MGM Litigates, Lobbys Over Potential Competition
MGM Resorts International has suffered a setback in a bid to block development of a casino in Connecticut that would be a direct competitor to the $950 million casino the Las Vegas-based company is building in Springfield, Massachusetts.
When Connecticut lawmakers last year authorized the operators of the state’s two casinos, the Mashantucket Pequot and Mohegan tribes, to join forces to pursue a possible third casino, Springfield Mayor Dominic Sarno showed little concern.
" Good luck to them. I can't control what they do in Connecticut," said Sarno. " We are going to work very hard to make sure MGM is very successful for Springfield, western Massachusetts and the Commonwealth of Massachusetts."
But, for its part, MGM has waged a legal fight in federal court, has lobbied at the Connecticut State Capitol, and reportedly in the Congress in a high-stakes bid to block the construction of a third tribal casino just over the Massachusetts state line.
MGM said it would immediately appeal when U.S. District Court Judge Alvin Thompson last week dismissed the lawsuit challenging the constitutionality of Connecticut’s 2015 Tribal Gaming Act. According to the Boston Globe, MGM secretly lobbied in Congress for a bill that would block tribes from opening commercial casinos in the same states where they run casinos on reservations.
It did not come up for a vote.
Clyde Barrow, Chairman of the Political Science Department at the University of Texas Rio Grande Valley, who is a casino industry expert, said it is not surprising the lengths to which MGM has gone to try to thwart would-be competition to the Springfield casino.
" In their application to the Massachusetts Gaming Commission, MGM's business plan relies on the ability to capture $200-$300 million a year in gross gaming revenue from Connecticut. So, anything that seriously undermines that business plan makes the investment at its current level untenable," said Barrow.
Earlier this year, MGM won approval from city officials and state casino regulators for a cost-cutting redesign of the Springfield project. Further downsizing is unlikely to win regulatory approvals, so MGM has to go all out to thwart a third Connecticut casino, according to Barrow.
" They are in a bind, there is only so much they can do to make this project financially feasible," he said.
Mohegan Sun and Foxwoods casinos have both seen revenues shrink substantially as casino competition has increased in the Northeast. A third casino would help stave off more losses.
" Foxwoods and Mohegan Sun , despite the challenges they've faced, are still two very substantial very large resort destination casinos," said Barrow. " If they could capture some of the revenue that would otherwise go off to Massachusetts that would be a substantial amount of profit for them to funnel back into their so-called home facilities."
A location for the third casino has not been announced.
Final legislative approval is needed in Connecticut before a new casino could be built.
The MGM Springfield casino is scheduled to open in September 2018.
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