Critics Argue the Special Act Gave Mohegan Sun (pictured) and Foxwoods Casino an Unfair Advantage.
The Connecticut Secretary of State admitted Wednesday that her office’s acceptance of the Schaghticoke Tribal Nation’s application to form a “tribal business entity” was an error. Secretary of State Denise Merill admitted that the tribe has met the basic requirements to form an LLC. Merrill said the tribe does not meet the criteria of a “special act” needed to allow the group to establish a gambling facility, or pursue that establishment of the state’s third tribal casino.
When the application was accepted by the Connecticut State Department earlier this week, Schaghticoke Tribal Nation (STN) Chief Richard Velky celebrated the acceptance as a great victory for the Schaghticoke Tribal Nation. The tribe has tried for years to gain a tribal gaming license, despite opposition from the state’s two vested interests in tribal casinos: the Mohegan Tribe and Mashantucket Pequot (Foxwoods) Tribe. Those two tribes run the Mohegan Sun and Foxwoods casinos. They are two of the biggest casinos in the United States, giving those tribes plenty of money to lobby Connecticut officials.
Confluence of Rivers Business Entity LLC
According to the application, the Schaghticoke Tribe’s limited liability corporation would have been named “Confluence of Rivers Business Entity LLC”.
In the application, the tribe said it was establishing the LLC in order “to pursue the development of a commercial casino in Connecticut.”
Denise Merrill’s Statement
Denise Merrill released a statement to contradict the actions of her bureaucrats, who accepted the license application by mistake. The Connecticut Secretary of State said in her public statement, “The Special Act created a unique situation that raised the bar for review. In this case, it looks like the application was received in error.”
Merrill implied that accepting the application for an LLC was not tantamount to accepting the Schaghticoke’s contention they qualify under the “Special Act”. Instead, that statute raises the bar for legal status.
Merrill added, “In 99.99 percent of the cases, we have to receive and file an LLC application without regard to the stated purpose of the entity. Anyone can start a business and we believe it should be easy to do. It appears in this case that the application meets the standard to create an LLC, but not the requirements of the Special Act. We are looking into what additional action should be taken.”
What Is the Special Act?
The term “Special Act” refers to Senate Bill No. 1090, which was passed into law on June 19, 2015. The Connecticut legislature crafted a law which would authorize a third casino in the state near Hartford. This casino would be co-owned by the Mohegan and Mashantucket Pequot tribes, who have long been rivals in the state.
The two tribes came together with Connecticut lawmakers on SB 1090 to devise a way to keep Connecticut gamblers’ money in the state. The new casino is a smaller “slots-in-a-box” satellite casino, which is meant to act as a firewall against cross-border competition. MGM Resorts received a license from the state of Massachusetts to build a casino in Springfield.
When it opens, MGM Springfield is expected to cannibalize the business of Foxwoods and Mohegan Sun. Part of the cannibalization is going to take place under any circumstances, because gamblers in Western Massachusetts are more likely to drive down the road to Springfield than they are across the border into the Connecticut tribal casinos.
The satellite casino is designed to keep Northern Connecticut residents gambling in the state, instead of going to MGM Springfield. MGM Resorts currently has a lawsuit against Connecticut, claiming their application for a Connecticut casino was turned down summarily. MGM Resorts asserts the Connecticut is illegally maintaining a duopoly.
About the Schaghticoke Tribal Nation
The Schaghticoke Tribal Nation likely would agree with MGM Resorts. The tribe is a mixture of Eastern Woodlands Native American tribes throughout Connecticut, New York, and Massachusetts. The tribe consists of a group of Eastern Woodlands bands, including Mahican, Tunxis, Podunk, Potatuck, and Weantinock bands.
The Connecticut-based tribe has one of the oldest reservations in the United States. It was granted by the General Assembly of the Colony of Connecticut in 1736. The Schaghticoke have long political ties with Connecticut policies. Most members of the tribe live in and around Kent, Connecticut. With such a long history behind it, the STN gained legal status in 2004 from the Bureau of Indian Affairs (BIA), becoming the fourth tribe in the state to gain such recognition.
That status was revoked a year later by BIA, after significant pressure from state and local governments in Connecticut. Supporters of the STN believe that pressure was at the behest of the rival tribal gaming interests, who did not want another rival in the state.
Trouble for Connecticut Casinos
Since then, the economic outlook for Connecticut’s tribal casinos have darkened significantly. Mohegan Sun began an expansion in 2007 which would have made it the largest casino in the world. When the economic collapse of 2008 and 2009, the tribe’s expansion became a massive waste of resources. Gaming revenues declined throughout the recession years. Meanwhile, the market became saturated, as more gaming operations were built in New York, Pennsylvania, and Rhode Island. Looking for tax revenues, Massachusetts approved three new casinos.
Gamblers from all of those states once flocked to Mohegan Sun or Foxwoods Casino. The loss of a significant portion of their gambling clientele, the tribal interests have scrambled to maintain what they have. The STN’s attempts to build a third gaming empire is thus seen as an anathema to the Mohegan and Mashantucket Pequot tribes, as well as the lawmakers who support them.
