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Date: 8/7/2015
SPRINGFIELD – In the chess game that is the casino industry in the Northeast, MGM Resorts International has unleashed the most unexpected of moves.
The state of Connecticut and its two casinos had responded to the threat posed by MGM Springfield by proposing the construction of a casino between Hartford, CT, and the Massachusetts line. The concept was that such a business would keep Connecticut residents and their discretionary income within state borders.
In a checkmate move, MGM filed to apply for that license, which was rejected on July 23. It announced on Aug. 4 plans to take legal action against the state of Connecticut.
Mayor Domenic J. Sarno stated, “We have been assured by MGM that this will not affect their Springfield investment. As for their dealings in Connecticut that is for the Connecticut courts to decide.”
MGM spokespeople declined to elaborate further than the following written statement: “A law known as Special Act 15-7 was enacted this year in Connecticut that gives two tribes the exclusive opportunity to develop a commercial casino far from their tribal boundaries. This special law prevents everyone else from competing or even from making an alternative proposal that could be of greater benefit to the state. We believe that everyone should be given an equal opportunity to compete. MGM Resorts International this morning filed an action in Federal Court to enjoin the state of Connecticut from further implementing Special Act 15-7. We are asking the court to rule that the preferential treatment is unconstitutional.
“MGM Resorts regularly monitors and analyzes opportunities for growth across the country and around the world. In that regard, the Act restricts the new opportunity to entities owned by the two Federally-recognized tribes and prevents any other tribal or non-tribal entity from competing for a license.
“On analysis, we believe we could offer a highly competitive product for Connecticut that is fully compliant with our obligation in Massachusetts.
“Accordingly, we applied to register a business to compete for this commercial casino in Connecticut and just last week received confirmation from the Secretary of State of Connecticut that our application to incorporate pursuant to the Special Act 15-7 was rejected.
“We are disappointed by this decision. MGM regularly competes for commercial casino development opportunities and would like to be able to do so in Connecticut.
“While our company is supportive of tribal gaming as permitted under the Indian Gaming Regulatory Act, the law passed in Connecticut gives two preferred tribes an unfair and unjustified preferential treatment by designating them as the only entities, tribal or commercial, authorized to negotiate with cities and enter development agreements for a new commercial casino on non-reservation land in Connecticut.”
In the lawsuit, MGM asserts the legislation is unconstitutional as it excludes “all other tribes, races and entities, both in-state and out-of-state” from applying for the license of the casino.
MGM argues because the casino would not be operated on tribal property “there is no constitutionally legitimate basis for the Act’s discrimination in favor of the Preferred Tribes and against all other potential bidders.”
The lawsuit continued, “MGM is ready, willing and able to compete for the opportunity to develop a commercial casino gaming facility in Connecticut, but is excluded by the Act from competing for this opportunity.”
Further in the lawsuit, MGM’s attorney’s noted, “MGM is also not as a practical or economic matter precluded from developing a casino in Connecticut simply because MGM Springfield is located near Connecticut. MGM and other casino developers often employ a ‘two-stop strategy,’ pursuant to which a single owner will own two or more casinos in relative proximity to one another, with the goal of capturing a greater share of the market than a single casino would be able to capture alone. MGM Resorts International has employed this strategy in Las Vegas and in Mississippi and MGM Resorts International Mlife player loyalty program supports this strategy by encouraging players to visit multiple MGM Resorts International properties. MGM’s preliminary feasibility study indicates that having both casinos in Springfield and Connecticut would be commercially attractive to MGM and MGM Resorts International.”