Connecticut Tribal Casinos Assert Rights to US-Legalized Sports Betting Offerings

Close-up partial view of businesspeople fighting for money isolated on black

The tribal owners of Connecticut’s two major casinos, Foxwoods and Mohegan Sun, assert that they have the rights to offer sports betting in Connecticut if that activity is legalized in the US, contrary to an opinion offered by Connecticut’s attorney general.

A battle over legalized sports betting is brewing in Connecticut even before the activity is being considered there, due to assertions by the tribal nations that operate Connecticut’s two large casino-entertainment venues.

In a letter to Connecticut’s leading legislators, including House Speaker Joe Aresimowicz, representatives of Connecticut’s Foxwoods Resort Casino and Mohegan Sun Casino have threatened to cut off the tribal casinos’ revenue from the slot machines and table games at their resorts if sports betting is legalized in the state without granting the casinos the rights to offer sports-wagering services at their casinos.

$250m in Tax Revenue

The two casinos jointly provide about $250m (£184m) in tax revenue to Connecticut under the terms of the gambling compacts with the state. Legalized sports wagering is projected to bring in at least another $40 million or so annually, but who will be allowed to offer such services is the issue at the heart of this dispute.

Connecticut is among dozens of states that are closely monitoring the sports-betting “Christie II” case that is likely to receive a final ruling from the US Supreme Court within the next two months. A ruling in favor of New Jersey and against the US’s major sports associations will likely open the door to legalized sports wagering across much of the US.

Two bills in Connecticut’s legislature already address the topic, one each in the state’s House and Senate. The House bill, HB5307, has already cleared its preliminary committee and administrative hurdles and was tabled (temporarily suspended) on Monday, April 30, pending further developments in the Christie II case. The Senate bill, roughly parallel but more fleshed out in detail, is approaching a similar point.

“Commercial casino game” claim

Under the text of the Senate bill, SB540, the state would authorize several different categories of facilities to conduct sportsbook services. Those include:

(1) a casino gaming facility in the state;

(2) the Connecticut Lottery Corporation (CLC);

(3) licensed race tracks;

(4) jai alai frontons;

(5) licensed off-track betting (OTB) facilities; and

(6) any other Connecticut residents, entities, or facilities licensed by the Department of Consumer Protection (DCP) to offer wagering.

However, the text notes that most of those categories would be moot for other reasons. From the bill: “It appears that a casino gaming facility in the state would not include either the Foxwoods or Mohegan Sun casinos because both are located on sovereign tribal land. The state currently does not have any licensed race tracks and jai alai frontons or other DCP-licensed residents, entities, or facilities”.

That leaves a couple of dozen off-track-betting (OTB) parlors and Connecticut’s own state lottery as the only legal sportsbooks, with the state lottery also newly authorized to conduct online sales as a part of the bill.

This is what drew the legal fire from Foxwoods and Mohegan Sun, who are attempting to use the power of that combined $250 million in annual tax payments to muscle in on the possible new category. The casinos’ legal angle is that any automatic kiosks that provide wagering stubs are themselves “commercial casino games”, and thus fall into the gaming categories the casinos can offer.

“If the state authorizes video facsimile gaming, the exclusivity provisions of (the compacts) would be violated and our obligations to make the slot contributions cease,” Mohegan Attorney General Helga Woods, told the Connecticut Post.

Ms. Woods added that the tribes “most certainly would argue that sports wagering would violate the exclusivity provisions of our (compact). While Attorney General Jepsen calls it an ‘open question,’ we believe that sports betting is a ‘commercial casino game’ as that term is used in the (compact’s) exclusivity provisions.”

A statement from the Mashantucket Pequot Tribes given to the state’s WTHI-TV 10 followed the same line: “The Mashantucket Pequot Tribe’s position is sports betting is a commercial casino game. … [S]ports betting falls within the exclusivity granted to the tribes under the current agreement.”

Category III gaming issue

The problem for Mohegan Sun and Foxwoods is that sports betting falls under Category III of forms of gambling, as defined under the Indian Regulatory Gaming Act (IGRA), the federal law that opened the door to tribal casinos 30 years ago.

Ms. Adams’ reference to CT Attorney General George Jepsen is in response to Jepsen’s own written response to Rep. Aresimowicz, who inquired about the tribes’ right to offer sports betting. Jepsen wrote, in part:

Connecticut’s agreements with the Tribes require the legislature to carefully consider a number of factors before legalizing sports wagering. In the event PASPA is struck down and state law continues to prohibit sports wagering (as it presently does), because sports wagering is a Class III game under federal law and is not an authorized game under either of the respective Compacts, the Tribes would still be prohibited from conducting sports wagering on their reservations.

Moreover, it is our opinion that if sports betting were to become lawful in Connecticut, the Tribes would not have an exclusive right under the existing Compacts and MOUs to offer it. The Compacts set out a list of authorized games. […] The exclusion of sports betting from the specific list of authorized games is compelling evidence that the Compacts do not presently authorize it. […] Amendments to the Compacts would be necessary to authorize the Tribe’s sports betting, as contemplated under section 17 of the Compacts. Thus, our opinion is that the Compacts do not presently authorize the Tribes to conduct sports betting on their reservations. Nor are we aware of any other federal or state law that would be a basis for the Tribes to assert an exclusive right over sports betting.

The Tribes may argue, however, that a state law permitting sports wagering in Connecticut would violate the exclusivity provisions of the MOUs. Those provisions state that the Tribes are relieved of their obligation to pay the State a portion of the gross operating revenues from the operation of video facsimiles of games of chance on their reservations if state law is changed to permit “video facsimiles or other commercial casino games.” Although it is our view that sports wagering is not a video facsimile, whether it is a “commercial casino game” is an open question. That term is not defined in the MOUs or Compacts. How a court might resolve that question is uncertain. …

While sports betting can also be offered over the counter or online, the placing of bets at automated kiosks is likely to be the major channel through which such bets are transacted.

AG Jepsen chose not to offer a legal opinion on whether those kiosks are “games”, and a key argument that they are not is that the results of the wagers are determined at the actual sporting event, not within the kiosks’ or casinos’ gaming system.

Nonetheless, Jepsen and Rep. Aresimowicz agreed that an amendment to the compacts between the tribes and state could fix the issue. As Aresimowicz noted: “The tribes have been great partners and I’m sure we will have conversations. The tribes would be part of anything we do, we know that.”

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