Connecticut Seal

General Assembly

File No. 310

    January Session, 2017

Substitute Senate Bill No. 957

Senate, March 29, 2017

The Committee on Public Safety and Security reported through SEN. LARSON of the 3rd Dist. and SEN. GUGLIELMO of the 35th Dist., Chairpersons of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT CONCERNING THE REGULATION OF GAMING AND THE AUTHORIZATION OF A CASINO GAMING FACILITY IN THE STATE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 12-557b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

As used in this chapter, sections 12-579 and 12-580, [and] chapter 226b, sections 2 to 5, inclusive, of this act, and section 53-278g, as amended by this act, unless the context otherwise requires:

(1) "Commissioner" means the Commissioner of Consumer Protection;

(2) "Department" means the Department of Consumer Protection;

(3) "Business organization" means a partnership, incorporated or unincorporated association, firm, corporation, trust or other form of business or legal entity, other than a financial institution regulated by a state or federal agency which is not exercising control over an association licensee, [; and] but does not mean a governmental or sovereign entity;

(4) "Control" means the power to exercise authority over or direct the management and policies of a person or business organization; [.]

(5) "Casino gaming facility" means any casino gaming facility authorized by any provision of the general statutes or a public or special act to conduct authorized games on its premises, but does not include any casino gaming facility located on Indian lands pursuant to the Indian Gaming Regulatory Act, P.L. 100-497, 25 USC 2701 et seq.;

(6) "Authorized game" means any game of chance specifically authorized to be conducted at a casino gaming facility by any provision of the general statutes or a public or special act; and

(7) "Gross gaming revenue" means the total of all sums actually received by a casino gaming facility from gaming operations less the total of all sums paid as winnings to patrons of the casino gaming facility, provided the total of all sums paid as winnings to such patrons shall not include the cash equivalent value of any merchandise or thing of value included in a jackpot or payout, and provided further the issuance to or wagering by such patrons of any promotional gaming credit shall not be included in the total of all sums actually received by a casino gaming facility for the purposes of determining gross gaming revenue.

Sec. 2. (NEW) (Effective from passage) (a) Not later than twelve months after the date any authorization of a casino gaming facility by any provision of the general statutes or a public or special act is effective, the commissioner shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, for the administration of casino gaming facilities. Such regulations shall include provisions to protect the public interest in the integrity of gaming operations and reduce the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of gaming. Such regulations shall include, but need not be limited to:

(1) Minimum accounting standards for a casino gaming facility;

(2) Minimum security procedures including the video monitoring of casino gaming facilities;

(3) Approved hours of operation for gaming and nongaming activities at casino gaming facilities;

(4) Procedures governing the manufacture, sale, lease and distribution of gaming devices and equipment for use in casino gaming facilities;

(5) Procedures for the recovery of winnings by patrons of casino gaming facilities;

(6) Procedures governing how gross gaming revenue is calculated and reported by a casino gaming facility;

(7) Requirements for regular auditing of the financial statements of a casino gaming facility;

(8) Procedures to be followed by any casino gaming facility for cash transactions;

(9) Procedures regarding the maintenance of lists of persons banned from any casino gaming facility and security measures to enforce such bans;

(10) Standards for the provision of complimentary goods and services to casino gaming facility patrons;

(11) Minimum standards of training for persons employed in a casino gaming facility;

(12) Procedures governing the submission of standards of operation and management of gaming operations by casino gaming facilities to the commissioner; and

(13) Requirements for information and reports from casino gaming facilities to enable effective auditing of casino gaming operations.

(b) Until such regulations are adopted and in effect, a casino gaming facility may operate pursuant to its standards of operation and management, provided such standards are approved by the commissioner pursuant to section 3 of this act.

Sec. 3. (NEW) (Effective from passage) (a) Each casino gaming facility shall submit to the commissioner a description of its standards of operation and management of all gaming operations. The description shall include: (1) Accounting controls to be used in casino gaming operations, (2) job descriptions for all positions involved in casino gaming operations, (3) procedures for the security of chips, cash and other cash equivalents used in authorized games, (4) procedures for the safety and security of patrons of the casino gaming facility, (5) procedures and rules governing the conduct of any authorized games conducted at the casino gaming facility, (6) a certification by the attorney of the casino gaming facility that the submitted standards of operation and management conform to state law and regulations governing casino gaming operations, (7) a certification by the chief financial officer of the casino gaming facility or an independent auditor that the submitted standards of operation and management provide adequate and effective controls, establish a consistent overall system of procedures and administrative and accounting controls and conform to generally accepted accounting principles, and (8) any other standards required by the commissioner.

(b) The commissioner shall approve or reject a submission of standards of operation and management required under subsection (a) of this section not later than sixty days after the date on which the commissioner received such standards. If the commissioner fails to approve or reject a submission of standards of operation and management not later than sixty days after the date on which the commissioner received such standards of operation and management, such standards of operation and management shall be deemed approved. No casino gaming facility may commence casino gaming operations unless such standards of operation and management are approved by the commissioner or deemed approved.

(c) No casino gaming facility shall revise any standards of operation and management that have been approved by the commissioner pursuant to subsection (b) of this section unless the revision has been approved by the commissioner. If the commissioner fails to approve or reject a submitted revision not later than sixty days after the date on which the commissioner received such revision, such revision shall be deemed approved.

(d) A casino gaming facility aggrieved by an action of the commissioner under the provisions of this section may request in writing a hearing before the commissioner. Such hearing shall be held in accordance with the provisions of chapter 54 of the general statutes. The casino gaming facility may appeal from the final decision in accordance with the provisions of section 4-183 of the general statutes.

