Why The Special Session Will Skip Connecticut Sports Betting This Year

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Connecticut sports betting

Connecticut might hold a special session this fall, but sports betting isn’t going to be part of it.

Sen. Cathy Osten proposed comprehensive gaming expansion legislation including Connecticut sports betting in July. Osten hoped to get the Connecticut Jobs and Revenue Act taken up in a special session.

It was presented as having bicameral, bipartisan legislative support. The statement wasn’t untrue but perhaps seemed to indicate more widespread support than the draft proposal possesses today.

Support comes from three specific territories in southeast Connecticut near the Mohegan Sun and Foxwood casinos, and the regions around East Windsor and Bridgeport.

The proposal would facilitate the construction of casinos run jointly by Indian tribes.

Legislators from the rest of the state and Gov. Ned Lamont oppose the bill, and won’t allow it to be part of a special session. A special session is expected to focus on financing transportation infrastructure upgrades.

“If you didn’t know better, you would have thought the tribes wrote it, quite frankly,” said Rep. Joe Verrengia, who co-chairs the Joint Committee on Public Safety and Security that handles gaming issues. “That particular bill doesn’t stand a chance of passing.”

Tribes trying to move CT sports betting forward

The proposal is an effort by Osten to modernize gambling operations for the tribes by providing them CT sports betting and internet gaming. Her district incorporates both tribal gaming facilities in the state.

Tribal leaders of Mohegan and the Mashantucket Pequot, which runs Foxwoods, reportedly had a sports betting deal in place with former Gov. Dannel Malloy last summer.

Verrengia revealed that the legislature blocked Malloy’s agreement because it gave the tribes exclusivity on a mobile Connecticut sports betting platform.

“There wasn’t a lot of support for that, recognizing that the money is in the mobile platform when it comes to sports betting,” Verrengia said.

Starting at the beginning in Connecticut

The tribes needed to begin discussions with a new governor. Verrengia, who supports Lamont, told Legal Sports Report that in return for exclusivity on CT sports betting, the governor wanted the tribes to give up the right to build a casino in East Windsor. The legislature approved it in 2017.

Talks quickly broke down and have not resumed, leading Osten to push for an alternate path.

“The two tribal nations are under some significant pressures having to do with the 2008 slowdown and the lack of the state at the executive branch allowing us to modernize gaming,” Osten said at the National Indian Gaming Association conference held at Mohegan Sun in September.

“So, I think we need to push back a little bit on our executive branch to inquire for them to allow two of our largest businesses to modernize at greater efficiencies.”

Tribes play an important role in Connecticut

Osten is quick to point out the impact of tribal gaming in Connecticut.

The tribes are two of the top 10 employers in the state. As part of compacts with the state, they pay a percentage of slot revenue to the state, currently combining at about $250 million. Those contributions total more than $8 billion over 27 years.

A portion of that money goes to municipalities around the state to fund programs and services. Also, the tribes support many nonprofits in the region.

“For (Indian tribes) in Connecticut, it’s not a decades-long relationship, it’s a centuries-long relationship, and we’re not going anywhere,” Rodney Butler, chairman of the Mashantucket Pequot, said at the NIGA conference. “We can’t pick up our reservations and move to Rhode Island or Southern California.”

Just about everyone wants Connecticut sports betting

Nationally, tribes tend to take a cautious approach toward mobile sports betting and online gambling.

They want to be at the forefront of any gaming advancements in the states in which they are located. However, they are wary of the effects each could have on the brick-and-mortar casinos they see as essential to their people.

Connecticut tribes have aggressively pursued sports betting and internet gambling from early on, hoping to supplement decreasing slot machine revenue.

“We were talking about sports betting and iGaming with the administration three years ago, and here we are three years later and we’re behind the curve,” Butler said.

“You have Rhode Island and New York and Jersey and Pennsylvania all having sports betting and migrating to online sports betting and iGaming. We’re still sitting here talking about the possibility and worrying about a lawsuit from a third party that’s never going to enter the state.”

