2011OFA-1076

December 20, 2011

FROM:

Christopher Wetzel

   
   

SUBJECT:

Impact of Massachusetts Casino Legislation on Connecticut Gambling Revenue

You asked for an estimate of the fiscal impact on Connecticut Indian gaming revenue from recent legislation legalizing casino gambling in Massachusetts.

This legislation could reduce Indian gaming payments to the state by up to 25% or approximately $ 95. 0 million annually. 1 The timing of the revenue loss is dependent upon the date on which Massachusetts casinos become fully operable. 2

This estimate assume that: 1) any casinos established in Massachusetts will be substantially similar to those at the Foxwoods and Mohegan Sun resorts; 2) economic conditions will remain generally positive through at least FY 16; 3) approximately 86% of current Foxwoods and Mohegan Sun patrons living in Massachusetts and northern New England would substitute Massachusetts casinos for Connecticut casinos; 4) all current Foxwoods and Mohegan Sun patrons living in Connecticut, New York, and New Jersey do not substitute Massachusetts casinos for Connecticut casinos; 5) the establishment of additional casinos in Massachusetts will not increase the total pool of casino patrons; and 6) any casinos established in Massachusetts are fully operable by the first day of the Connecticut fiscal year in which they are established.

The revenue loss estimates are based on data from Center for Policy Analysis at the University of Massachusetts Dartmouth indicating that approximately 31. 0% and 19. 5% of Foxwoods and Mohegan Sun patrons are from Massachusetts, and an additional 4. 8% (Foxwoods) and 2. 7% (Mohegan Sun) are from Maine, New Hampshire, or Vermont. Data from the Center also indicate that approximately 86% of patrons would no longer frequent out-of-state casinos if similar casinos were established in-state.

I hope that you find this information helpful. Please contact me if you have any questions or need further assistance.

1 The out-years (FY 14-16) of the October 14, 2011 Consensus Revenue Estimates produced jointly by OFA and the Office of Policy and Management form the basis for determining the magnitude of revenue loss. It is not anticipated that any Massachusetts casinos would be operable until FY 14 at the earliest.

2 The Massachusetts legislation includes a licensure process and requires the approval of local voters before any casino proceeds with building.