Foxwoods, Mohegan Sun angling for online gambling amid pandemic shutdowns

Southeast Connecticut Mayors Want Tribal Online Gambling Via Executive Order

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An organization representing 22 municipalities in southeast Connecticut asked Gov. Ned Lamont last week to authorize online gambling in the state.

According to GGB News, the Southeastern Connecticut Council of Governments (SCCOG) said that the ongoing shutdowns related to COVID-19 make it necessary for the two tribes to offer their casino games online in Connecticut on a temporary basis.

The governor summarily dismissed the idea. Lamont described online gambling as a “significant policy decision” and said it would be inappropriate to approve it by executive order, even on a temporary basis.

The two casinos — Mohegan Sun and Foxwoods — are important both as local employers and as large contributors to state via a share of their slots revenue. The Mohegan and Mashantucket Pequot tribes that operate the casinos pay hundreds of millions of dollars annually in return for exclusivity over casino gaming.

12,000 casino employees out of work

Mohegan Sun and Foxwoods both rank among Connecticut’s 10 largest employers. They’re also among the largest casinos in the world by number of workers.

The state’s total workforce is about 1.9 million, and over 1% of it was employed by one of the casinos prior to the pandemic — about 11,500 for Foxwoods and 8,000 for Mohegan Sun.

Both casinos shut down on March 17.

The closure was initially supposed to last just two weeks but, as has been the case throughout the country, that has dragged on. It now looks unlikely that it will be safe to reopen non-essential businesses for many weeks at least. Those likely to draw crowds, like casinos, might remain closed for months.

Over half the employees of Foxwoods and Mohegan Sun — 12,000 in total — are currently out of work as a result. Additionally, every month the casinos remain closed means tens of millions of dollars in lost revenue for the state and local municipalities.

Play-money gambling available in the meantime

Both casinos already offer the games online. Since online gambling is illegal in the state, however, they can only offer them for play money.

SCCOG and the casinos stressed this fact to Lamont in attempting to convince him to legalize mobile casinos and online poker in Connecticut. They claim it would be an easy process to convert the existing social sites to real-money play.

It’s a moot point, since Lamont is unwilling to consider the possibility. Even if he signed such an executive order, however, it’s unlikely that it would be quite that easy. Technological hurdles would be numerous, the greatest of which would likely be geolocation to ensure operators don’t accidentally take out-of-state bets.

On the other hand, play-money sites do provide a distraction for a bored populace and a way for casinos to market themselves during the shutdown. They’re also enough to keep at least a few extra employees working.

Bad blood around gambling predates coronavirus

Despite the support from the mayors of Connecticut’s southeastern municipalities, the casinos were unlikely to get their way.

Gov. Lamont’s objections are, by most measures, valid and reasonable. However, it’s also hard to imagine that he’d be favorably predisposed to such a proposal because of the friction between the state and the tribes amid ongoing attempts to expand CT gambling.

Many state officials, including Lamont, are in favor of legal CT sports betting and online gambling. The tribes support such an expansion, but only so long as it doesn’t interfere with their statewide exclusivity over casino games.

While the governor and others would prefer to allow the lottery and off-track betting parlors to offer sports betting alongside the casinos, the tribes have threatened to sue if the state passes such a law. At the same time, MGM is suing the state for the right to bid for a competing commercial casino.

Even a casino-friendly governor would likely have nixed the emergency online gambling suggestion, but this pre-existing tension may have made Lamont further disinclined to consider it.

Some CT municipalities already resentful

The tribes’ joint MPM Fund has its own share of controversies.

In 1994, after one year of casino operations, the state had collected $113 million in revenue payments from the tribes. Of that, $88 million (78%), went to the Fund. Both casino revenue and the MPM Fund increased over the next few years, though the latter’s share of the money collected declined.

The state began scaling back on the Fund in 2002 even as casino revenue continued to increase. For over a decade now, it has been getting only about 20% of the money collected from the tribes (give or take a few percent).

Money is furthermore distributed based on population, meaning that Hartford gets the lion’s share. The communities surrounding the casinos say this is unfair. They shoulder the societal burden that comes with legal gambling and pay for services for the tribes, who do not otherwise pay taxes.

The five closest towns to the casinos each get an extra $750,000 per year from the Fund to account for the latter, an amount they say this is not nearly enough.

Early fund distribution is small consolation

Part of the problem is that the casinos are getting no help from the federal government. The CARES Act largely excludes gambling businesses.

The Act’s Payroll Protection Program (PPP) may end up excluding gambling-related business, even tribal casinos which have been particularly hard hit by the economic downturn. That exclusion is currently being disputed by the American Gaming Association and others.

However, even if that exclusion it removed, PPP applies only to businesses with fewer than 500 employees. Foxwoods and Mohegan Sun are far too large to qualify regardless.

As far as the municipalities go, Gov. Lamont has offered some help by moving forward the dates for distribution of the MPM Fund. Ordinarily, municipal governments receive three equal payments each year on January 1, April 1, and June 1. The second and third payments instead went immediately on March 18, the day after the casinos closed.

Receiving payments a few months early is unlikely to appease the mayors of these communities, nor will Lamont’s brusque dismissal of the online gambling proposal improve his standing with the tribes.

Whatever happens in the coming months, the governor and the tribes are collectively writing another chapter in their contentious saga. It’s one that will likely continue long after the pandemic has abated.

- 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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