Thursday, March 4, 2010

State's Gaming Director Says Tribal Casinos Will Be Shut Down If Payments Halted Over Keno Game

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The following article in The Day newspaper, today's Tribe In The Media installment, reports that the executive director of the Division of Special Revenue, Paul Young, believes the tribal casinos would be shut down if they withold payments to the state over the Keno gambling game.

Keno dispute seen as unlikely to turn confrontational
By Ted Mann
The Day
March 4, 2010

But state and tribes don't see eye to eye on whether lottery's use of game would violate casino compact

Hartford - If Connecticut's two Indian casinos play hardball over a proposal to add keno to the state lottery, shutting off slot-machine payments to the state government, they may get a dose of hardball in return.

The executive director of the Division of Special Revenue, which oversees state revenue from casinos and the state lottery, said Wednesday that state officials would order Foxwoods and Mohegan Sun to cease operations of their slot machines and video facsimile gambling machines if either stopped making the monthly slot payments.

Such a confrontation is unlikely, said Paul A. Young, the executive director of the special revenue office.

"I one hundred percent don't believe that would occur," Young said in a phone interview a day after hearings on the Rell administration's proposal to offer keno through the Connecticut Lottery to help balance the state budget.

But the possibility of casinos protesting the introduction of keno by halting slot-revenue payments was raised in Tuesday's hearing of the Public Safety and Security Committee, including by Jackson T. King, the general counsel of the Mashantucket Pequot Tribal Nation, which owns and operates Foxwoods, and John B. Meskill, the director of the Mohegan Tribal Gaming Commission.

Under the terms of the memoranda of understanding signed by both tribes with the state to operate slot and video facsimile machines, if the state allowed others to operate designated casino games in the state, "then the payments no longer have to be made," King told lawmakers this week.

But Young countered that those same memoranda are "very clear" that without making the payments, the casinos "don't have the authority to operate slot machines."

In that event, he added "I'm sure we would issue a cease-and-desist that they were in violation of that memorandum and that they no longer have the authority to operate slot machines."

The division would also issue such orders to the multiple vendors that supply and support the slot and video machine operations at both Mohegan Sun and Foxwoods, Young said, a move that would deprive all sides of revenue and likely lead to a prolonged court battle.

"Nobody wins," Young said. "They lose their income. We lose our income. Nobody wins."

Executives from both tribes said they also are hoping to avoid a major confrontation over keno, which was proposed by Rell last year but ultimately abandoned.

This year, Rell has put forward the proposal as part of a $1.3 billion borrowing package that her administration and legislators negotiated to balance the second year of the current two-year state budget. State officials would launch keno in bars, restaurants and other public spaces, then sell bonds backed by the anticipated revenue from new gamblers, which Rell has estimated at $60 million annually.

"We do have concerns about what we heard, but we want to continue to have dialogue," said Chuck Bunnell, the chief of staff of the Mohegan Tribe.

Both tribes maintain that keno should be considered a casino game, and therefore one that could only be offered by the casinos. State officials, including Young, Rell, and budget chief Robert L. Genuario, have said they believe the game is properly classified as a lottery game under the terms of the memoranda and the gaming compacts each tribe has signed with the state. Under the state's reading, the Connecticut Lottery is free to unilaterally offer keno, as it would any new lottery game, without violating the compacts.

Tribal officials like Bunnell counter that the overarching federal law that governs gambling operations on American Indian reservations considers keno a casino game - and also that signatories to the compacts that established Foxwoods and Mohegan Sun never would have intended a game like keno to be readily accessible in businesses all over the state.

"Six hundred or 1,000 gaming parlors opening up around the state ... Was that really the intent of the agreement that the tribes and the state entered into?" Bunnell said. "Our position is no. We don't believe when they entered into that agreement that they were thinking the state would ever do that. And based on what we heard yesterday, this is not something the state ever would have considered if it wasn't in this financial trouble."

Other state officials, including Attorney General Richard Blumenthal, have said the question of the state's legal right to offer keno remains undecided. But both tribes say they hope to forge an agreement with the state rather than head toward court.

"We still have not seen the formal proposal from the state at this point," said William Satti, the director of public affairs at the Mashantucket Pequot Tribal Nation. "The Mashantuckets have had a very good working relationship with the state, and we want to continue on that path."

Meanwhile, there are other opponents to the Rell administration's keno push, including at least one of the Republicans wishing to succeed her. At a press conference Wednesday at the Legislative Office Building, former U.S. ambassador Tom Foley, a candidate for his party's gubernatorial nomination, said he disagreed with Rell's decision to push for keno. Foley criticized the fact that the state will be borrowing $1.3 billion to cover operating expenses in the first place, and said lawmakers and the governor should instead move quickly to cut at least $1 billion in spending instead.

"I think the keno is probably a bad idea," Foley said.