(e) The commissioner shall periodically review a casino gaming facility's compliance with state law and regulations governing casino gaming facilities.

Sec. 4. (NEW) (Effective from passage) (a) No person may commence or continue employment on the gaming floor or in a gaming-related position in a casino gaming facility unless such person holds a gaming employee license issued by the commissioner pursuant to this section.

(b) No person or business organization may provide more than twenty-five thousand dollars of nongaming goods or services per year in a casino gaming facility unless such person or business organization holds a nongaming vendor license issued by the commissioner pursuant to this section.

(c) No person or business organization may provide gaming services or gaming equipment to a casino gaming facility unless such person or business organization holds a gaming services license issued by the commissioner pursuant to this section.

(d) No business organization, other than a shareholder in a publicly traded corporation, may exercise control in or over a licensee licensed pursuant to this section unless such business organization holds a gaming affiliate license issued by the commissioner pursuant to this section.

(e) Each applicant for a license issued pursuant to this section shall submit a completed application on forms prescribed by the commissioner. Such application forms may require the applicant to submit information as to: (1) Financial standing and credit; (2) moral character; (3) criminal record, if any; (4) previous employment; (5) corporate, partnership or association affiliations; (6) ownership of personal assets; and (7) any other information as the commissioner deems pertinent to the issuance of such license.

(f) The commissioner shall, as soon as practicable after the receipt of a completed license application, grant or deny the license application. Any license issued by the commissioner pursuant to this section shall be effective for not more than one year from the date of issuance. Applications for renewal of any such license shall be on such form as prescribed by the commissioner. Any holder of a license issued pursuant to this section who submits an application to renew such license may continue to be employed by a casino gaming facility or provide services to a casino gaming facility until the commissioner grants or denies such renewal application.

(g) The commissioner may issue a temporary license at the request of any person who has submitted an application for a license under this section. The commissioner shall require such applicant to submit to state and national criminal history records checks before receiving a temporary license. The criminal history records checks shall be conducted in accordance with section 29-17a of the general statutes. A temporary license shall expire when the commissioner grants or denies the pending application for a license under this section.

(h) The commissioner may investigate any person or business organization that holds a license pursuant to this section at any time and may suspend or revoke such license for good cause after a hearing held in accordance with the provisions of chapter 54 of the general statutes. Any person or business organization whose license is suspended or revoked, or any applicant aggrieved by the action of the commissioner concerning an application for a license or renewal application, may appeal pursuant to section 4-183 of the general statutes.

Sec. 5. (NEW) (Effective from passage) (a) For the purposes of this section, "alcoholic liquor" has the same meaning as provided in section 30-1 of the general statutes.

(b) Except as provided in subsection (c) of this section, no person under the minimum age for purchase of alcoholic liquor under the provisions of chapter 545 of the general statutes shall be admitted onto the gaming floor of any casino gaming facility nor be permitted to participate in any authorized games.

(c) A person eighteen years of age or older but under the minimum age for the purchase of alcoholic liquor may be employed in a casino gaming facility provided such person is licensed by the commissioner pursuant to section 4 of this act and such employment does not involve handling or serving alcoholic liquor.

Sec. 6. Section 12-561 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

No commissioner or unit head or employee of the department shall directly or indirectly, individually or as a member of a partnership or as a shareholder of a corporation, have any interest whatsoever in dealing in any lottery, racing, fronton, [or] betting enterprise or casino gaming facility or in the ownership or leasing of any property or premises used by or for any lottery, racing, fronton, [or] betting enterprise or casino gaming facility. No commissioner or unit head shall, directly or indirectly, wager at any off-track betting facility, race track or fronton authorized under this chapter, [or] purchase lottery tickets issued under this chapter or play any game of chance at a casino gaming facility authorized by any provision of the general statutes or a public or special act. The commissioner may adopt regulations in accordance with the provisions of chapter 54 to prohibit any employee of the department from engaging, directly or indirectly, in any form of legalized gambling activity in which such employee is involved because of his or her employment with the department. For purposes of this section, "unit head" means a managerial employee with direct oversight of a legalized gambling activity.

Sec. 7. Subsection (a) of section 12-562 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Except as provided in subsection (b) of this section, the commissioner shall have power to enforce the provisions of this chapter and chapter 226b, and shall adopt all necessary regulations for that purpose and for carrying out, enforcing and preventing violation of any of the provisions of this chapter, for the inspection of licensed premises, [or] enterprises or casino gaming facilities, for insuring proper, safe and orderly conduct of licensed premises, [or] enterprises or casino gaming facilities and for protecting the public against fraud or overcharge. The commissioner shall have power generally to do whatever is reasonably necessary for the carrying out of the intent of this chapter; and may call upon other administrative departments of the state government and of municipal governments for such information and assistance as he or she deems necessary to the performance of his or her duties. The commissioner shall set racing and jai alai meeting dates, except that the commissioner may delegate to designated staff the authority for setting make-up performance dates. The commissioner shall, as far as practicable, avoid conflicts in the dates assigned for racing or the exhibition of the game of jai alai in the state.

Sec. 8. Section 12-563a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The Commissioner of Consumer Protection shall, within available resources, prepare and distribute informational materials designed to inform the public of the programs available for the prevention, treatment and rehabilitation of compulsive gamblers in this state. The commissioner shall require any casino gaming facility and any person or business organization which is licensed to sell lottery tickets, operate an off-track betting system or conduct wagering on racing events or jai alai games, to display such informational materials at the casino gaming facility and each licensed premise.

