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.

As Amended by Senate "A" (LCO 7686)

Senate Calendar No.: 173


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Resources of the General Fund

GF - Potential Revenue Impact

See Below

See Below

Consumer Protection, Dept.

State Gaming Regulatory Fund - See below

See Below

See Below

Consumer Protection, Dept.

GF - Potential Revenue Impact

See Below

See Below

Consumer Protection, Dept.

GF - Potential Cost

See Below

See Below

State Comptroller - Fringe Benefits1

GF - Potential Cost

See Below

See Below

Department of Economic & Community Development

GF – Statewide Tourism Marketing Acct. - Revenue Impact

See Below

See Below

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 a 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.

State Gaming Regulatory Fund - See below

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

Department of Economic & Community Development

GF – Statewide Tourism Marketing Acct. - Revenue Impact

See Below

See Below

See Below

Note: GF=General Fund

Municipal Impact:

Section 16 establishes the municipal gaming account as a separate, nonlapsing account within the Mashantucket Pequot and Mohegan Fund. It annually distributes $750,000 each to Ellington, Enfield, South Windsor, Windsor Locks, Hartford, and East Hartford, beginning when the casino is operative. The bill makes this funding subject to proration if deposits into the account are insufficient to make payments.

As the bill creates a separate account within the Pequot fund for this money, there is no impact on Pequot grants to any other towns.

Section 17 allows East Windsor to fix the assessments of any real or personal property used in connection with a casino gaming facility. This precludes any increase in the town's grand list that would occur due to the development of such property.

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. Section 15 of the bill requires any such casino to pay the state 25% of gross gaming revenue from all authorized casino games.2 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 bill creates licensure categories applicable to the casino and establishes Department of Consumer Protection (DCP) oversight of the casino. Revenues and costs would be expected from licensure. The casino owner would pay for expected regulatory costs through a new dedicated State Gaming Regulatory Fund.

Sections 4 and 11 of the bill result in potential 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.

The State Gaming Regulatory Fund, established in Section 6, is anticipated to limit the state's fiscal impact from DCP enforcement at this casino. By October 30 annually, the casino would be expected to pay into the fund the amount of expected DCP enforcement costs for the next fiscal year, and the fund would be used to pay such costs. The bill contains provisions to ensure that, over a multi-year horizon, the casino would be paying full DCP enforcement costs. To the extent fund payments exceed or fall short of actual enforcement costs, there may be a discrete fiscal year impact to the state; the following year's casino payment into the fund would be adjusted accordingly. In addition to the fund, the casino owner would be required by Section 15 to pay the state $1 million to be credited against future revenue-sharing as described above.

The costs of DCP licensure and regulation, including gaming and liquor enforcement, are expected to total $3,592,426 in the first year of casino operation and $3,525,692 annually thereafter. To administer gaming-related licensure as well as enforce gaming laws at the casino, DCP would require 31 personnel at a total annual cost of $1,858,261 in salary and $707,626 in fringe benefits. Casino liquor enforcement at the casino would require one new Liquor Control Supervising Casino Agent and six new Liquor Control Casino Agents at a total annual cost of $504,494 in salary and differential pay, and $192,111 in fringe benefits. Other expenses and equipment needed for these DCP personnel to carry out their enforcement duties are anticipated to total $329,934 in the first year of casino operation and $263,200 annually thereafter.

DCP would also need to adopt regulations and review standards of operation and management under numerous sections of the bill, which the department 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 under Section 15. As this organization is a nonprofit, there is no state or municipal fiscal impact.

Casino Liquor Permit. Section 13 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.

SENATE “A”

Senate “A” strikes the underlying bill and the associated fiscal impact. The amendment: (1) results in a revenue gain to the six municipalities that would receive annual funds from the new municipal gaming account, (2) limits the state's regulatory costs for the casino by establishing the State Gaming Regulatory Fund as described above, and (3) clarifies gaming revenue sharing with the state.

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.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does 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.

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.

2 The bill specifies that 10% of gross gaming revenue from table games be deposited in the State-wide Tourism Marketing Account, 15% of gross gaming revenue from table games be deposited in the General Fund, and 25% of gross gaming revenues from slot machines be distributed between the municipal gaming account and the General Fund.