than have no sports betting at all, as each year that passes without legislation means lost revenue for both. For now, though, each is still holding out hope that the other will blink first.

More hurdles down the road

Even if the governor and the tribes do find a way to see eye to eye before session adjourns, it won’t necessarily settle the matter for good. The tribes, the lottery, and the OTBs aren’t the only groups eyeing a slice of the gambling pie in Connecticut.

Both senate bills contain provisions to allow the tribes to construct a new casino in Bridgeport. This, along with another already planned for East Windsor, would be located on non-tribal land.

MGM Resorts International, which owns a Massachusetts casino just across the border in Springfield, has cried foul on these plans.

In the company’s opinion, any casino not located on tribal land should legally be subject to a competitive bidding process. MGM has already filed suit and will continue its legal battle if a bill authorizing the Bridgeport casino passes.

The tribes, however will likely reject any compromise that takes the new casino off the table. Lamont has said he won’t sign a bill that isn’t litigation-proof, but it’s hard to see a way forward without engaging in a legal battle with one party or another.

Legislators are therefore stuck between a rock and a hard place. The parties are only becoming more entrenched in their positions as the weeks pass, and the odds of Connecticut coming away with a positive result in 2020 seem to be trending negative.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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