OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sSB-957

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


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.

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.