Sec. 9. Section 12-577 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The commissioner shall annually cause to be made by some competent person or persons in the department a thorough audit of the books and records of each association licensee under this chapter and each casino gaming facility and the commissioner may, from time to time, cause to be made by some competent person in the department a thorough audit of the books and records of any other person or business organization licensed under this chapter. All such audit records shall be kept on file in the commissioner's office at all times. Each licensee and casino gaming facility shall permit access to its books and records for the purpose of having such audit made, and shall produce, upon written order of the commissioner, any documents and information required for such purpose.

Sec. 10. Section 12-578 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The commissioner shall adopt regulations, in accordance with the provisions of chapter 54, governing registration and the issuance and annual renewal of licenses and payment of annual nonrefundable application fees for the same in accordance with the following schedule:

(1) Registration: (A) Stable name, one hundred dollars; (B) partnership name, one hundred dollars; (C) colors, twenty dollars; (D) kennel name, one hundred dollars.

(2) Licenses: (A) Owner, one hundred dollars; (B) trainer, one hundred dollars; (C) assistant trainer, one hundred dollars; (D) jockey, forty dollars; (E) jockey agent, for each jockey, one hundred dollars; (F) stable employees, including exercise boy, groom, stable foreman, hot walker, outrider, twenty dollars; (G) veterinarian, one hundred dollars; (H) jockey apprentice, forty dollars; (I) driver, one hundred dollars; (J) valet, twenty dollars; (K) blacksmith, twenty dollars; (L) plater, twenty dollars; (M) concessionaire, for each concession, two hundred fifty dollars; (N) concessionaire affiliate, for each concession of the concessionaire, two hundred fifty dollars; (O) concession employees, twenty dollars; (P) jai alai players, one hundred dollars; (Q) officials and supervisors, one hundred dollars; (R) pari-mutuel employees, forty dollars; (S) other personnel engaged in activities regulated under this chapter, twenty dollars; (T) vendor, for each contract, two hundred fifty dollars; (U) totalizator, for each contract, two hundred fifty dollars; (V) vendor and totalizator affiliates, for each contract of the vendor or totalizator, two hundred fifty dollars; (W) gaming employee, forty dollars; (X) nongaming vendor, two hundred fifty dollars; (Y) gaming services, five hundred dollars; and (Z) gaming affiliate, two hundred fifty dollars. For the purposes of this subdivision, "concessionaire affiliate" means a business organization, other than a shareholder in a publicly traded corporation, that may exercise control in or over a concessionaire; and "concessionaire" means any individual or business organization granted the right to operate an activity at a dog race track or off-track betting facility for the purpose of making a profit that receives or, in the exercise of reasonable business judgment, can be expected to receive more than twenty-five thousand dollars or twenty-five per cent of its gross annual receipts from such activity at such track or facility.

(b) The commissioner shall require each applicant for a license under subdivision (2) of subsection (a) of this section to submit to state and national criminal history records checks before such license is issued. The criminal history records checks required pursuant to this subsection shall be conducted in accordance with section 29-17a.

Sec. 11. Section 53-278g of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Nothing in sections 53-278a to [53-278g] 53-278f, inclusive, shall be construed to prohibit the publication of an advertisement of, or the operation of, or participation in, a state lottery, pari-mutuel betting at race tracks licensed by the state, off-track betting conducted by the state or a licensee authorized to operate the off-track betting system, authorized games at a casino gaming facility, a promotional drawing for a prize or prizes, conducted for advertising purposes by any person, firm or corporation other than a retail grocer or retail grocery chain, wherein members of the general public may participate without making any purchase or otherwise paying or risking credit, money, or any other tangible thing of value or a sweepstakes conducted pursuant to sections 42-295 to 42-301, inclusive.

(b) The Mashantucket Pequot tribe and the Mohegan Tribe of Indians of Connecticut, or their agents, may use and possess at any location within the state, solely for the purpose of training individuals in skills required for employment by the tribe or testing a gambling device, any gambling device which the tribes are authorized to utilize on their reservations pursuant to the federal Indian Gaming Regulatory Act; provided no money or other thing of value shall be paid to any person as a result of the operation of such gambling device in the course of such training or testing at locations outside of the reservation of the tribe. Any person receiving such training or testing such device may use any such device in the course of such training or testing. Whenever either of said tribes intends to use and possess at any location within the state any such gambling device for the purpose of testing such device, the tribe shall give prior notice of such testing to the Department of Consumer Protection.

(c) Any casino gaming facility, or its agents, may use and possess at any location within the state, solely for the purpose of training individuals in skills required for employment by the casino gaming facility or testing a gambling device, any gambling device which the casino gaming facility may use for conducting authorized games at the casino gaming facility, provided no money or other thing of value shall be paid to any person as a result of the operation of such gambling device in the course of such training or testing at locations outside of the casino gaming facility. Any person receiving such training or testing such device may use any such device in the course of such training or testing. Whenever a casino gaming facility intends to use and possess at any location within the state any such gambling device for the purpose of testing such device, the casino gambling facility shall give prior notice of such testing to the Department of Consumer Protection.

Sec. 12. Subsection (a) of section 30-37k of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) As used in this section and subsection (a) of section 30-91: (1) "Casino" means the premises within which a gaming facility is operated with other facilities, including, but not limited to, restaurants, hotels, nightclubs, bingo halls or convention centers; and (2) "gaming facility" means a room or rooms within which class III gaming, as defined in the Indian Gaming Regulatory Act, P.L. 100-497, 25 USC 2701, et seq., or an authorized game, as defined in section 12-557b, as amended by this act, is legally conducted.