So, why isn’t it getting done?

The Connecticut tribes can’t offer sports betting without reopening their compact with the state.

Compacts with the state outline that the tribes “may not conduct any form of Class III gaming, which is not expressly enumerated” in the previous section unless the compact is amended. The previous administration and tribal interests clashed over whether sports betting fits into the Class III definition.

The tribes want the governor to add sports betting to the games they are permitted to offer in recognition of their long and mutually beneficial partnership with the state. In return, they would provide 10% of sports betting revenue to the state.

Tribes would be happy to add sports betting right away and deal with any of the other complicated gaming issues in the state at another time.

However, experiencing a drop in the state share of tribal slot revenue from a peak of $430 million early in the 2007, Connecticut’s leadership so far has declined to hand over exclusivity on other forms of gambling, particularly the potentially lucrative mobile forms of betting.

Other operators want in on CT sports betting

Connecticut’s agreement with the tribes provides that they pay 25% of slot revenue in exchange for the state not permitting others to offer casino games. There is national debate as to whether sports betting should be classified as a casino game.

Some tribes have tried to expand their reach beyond their reservations through mobile gaming and commercial casinos. Some operators see this as creating an opening for them to challenge tribal exclusivity and enter the state.

MGM already filed a lawsuit trying to block them from jointly operating a casino in East Windsor, which is 12 miles from MGM’s casino in Springfield, Mass.

A discussion far from finished

Many lawmakers expect that any attempt to expand tribal exclusivity to sports betting would face a similar challenge.

“If we think that we can just go ahead tomorrow and sign an exclusivity agreement with the tribes and there would be no litigation, then we’re just fooling ourselves,” Verrengia said.

“So, how can we get our sports betting moving forward without having to play it out in the courtroom? It’s really all parties, the state, the tribes and other stakeholders working together to try to come up with an amicable agreement. To this point, that hasn’t happened.”

Butler contends that the legislation proposed by Osten benefits the tribes, state, municipalities and the people of Connecticut. But it’s getting held back for not benefiting MGM and some external sports betting companies.

Tribes, CT will try again next year

Verrengia believes it doesn’t benefit the state to extend tribal exclusivity to sports betting.

“Without question, I think the most profitable sports betting model for the state of Connecticut would be if we allowed our lottery to run sports betting,” Verrengia said. “That begs the question on if we can completely block (the lottery) out of it.”

Osten’s proposal limits sports betting to the tribes. The bill discussed in Verrengia’s committee this year, H 7331, would have authorized sports betting for the tribal casinos, off-track betting parlors and lottery.

“To give sports betting to one entity, whether it’s just the casinos or the lottery, that’s not necessarily what’s best for the consumer,” Verrengia said. “The more competition, the better for the consumer.”

Dawning of a new day?

He sees Connecticut sports betting and online gambling as new areas not covered by the compacts. They allow the tribes to expand their reach outside of their reservations.

For making such an allowance, lawmakers want them to be part of a more comprehensive package to make sure the tribes also are making concessions.

Verrengia explained:

“I truly value the tribes, their elected officials and certainly their history. I think the respect has to be mutual when you’re dealing with state elected officials as far as what the state is looking for. You’ve come and knocked on our door many times. I think the state and the governor have made it clear, particularly when it comes to sports betting, that it has to be open. I don’t think there’s a will by the full legislature to go ahead and grant them exclusivity on sports betting, and that’s why we don’t have a sports betting bill in place.”

Verrengia declared his goal is for the parties to come to an agreement by the end of the next session, which starts in February. Despite the stalemate, Butler is optimistic that sports betting soon will be authorized in Connecticut.

“People ask me what’s the probability of getting sports betting in Connecticut,” Butler said. “It’s 100%. We’re going to get it done. We have to figure it out; there’s no way around it. We need to be competitive from the state’s perspective and as two tribal nations, so we’re going to do that.”