Things are getting real nasty on the Connecticut sports betting front.
Hours after representatives from Gov. Ned Lamont’s office and the state’s two federally recognized tribes played nice at a hearing before the Public Safety and Security Committee, Lamont decided to play hardball. And it appears that so far, anyway, his efforts have backfired.
“After months of closed-door negotiations, it’s offensive that Governor Lamont would announce an agreement with only one of the two Tribal Nations that have been a party to the negotiations, despite full knowledge that both sovereign Nations are needed to implement any agreement,” Mashantucket Pequot Tribal Chairman Rodney Butler said in a statement late Tuesday afternoon. “We have participated in these discussions in good faith and consider today’s events extremely disrespectful in terms of process and substance.”
Those comments came after Lamont’s office on Tuesday released key details of a deal with the Mohegan Tribe, which includes a 20% tax rate on iGaming and 13.75% on sports betting. The deal also allows the Connecticut Lottery to have its own digital platform and up to 15 retail sports betting locations.
Lamont making amends?
Wednesday, Lamont’s office offered up a bit of an olive branch with this statement released by his Chief of Staff Paul Mounds:
“The administration agrees that the Mashantucket Pequot Tribal Nation must be a party in any agreement, and that this agreement is best for the entire state, especially Eastern Connecticut, where the tribes employ thousands of people and contribute significantly to local economies and communities. This expansion of gaming in Connecticut is a financial benefit to both tribes and will provide long-term stability for both sovereign governments. Governor Lamont is urging the Mashantucket Pequot Tribal Nation to join this agreement immediately, and Eastern Connecticut legislators should do the same.”
Also on Wednesday, a coalition of lawmakers from eastern Connecticut, where the tribes are located, sent a letter to Lamont’s office calling the agreement “incomplete,” and saying they “cannot accept” the pact with the Mohegans if the Mashantucket Pequot are not included. The lawmakers set a Sunday deadline for the governor’s office to negotiate a deal.
— John Craven (@johncraven1) March 3, 2021
The question is, did Lamont’s actions on Tuesday derail progress that has been years in the making? Connecticut has only two federally recognized tribes, and they have had a monopoly on gaming in the state since the late 1980s. Since the Professional and Amateur Sports Protection Act was overturned in 2018, the sides have been trying to reach an agreement to bring sports betting to the state.
The tribes are already willing to do what many other tribes aren’t, which is offer off-reservation wagering by way of digital platforms. Many tribes decline to agree to this expansion, because they believe it may slow foot traffic at their casinos, which represent not only the core driver of their revenue, but jobs for thousands of tribal members. But Michigan’s tribes did embrace online sports betting and iGaming, viewing it as an additional revenue generator and a physical sportsbook amenity that may increase foot traffic by engaging a clientele that otherwise might not visit the hotel-casinos. The Mohegans (and presumably the Mashantucket Pequot) have also agreed to allow the Connecticut Lottery to have its own digital platform, meaning the tribes were willing to part with the duopoly they had been fighting for.
For months, and even Tuesday, Butler has been complimentary of the negotiating process with Lamont, whose team seemingly managed to give nearly every key party at least a sliver of the sports betting pie, based on the overview of the Mohegan compact that was released. The lottery gets its share, and it can in turn subcontract sports wagering to parimutuel facilities, which means state tracks and operator Sportech get in on the action, and the lottery must build retail facilities in Hartford and Bridgeport. The latter has been at the center of a fight for a commercial casino for years.
Mashantucket Pequot want lower tax rate
But during Tuesday’s hearing, Butler was clear that his tribe had not signed off on the current terms. He said the tribe and the state were at “fourth-and-inches” and both sides seemed ready to punch the ball across the goal line. Butler essentially said that his tribe needed just a little bit more on the money side of things to get the deal done. Tuesday afternoon, the Connecticut Mirror reported that Butler said his tribe is seeking an 18% tax rate for iGaming. The tribes already pay 25% on slot revenue, the highest percentage paid by a tribal nation to a state anywhere in the U.S.
The open question now is whether or not Lamont’s gamble to expose the details of the pact before the Mashantucket Pequots had signed off will work. Butler is clearly angered, but he did leave the door open for continued — and swift — resolution.
“Now that Governor Lamont has laid bare the confidential terms of our negotiations, you can see the significant and substantial concessions made by both Tribes,” Butler said in his statement. “Just permitting Lottery to participate in full sports betting, absent tax or revenue share, is a major allowance. We have one remaining point of contention that is easily resolved if some sense of mutual respect is afforded for the specific needs of our tribal community. We remain open to discussions and hope this is resolved quickly for the benefit of the entire state of Connecticut.”