Sec. 13. (NEW) (Effective from passage) (a) For the purposes of this section and section 14 of this act:

(1) "Authorized games" means any game of chance, including, but not limited to, blackjack, poker, dice, money-wheels, roulette, baccarat, chuck-a-luck, pan game, over and under, horse race game, acey-deucy, beat the dealer, bouncing ball, video slot machines and any other game of chance authorized by the Commissioner of Consumer Protection;

(2) "Mashantucket Pequot memorandum of understanding" means the memorandum of understanding entered into by and between the state and the Mashantucket Pequot Tribe on January 13, 1993, as amended on April 30, 1993;

(3) "Mashantucket Pequot procedures" means the Final Mashantucket Pequot Gaming Procedures prescribed by the Secretary of the United States Department of the Interior pursuant to Section 2710(d)(7)(B)(vii) of Title 25 of the United States Code and published in 56 Federal Register 24996 (May 31, 1991);

(4) "MMCT Venture, LLC" means a limited liability company described in subsection (d) of this section;

(5) "Mohegan compact" means the Tribal-State Compact entered into by and between the state and the Mohegan Tribe of Indians of Connecticut on May 17, 1994; and

(6) "Mohegan memorandum of understanding" means the memorandum of understanding entered into by and between the state and the Mohegan Tribe of Indians of Connecticut on May 17, 1994.

(b) MMCT Venture, LLC, is authorized to conduct authorized games at a casino gaming facility at 171 Bridge Street, East Windsor, Connecticut.

(c) Such authorization shall not be effective until the following conditions have been met:

(1) The Governor enters into an amendment to the Mashantucket Pequot procedures and to the Mashantucket Pequot memorandum of understanding with the Mashantucket Pequot Tribe and an amendment to the Mohegan compact and to the Mohegan memorandum of understanding with the Mohegan Tribe of Indians of Connecticut concerning the operation of a casino gaming facility in the state. Each amendment shall include a provision that the authorization of MMCT Venture, LLC, to conduct authorized games in the state does not terminate the moratorium against the operation of video facsimile games by the Mashantucket Pequot Tribe and Mohegan Tribe of Indians of Connecticut on each tribe's reservation;

(2) The amendment to the Mashantucket Pequot procedures and to the Mohegan compact is approved by the General Assembly pursuant to section 3-6c of the general statutes;

(3) The amendment to the Mashantucket Pequot procedures and to the Mohegan compact is approved by the Secretary of the United States Department of the Interior pursuant to 25 CFR 291.14 and 25 CFR 293.4, respectively, and any judicial review or period for judicial review, whichever is later, with regard to such approval by the Secretary provided under the federal Administrative Procedure Act, 5 USC 551 et seq., has concluded;

(4) The amendment to the Mashantucket Pequot memorandum of understanding and to the Mohegan memorandum of understanding is approved by the General Assembly pursuant to the process described in section 3-6c of the general statutes; and

(5) The Mashantucket Pequot Tribe and Mohegan Tribe of Indians of Connecticut (A) waive sovereign immunity with respect to any action brought by or against the state concerning the casino gaming facility in the state, and (B) agree to bring any such action against the state before the superior court for the judicial district of Hartford.

(d) Such authorization shall apply to MMCT Venture, LLC, provided (1) MMCT Venture, LLC, is a limited liability company jointly and exclusively owned by the Mashantucket Pequot Tribe and the Mohegan Tribe of Indians of Connecticut, (2) no other person or business organization holds an equity interest in MMCT Venture, LLC, and (3) each tribe holds at least a twenty-five per cent equity interest in MMCT Venture, LLC. If MMCT Venture, LLC, ceases to be a limited liability company jointly and exclusively owned by the Mashantucket Pequot Tribe and the Mohegan Tribe of Indians of Connecticut in which each tribe holds at least a twenty-five per cent equity interest, such authorization shall become void.

Sec. 14. (NEW) (Effective from passage) (a) For the purposes of this section, "gross gaming revenue" has the same meaning as provided in section 12-557b of the general statutes, as amended by this act.

(b) Not later than thirty days after the date the authorization of MMCT Venture, LLC, to conduct authorized games at a casino gaming facility is effective pursuant to section 13 of this act, MMCT Venture, LLC, shall pay to the state one million dollars to provide for the initial costs to be incurred by the state to regulate the casino gaming facility. Such money shall be credited against unpaid required payments pursuant to subsection (c) of this section for the first full calendar year in which the casino gaming facility is conducting authorized games.

(c) Not later than thirty days after the date the casino gaming facility is operational and on a monthly basis thereafter while such casino gaming facility is operational, MMCT Venture, LLC, shall pay to the state (1) twenty-five per cent of the gross gaming revenue from the operation of video slot machines at the casino gaming facility, which shall be deposited in the General Fund, and (2) twenty-five per cent of the gross gaming revenue from the operation of all other authorized games at the casino gaming facility, fifteen per cent of which shall be deposited in the state-wide tourism marketing account, established pursuant to section 10-395a of the general statutes, and ten per cent of which shall be deposited in the General Fund.

(d) Not later than the date the casino gaming facility is operational and annually thereafter while such casino gaming facility is operational, MMCT Venture, LLC, shall contribute three hundred thousand dollars to the Connecticut Council on Problem Gambling.

