Lawmakers think they’ve finally figured out a way to save Connecticut’s gaming industry: allow more casinos so residents can spend their money at gambling halls within the state rather than at venues in Massachusetts, Rhode Island and New York.
That’s the proposal state lawmakers are pitching to help Mohegan Sun and Foxwoods fend off growing competition from nearby states. But we aren’t buying what state lawmakers are selling. Simply put, we think the addition of new casinos doesn’t make a whole lot of economic sense.
Here’s why:
1. Mohegan Sun and Foxwoods, which have struggled financially in recent years, are going to have to spend more money, potentially take on additional debt, and hire more people to make these new gaming halls even remotely attractive enough for patrons to skip out on the elaborate casinos being planned in Massachusetts and New York.
Even if convenience is a major factor in where people choose to gamble, it’s hard to imagine northern Connecticut residents refusing to drive an extra 10-15 minutes to visit Springfield’s $800 million resort, complete with gaming, entertainment, and high-value restaurants, to play slots and table games at what would amount to an outlet-store casino.
Instead of leveraging themselves further, Foxwoods and Mohegan would be wiser to pay down their significant debts, get their balance sheets in order, and limit hiring so they can be as nimble as possible in the new competitive environments they face.
2. Three new gambling facilities along I-91, I-84, and I-95 don’t address the fundamental problem caused by new casinos opening in Massachusetts and New York, which is Mohegan Sun and Foxwoods losing more out-of-state gamblers.
Any new Connecticut gaming venues will simply trap existing in-state dollars. They won’t attract new money to the state, limiting their overall economic impact.
3. New Connecticut casinos would further complicate an already complicated and heavily regulated gaming industry that includes Foxwoods, Mohegan Sun, the Connecticut Lottery, and 14 off-track-betting (OTB) locations.
OTB operator Ted Taylor and Connecticut Lottery Corp. CEO Anne Noble told state lawmakers last week that any additional gambling sites would hurt their businesses. Taylor said he wants a piece of the action if new casinos are permitted, while Noble wants lawmakers to approve new lottery products, including online offerings.
More casinos would mean additional deals have to be cut with all these stakeholders, which could lead to a significant expansion of gaming in the state, without any guaranteed payoff.
The financial and social risks are high.
4. The entire casino expansion process seems rushed at this point. Lawmakers put together the proposal to add up to three new casinos in about a week’s time, but there is no data available indicating what economic impact these new facilities might have. That should be a red flag.
Are we really sure that new gaming venues will save jobs and preserve state revenues, or simply add to Connecticut casinos’ recent financial struggles? The truth is, we have little to no evidence that supports either case, which adds a great deal of skepticism to the process.
In their heyday, Mohegan Sun and Foxwoods were shining beacons of gaming and entertainment in rural Connecticut, attracting patrons from around the region and the globe. They may never be the dominant forces they once were, but they are still premier tourist and gaming destinations.
Foxwoods and Mohegan should invest their dollars in maintaining and improving what they have, rather than expanding and diluting their product for unquantified economic gains.
