Wednesday, March 25, 2009

Mohegan Tribe Threatens To Stop Slot Payments To State Over Smoking Legislation

By Ken Davison
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The top headline in today's New London Day newspaper was boldfaced: "Mohegans Threaten Suit Over Smoking." Two articles detailing the flareup between the state and the Mohegan Tribe glared out from underneath that headline, one on the left of the page and one on the right of the page, like a double-barreled shotgun.

Meanwhile, the Norwich Bulletin's article on the possible fight between the sovereigns was tucked in the shadows of page three in today's edition.

The battle to come is over the Mohegan Tribe's announced threat to take the state to federal court and possibly stop sending the state its share of slot machine revenues if the state goes forward with legislation aimed at eventually banning smoking at the state's two Indian casinos by October 2011.

Except in this looming battle, the last one breathing isn't the winner - it's what the state's fight is about.

The state legislature's Public Health Committee voted overwhelmingly to move a bill forward that would eventually ban smoking at Foxwoods and Mohegan Sun. The bill now goes to other lawmakers for consideration.

In response to that legislation, which also includes the possibility of the state yanking the casinos' liquor permits for non-compliance with their plan that would gradually phase out smoking at the casino, both the Mohegans and the Mashantucket Pequot Tribe concurred that it could trigger a lawsuit and stop the flow of the state's 25 percent share of casino slot machine revenue.

The amount of slot machine revenue that both Indian casinos send to the state is approximately $400 million annually.

The Mohegan Tribe sent letters to Connecticut Governor M. Jodi Rell and the state attorney general, Richard Blumenthal. The letters reportedly said that the legislation would infringe on the Tribe's sovereign rights in addition to the possibility of a lawsuit while halting payments to the state.

The state comes to the fight armed too. The state could deny the renewal of liquor permits at the Indian casinos which would put the two casinos in the same situation as that of the Oneida Tribe in New York. The Oneida's Turning Stone casino in upstate New York cannot serve liquor but has recently placed its nightclub into the status of a private club thereby permitted some alcohol sales at the resort location.

The compact between the tribes and the state allow the two tribes to maintain a monopoly on gaming in the state. Should that compact be breached, the state may be able to allow non-Indian casinos to be built in the state. It is not uncommon to see comments from readers of The Day newspaper suggesting that the state install toll booths at key access points near the casinos.

The last time the casinos seriously threatened to halt slot payments to the state was in the mid-1990's when the state considered allowing a non-Indian casino to be built in Bridgeport. The Mohegan Casino was being built and had not yet opened at that time.

One of the several leaders of the Mohegan Tribe, Bruce Bozsum, told The Day newspaper, "As the leader of the Mohegan Tribe, it is my obligation to protect the rights of our tribe and all indigenous people from an overreaching state legislature."

Mohegan Sun's profits have fallen dramatically over the past year. The most recent three month period for which the Mohegan Tribal Gaming Authority issued financial statements reflects a loss of about $3.8 million. That three-month period was from October through December and also marked the first time in which the losses generated at the Tribe's racetrack-slot parlor in Pennsylvania made the difference between a profit or loss for MTGA. Had the losses at the Pennsylvania slot parlor not been included, MTGA would have reported a small profit.

Analysts suggest that a ban on smoking at the casino could further weaken revenues.

The governor seems to prefer negotiations between the state and the tribes as opposed to legislation that would force the tribal casinos into compliance with a new law that could gradually ban smoking over the next two and a half years.

It is unclear how the relationship between the tribes and lawmakers have deteriorated to this point. The influence of unions may have had an impact. Many of the sponsors of the proposed law to ban smoking are from the region where the two Indian casinos are located.

The bill's sponsors include lawmakers Tom Reynolds, D-Ledyard, Andrea Stillman, D-Waterford, Ed Jutila, D-East Lyme, Melissa Olson, D-Norwich, Betsy Ritter, D-Waterford, Kevin Ryan, D-Montville, Diana Urban, D-North Stonington, and Elissa Wright, D-Groton. Edith Prague, D-Columbia, is also listed as a co-sponsor although she does not represent the casino region. One sponsor, state senator Andrew Maynard (D-Stonington), told The Day newspaper that he withdrew as a co-sponsor because it was not his intent to have a deadline for the smoking ban included in the bill.