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

12-557b

Sec. 2

from passage

New section

Sec. 3

from passage

New section

Sec. 4

from passage

New section

Sec. 5

from passage

New section

Sec. 6

from passage

12-561

Sec. 7

from passage

12-562(a)

Sec. 8

from passage

12-563a

Sec. 9

from passage

12-577

Sec. 10

from passage

12-578

Sec. 11

from passage

53-278g

Sec. 12

from passage

30-37k(a)

Sec. 13

from passage

New section

Sec. 14

from passage

New section

Statement of Legislative Commissioners:

In Section 6, the second sentence was redrafted for accuracy and consistency with other provisions of the act; in Section 14(b), "Within thirty days of" was changed to "Not later than thirty days after" for consistency with standard drafting conventions; in Section 14(c), "one month" was changed to "thirty days" and "date the" was added for consistency with standard drafting conventions; and in Sections 14(c) and (d), "while such casino gaming facility is operational" was added for accuracy.

PS

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Resources of the General Fund

GF - Potential Revenue Impact

None

See Below

Consumer Protection, Dept.

GF - Potential Revenue Impact

None

None

Consumer Protection, Dept.

GF - Potential Cost

None

None

State Comptroller - Fringe Benefits1

GF - Potential Cost

None

None

Note: GF=General Fund

Municipal Impact: See below

Explanation

The bill has no fiscal impact in FY 18 as the East Windsor casino, revenue sharing terms, and regulatory structure authorized by the bill would not be built and operative within the fiscal year.

If the casino is authorized, including full resolution of legal issues surrounding existing agreements with Mashantucket Pequots and Mohegans, the casino owner must pay $1 million to the General Fund. This payment, which may be received by FY 19, would be deducted from any revenue-sharing payment to the state for the first full calendar year of operation.

To the extent that the bill facilitates the development agreement between East Windsor and the casino developer, there is a revenue gain to that town that will vary based on the implementation of the agreement.

The Out Years

State Impact:

Agency Affected

Fund-Effect

FY 20 $

FY 21 $

FY 22 $

Resources of the General Fund

GF - Potential Revenue Impact

See Below

See Below

See Below

Consumer Protection, Dept.

GF - Potential Revenue Impact

See Below

See Below

See Below

Consumer Protection, Dept.

GF - Potential Cost

See Below

See Below

See Below

State Comptroller - Fringe Benefits

GF - Potential Cost

See Below

See Below

See Below

Note: GF=General Fund

Municipal Impact: See above

Explanation

To the extent a casino is authorized and built there is a significant revenue impact to the state, as well as a potential significant cost.

Gross Gaming Revenues. The bill requires any such casino to pay the state 25% of gross gaming revenue from all authorized casino games. The timing and magnitude of the revenue impact to the state is dependent on the operation date and specific number and type of gaming devices offered.

It is unclear what, if any, impact this would have on casino gaming revenue the state currently receives. In FY 16, the state received approximately $265.9 million in tribal casino gaming payments.

Licensing and Regulation. The owner is required to pay the state $1 million to be credited against future revenue-sharing as described above.

The bill results in potential significant costs and some level of revenue for the General Fund through establishing license categories for several types of people and businesses associated with the casino: (1) gaming employee license with an annual fee of $40, (2) nongaming vendor license fee of $250, (3) gaming services license fee of $500, and (4) gaming affiliate license fee of $250. These licenses collectively are anticipated to generate less than $40,000 in revenue.

To administer licensure as well as enforce gaming laws at the casino, the Department of Consumer Protection (DCP) would require 31 personnel at a total annual cost of $1,858,261 in salary and $707,626 in fringe, along with equipment costing approximately $31,000 in the first year of operation and $3,100 annually thereafter. There may be higher personnel costs to the extent additional DCP personnel are needed to enforce liquor laws at the casino. DCP would also need to adopt regulations and review standards of operation and management, which it has the expertise to do.

Problem Gambling Contribution. Once operational and then annually, the owner must pay $300,000 to the Connecticut Council on Problem Gambling. As this organization is a nonprofit, there is no state or municipal fiscal impact.

Casino Liquor Permit. Section 12 results in a potential revenue gain to the state by expanding the existing $2,650 casino liquor permit to include the new casino gaming facility. Any tax revenue gain would be to the extent new alcohol sales are generated that would not have otherwise occurred under other currently permitted establishments.

BACKGROUND

The January 17, 2017 Consensus Revenue estimates include assumptions regarding the revenue impact of the planned opening of casinos in Massachusetts in FY 19. Specifically, the Office of Fiscal Analysis assumes the opening of Massachusetts casinos will result in a $68.3 million revenue loss to the state in FY 19. This assumes a casino will begin operation in Springfield in the fall of 2018, and is an annualized amount.

OLR Bill Analysis

sSB 957

AN ACT CONCERNING THE REGULATION OF GAMING AND THE AUTHORIZATION OF A CASINO GAMING FACILITY IN THE STATE.

SUMMARY

This bill authorizes the operation of one off-reservation casino gaming facility in East Windsor, Connecticut, once certain conditions are met, subject to regulation by the Department of Consumer Protection (DCP) (see COMMENT). DCP regulates all legalized gambling in the state, except gambling at the state's two tribal casinos (see BACKGROUND).

The bill gives MMCT Venture, LLC, a company the two tribes jointly own and operate, the exclusive right to conduct authorized games at a casino gaming facility after certain conditions are met. The conditions include amending the current gaming agreements to include a provision stating that the authorization of an off-reservation casino does not terminate the existing slot moratorium. The amendments must also be approved by the state legislature and federal Department of the Interior (DOI), among other conditions (see BACKGROUND).

