MGM Springfield Could Cost Connecticut $68.3 Million per Year

Posted on: October 12, 2016, 06:00h. 

Last updated on: October 12, 2016, 04:43h.

Jim Murren’s MGM could cost Connecticut $68.3 Million
MGM CEO and Connecticut native Jim Murren derided the Connecticut casino proposal as a “box of slots” last year, but his company has been sufficiently spooked to launch legal action against his home state. (Image: Forbes)

MGM’s new casino resort in Springfield Massachusetts will cost Connecticut $68.3 million in annual revenues once it’s up and running, according to a report by the Connecticut Office of Fiscal Analysis (OFA).

The MGM Springfield is scheduled to open in September 2018, just miles from the Connecticut border, and MGM Resorts has made no secret of the fact that it intends to attract customers from its neighboring state, estimating that some 40 percent of footfall will come from across the border.

The OFA says that Connecticut’s revenue-sharing agreements from its two tribal operators would fall as a result of the unwanted competition from MGM, from $267.3 million in fiscal 2018 to $199 million in fiscal 2019. Revenues are predicted to drop a further $2.4 million in 2020.

9,300 Jobs May Be Lost

There are concerns that the increased competition will be catastrophic for Connecticut’s two casinos, Foxwoods and Mohegan Sun, which have operated on tribal land in the south of the state since the early nineties. Both suffered in the recession of 2008 and are each around $1 billion in debt. A study funded by both tribes suggested out-of-state casino competition could cost Connecticut 9,300 jobs.

“We are fully aware of the negative impact MGM’s facility will have on both jobs and revenue,” said Andrew Doba, a spokesman for both tribes, in an official statement. “A hit like this to the state’s bottom line will lead to more cuts to essential social services, and more tough choices for our state leaders. We need to get this right, and make sure that losses of this magnitude never come to fruition.” 

Connecticut has countered by amending its constitution to authorize the creation of a “satellite casino,” to be run jointly by the tribes close to the border, outside tribal lands.

Borderline Disorder

The satellite project was derided as a “box of slots,” by MGM CEO Jim Murren, but his company was sufficiently spooked by the proposal to launch legal proceedings against the state, claiming it violated the Equal Protection Clause of the US Constitution. The case was shot down by a federal judge over the summer.

In July, MGM also tried to get an amendment added to a federal defense bill that would have prohibited Native American tribes from operating casinos in their home state outside their reservations. Again, the company was unsuccessful.

“As we have been saying for more than a year, if Connecticut wants to maximize job creation and revenue for the state, it needs to open up the process so that it is fair, transparent, and competitive,” MGM Resorts International Executive Vice President Alan Feldman said in a statement.

“At least one economic report has suggested that a casino in southwestern Connecticut has the potential to generate many more jobs and far more revenue than the number contained in this OFA report.”