The bill requires MMCT to (1) pay the state 25% of the gross gaming revenue from both the video slot machines and all other authorized casino games (e.g., table games) and (2) annually contribute $300,000 to the Connecticut Council on Problem Gambling.

The bill requires DCP to adopt implementing regulations to ensure proper, safe, and orderly conduct of casino gaming. The regulations must address other issues, including security at the facilities, audits and record keeping, and licensing of personnel. The bill also requires the casino gaming facility to develop management and operating standards for the casino gaming facility, subject to DCP approval.

Under the bill, a “casino gaming facility” is any casino gaming facility authorized by law to conduct authorized games on its premises but does not include a tribal casino operating under the Indian Gaming Regulatory Act (IGRA).

The bill also makes minor, technical, and conforming changes.

EFFECTIVE DATE: Upon passage

13 — CASINO AUTHORIZATION

The bill authorizes MMCT to conduct authorized games at a casino gaming facility at 171 Bridge Street, East Windsor, Connecticut (see COMMENT). “Authorized games” means any game of chance, including, blackjack, poker, dice, money-wheels, roulette, baccarat, chuck-a-luck, pan game, over and under, horse race game, acey-deucy, beat the dealer, bouncing ball, video slot machines, and any other game of chance the DCP commissioner authorizes.

The authorization to conduct casino gaming is not effective until certain conditions are met.

Conditions to be Met Before Authorization is Effective

Before the authorization is effective, the bill requires the governor to enter into an agreement with the tribes to amend the Mashantucket Pequot federal procedures, the Mohegan compact, and both MOUs on the operation of a casino gaming facility. Each amendment must include a provision that MMCT's authorization to conduct authorized casino games in the state does not terminate the moratorium against operating video facsimile games (see BACKGROUND).

Upon the tribes and state reaching an agreement, the amendments must be approved by the state legislature and DOI, pursuant to federal regulations (25 CFR 291.14, for procedures and 25 CFR 293.4, for compacts) (see BACKGROUND). Additionally, any judicial review or period for such review for any DOI secretarial approval must also have concluded in accordance with the federal Administrative Procedure Act (5 U.S.C. 551 et seq.).

Finally, the tribes must waive sovereign immunity with respect to any action brought by or against the state concerning the casino gaming facility and agree to bring any such action to the Hartford Superior Court.

MMCT

Under the bill, MMCT is a limited liability company jointly and exclusively owned by the Mashantucket Pequot and Mohegan tribes. Each tribe must hold at least a 25% equity interest in the company, and no other person or business organization may hold an equity interest. If MMCT ceases to be a limited liability company under these conditions, the bill's authorization is void.

14 — PAYMENTS

The bill requires MMCT, within 30 days after being authorized to conduct authorized games at a casino gaming facility, to pay the state $1 million for the initial costs of regulating the facility. The money must be credited against unpaid payments required for the first full calendar year the casino conducts authorized games.

Under the bill, within one month of the casino being operational, and monthly thereafter, MMCT must pay the state 25% of the gross gaming revenue from (1) video slot machines, which must be deposited into the General Fund and (2) all other authorized casino games, of which 10% must be deposited into the General Fund and 15% in the statewide tourism marketing account.

The bill also requires MMCT, by the date the casino is operational and annually thereafter, to contribute $300,000 to the Connecticut Council on Problem Gambling.

Gross Gaming Revenue

"Gross gaming revenue" means the total of all sums the casino gaming facility actually received from gaming operations after subtracting the amount paid as winnings to casino patrons. This total does not include the cash equivalent value of any merchandise or thing of value included in a jackpot or payout and any promotional gaming credit.

2 — GAMING REGULATIONS

The bill requires the DCP commissioner to adopt regulations for the administration of a casino within 12 months after the effective date of any authorization of a casino gaming facility. The regulations must include provisions to protect the public interest in the integrity of gaming operations and reduce the dangers of unsuitable, unfair, or illegal practices, methods, and activities in the conduct of gaming.

The regulations must also include the following:

The bill allows the casino gaming facility to operate under its standards of operation and management until regulations are adopted, provided they are approved by the commissioner (see below).

3 — STANDARDS OF OPERATIONS AND MANAGEMENT

Under the bill, the casino gaming facility must submit to the DCP commissioner a description of its management and operating standards for all gaming operations.

The description must include:

The bill requires the DCP commissioner to approve or reject standards of operation and management within 60 days of receipt. Standards not approved or rejected within that timeframe are deemed approved. The bill prohibits the casino gaming facility from operating until its standards are approved or deemed approved.

Under the bill, the commissioner must periodically review a casino gaming facility's compliance with state law and regulations governing such facilities.

Revisions

The bill prohibits casino gaming facilities from revising any previously approved operating and management standards, unless the commissioner has also approved the revision. A submitted revision not approved or rejected within 60 days after receipt is deemed approved.

Hearing and Appeals

If the casino gaming facility is aggrieved by an action by the commissioner, it may request in writing to have a hearing before the commissioner. The hearing and any appeal must be held according to the Uniform Administrative Procedure Act (UAPA).

4 & 10 — GAMING LICENSES FOR INDIVIDUALS AND BUSINESSES

The bill requires several individuals and businesses performing various tasks associated with the casino to be annually licensed by DCP. As with other current gaming licenses, applicants must submit to a state and national criminal history records check before being granted a license. Such checks must be conducted according to the state law governing criminal history record checks.

The bill requires anyone working on the gaming floor or in a gaming-related position in a casino gaming facility to hold a gaming employee license. The license fee is $40.

It also requires any person or business organization that (1) annually provides over $25,000 of nongaming goods or services in a casino gaming facility to hold a nongaming vendor license or (2) provides gaming services or gaming equipment to a casino gaming facility to hold a gaming services license. A nongaming vendor license fee is $250 and a gaming services license fee is $500.

Under the bill, no business organization, other than a shareholder in a publicly traded corporation, may exercise control in or over any of these gaming licensees unless the business organization holds a gaming affiliate license. The license fee is $250.

Application Form

The bill requires each applicant for any of these gaming licenses to submit a completed application on a DCP-prescribed form. The application forms may require information on:

The commissioner must, as soon as practicable after receiving a completed application, grant or deny the license application. All gaming licenses the commissioner issues are effective for up to one year from issuance and applicants must reapply annually on a DCP-prescribed form. Any gaming licensee who submits a renewal application may continue to be employed by a casino or provide services to a casino until the commissioner grants or denies the renewal.

Temporary Licenses

The bill allows the commissioner to issue a temporary license at the request of anyone who has submitted a gaming license application. He must require the applicant to submit to a state and national criminal history records check before granting a temporary license. The check must be conducted according to the state law governing criminal history record checks. A temporary license expires when the commissioner grants or denies the pending application.

Investigations

Under the bill, the commissioner may investigate any person or business organization that holds a gaming license at any time and may suspend or revoke such license for good cause after a hearing. Any person or business whose license is suspended or revoked or any applicant aggrieved by the commissioner's actions on an application may appeal the decision. All hearings and appeals must be done according to UAPA.

5 — AGE LIMIT

The bill prohibits people under age 21 from participating in any authorized game. And it, with one exception, limits entrance to the casino gaming floor to people over age 21. It allows DCP-licensed 18- to 20-year-old casino employees to enter the gaming floor as long as serving or handling alcoholic liquor is not part of their job.

6 — CASINO GAMBLING INVOLVEMENT BY DCP PERSONNEL PROHIBITED

As is currently the case for other authorized gambling (e.g., state lottery and off-track betting (OTB)), the bill prohibits the commissioner and DCP unit heads and employees, directly or indirectly, individually or as members of a partnership or shareholders of a corporation, from having any interest in (1) dealing in the casino or (2) owning or leasing any property or premises used by or for the casino.

The bill also prohibits the commissioner or unit heads from directly or indirectly playing any authorized game at the casino. And it allows the commissioner to adopt regulations prohibiting DCP employees from engaging, directly or indirectly, in any casino gambling activity in which such employees are involved because of their employment.

A “unit head” is any managerial employee with direct oversight of a legalized gambling activity.

7 — ENFORCEMENT REGULATIONS

The bill specifically gives the DCP commissioner the power to enforce and prevent violations of any provisions concerning the inspection of casino gaming facilities and insuring proper, safe, and orderly conduct at such facilities to protect the public against fraud or overcharge. The commissioner must adopt all necessary regulations and may do what is reasonably necessary to carry out such purpose.

8 — DISPLAY OF COMPULSIVE GAMBLING MATERIAL

By law, the DCP commissioner must, within available resources, prepare and distribute informational material to inform the public of compulsive gambling prevention, treatment, and rehabilitation programs.

Under the bill, the commissioner must require the casino gaming facility to display the information at the casino, just as other gaming licensees (e.g., OTB operator) must do under existing law.

9 — CASINO AUDITS

The bill requires the commissioner to annually require someone in DCP to perform a thorough audit of the casino gaming facility's books and records. It also allows him to audit the casino from time to time. The commissioner must keep the audit records on file at DCP. The casino gaming facility operators must permit access to their books and records for the audits. The casino must produce, at the commissioner's written request, any documents and information required for such audits. These same requirements apply under existing law to the OTB licensee.

11 — CASINO GAMBLING EXEMPT FROM GAMBLING BAN

The bill exempts gambling at the casino gaming facility from the state's general prohibition on unauthorized gambling.

By law, it is illegal to gamble in Connecticut unless the gambling (1) is specifically authorized by state law (e.g., charitable gaming) or other legally binding state agreements (e.g., Indian casino gaming) or (2) fits an exemption in the criminal laws (e.g., state lottery and OTB). It is also illegal to solicit or induce others to gamble, or be present when others are gambling. A violation of the gambling laws is a class B misdemeanor, punishable by imprisonment of up to six months, a fine of up to $1,000, or both (CGS 53-278b).

11 — ALLOWED GAMBLING DEVICES FOR TRAINING AND TESTING

The bill extends current law's exemption allowing the tribal casinos to use a gambling device to train an employee or for testing purposes to the new casino facility. As under current law, the casino gaming facility, or its agents, may use a gambling device only for these purposes if no money or other thing of value is paid to anyone operating the device.

As under current law and the bill, anyone receiving such training or who is testing the device may only use it during the training or testing. A casino gaming facility must notify DCP when it intends to have and use the devices for testing anywhere in the state.

12 — CASINO LIQUOR PERMIT

The bill expands the existing casino liquor permit to include the new casino gaming facility, thus allowing the new facility, upon receiving a permit, to sell alcoholic liquor at retail on the gaming floor.

By law, a casino permit allows the manufacture, storage, and bottling of beer to be consumed on the premises with or without food, provided the casino permittee annually produces at least 5,000 gallons of beer. Additionally, a casino permit, under certain conditions, allows the retail sale of alcoholic liquor in a guest bar located in hotel guest rooms. The annual fee is $2,650 plus $100 for each guest room with a guest bar (CGS 30-37k).

BACKGROUND

Casino Gaming at the Foxwoods and Mohegan Sun Casinos

Gambling at the Mohegan Sun Casino is conducted under a legally negotiated IGRA tribal-state compact. At the Foxwoods Casino, it is conducted under federal procedures, which are a legal substitute for an IGRA-negotiated compact. Both the compact and procedures are like federal regulations. As such, they supersede state law.

Moratorium on Video Facsimiles (e.g., Slot Machines)

Neither casino is explicitly authorized to operate video facsimile machines, which includes slot machines, under the compact or procedures. The federal procedures and the compact only authorize the Mashantucket Pequot and Mohegan tribes to operate slot machines pursuant to (1) an agreement between the tribe and state (e.g., MOU); (2) a court order; or (3) a change in state law that allows the operation of slot machines by any person, organization, or entity. Currently, both tribes are able to operate slot machines because of the MOUs each has with the state (see below).

Tribal-State MOUs

The Mashantucket Pequots and Mohegans have separate binding MOUs with the state that give the tribes the exclusive right to operate slot machines and other casino games in exchange for a monthly contribution of 25% of their gross slot machine revenue to the state. If the state enacts a law to permit any other person to operate slot machines or other casino games, the tribes would no longer need to pay the state any of their slot revenue.

Attorney General Opinion

The attorney general has raised a number of issues about the possible impact of passing legislation granting the two tribes the exclusive right to jointly operate an off-reservation casino (AG Opinion 2017-02). Such legislation could (1) affect the existing MOUs so the tribes no longer needed to make payments to the state, (2) lead to third-party challenges on the casino-licensing process, and (3) allow additional tribes that gain federal recognition to build new casinos.

The attorney general, among other things, pointed out that a business entity, although owned solely by the tribes, could constitute a separate entity. Allowing this separate entity to operate a casino could automatically end the slot moratorium and relieve the tribes of their obligation to pay the state.

Additionally, the attorney general also wrote that there is no guarantee that the DOI would approve any amendment and it is unclear as to the scope of the secretary's review. He stated that if DOI were to follow past practice, it would likely review the proposed amendment without looking at existing MOU provisions. But the attorney general reiterated that there is no guarantee that DOI will follow past practices and also pointed out that there has been a change in presidential administrations.

Pending Federal Court Case

After the enactment of SA 15-7, MGM Resorts International filed a federal lawsuit challenging the constitutionality of the Special Act on the grounds it violated both the Equal Protection and Commerce clauses of the Constitution (MGM Resorts v. Malloy et al., 3:15- cv-1182-AWT). The case was dismissed in district court because MGM had not suffered any real injury, and lacked standing to sue, because the Special Act did not authorize a casino, but only a request for proposal.

Upon dismissal, MGM appealed to the Second Circuit Court of Appeals, which heard arguments, but has not issued a decision (MGM Resorts v. Malloy et al., 0:16-cv-02158).

Legislative Approval for Tribal-State Gaming Compacts

Under existing state law, both houses of the legislature must approve a tribal-state compact (CGS 3-6c).

By law, the governor must file a tribal-state compact or amendment with the Senate and House clerks within 10 days after it is executed. If filed during a regular session, the legislature has until its adjournment to approve or reject it. If not filed during a regular session, the legislature has until adjournment of (1) the next regular session or (2) a special session convened to take action on the measure. If the legislature does not act by adjournment, the compact or amendment is rejected and is not implemented.

If the governor files a compact or amendment within 30 days of the end of a regular session, the legislature can either (1) convene in a special session and vote within 30 days or (2) vote on it within the first 30 days of its next regular session. The legislature has until the end of either 30 day-period to vote before the measure is considered rejected.

Federal Approval of Compact or Procedure Amendments

Federal regulations require the secretary of the Interior through the Bureau of Indian Affairs to approve amendments to compacts or gaming procedures (25 C.F.R. 293.4(b) and 25 C.F.R. 291.14). Upon the submission of the amendment, the Department may consider the entirety of the relationships between the tribes and the state, including the MOUs.

Additionally, the secretary's decision in any proposed amendment may potentially be subject to a third party challenge on the grounds the proposed amendment violates IGRA or other law (Amador County v. Salazar, 640 F.3d 373 (D.C. Cir. 2011)).

Related Bill

sHB 7239, reported favorably by the Public Safety and Security Committee, requires DCP to create a request for proposals process to qualify an entity to develop a casino gaming facility in the state.

COMMENT

Public Emolument

The bill could conceivably raise constitutional questions in that it appears to provide what may amount to an exclusive public emolument to the Mashantucket Pequots and the Mohegans. Article First, Section 1 of the Connecticut Constitution provides to operate off-reservation casinos in the state: “All men when they form a social compact, are equal in rights; and no man or set of men are entitled to exclusive public emoluments or privileges from the community.” The Connecticut Supreme Court has held that this constitutional provision invalidates state laws that grant emoluments or privileges to individuals unless there is a valid public purpose (Commission of Public Works v. City of Middletown, 53 Conn. App. 438, cert. denied 250 Conn. 923 (1999); Chotkowski v. State, 240 Conn. 246 (1997); City of Shelton v. Commissioner of Department of Environmental Protection, 193 Conn. 506 (1984)).

The Antitrust Act

The Connecticut Antitrust Act prohibits any contract or conspiracy to monopolize, or attempt to monopolize, a part of trade (CGS 35-27). The bill could conceivably be construed to have anticompetitive effects in violation of this law.

COMMITTEE ACTION

Public Safety and Security Committee

Joint Favorable Substitute

Yea

20

Nay

5

(03/15/2017)

TOP

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 38.08% of payroll in FY 18 and FY 19.