PA 17-89—sSB 957
Public Safety and Security Committee
AN ACT CONCERNING THE REGULATION OF GAMING AND THE AUTHORIZATION OF A CASINO GAMING FACILITY IN THE STATE
SUMMARY: Once certain conditions are met, this act authorizes the operation of an off-reservation commercial casino gaming facility (hereafter referred to as the “new casino”) in East Windsor, Connecticut, subject to regulation by the Department of Consumer Protection (DCP). The act gives MMCT Venture, LLC, a company jointly owned and operated by the Mashantucket Pequot and Mohegan tribes, the exclusive right to conduct authorized games (i.e., games of chance) at the facility. Under the federal Indian Gaming Regulatory Act (IGRA), the two tribes currently operate the Foxwoods and Mohegan Sun casinos, respectively, on their reservations (see BACKGROUND).
For the authorization to operate the new casino to take effect, the act requires that several conditions be met, including the following: (1) the current gaming agreements between the tribes and the state must be amended to provide that the authorization of an off-reservation casino does not terminate the existing video facsimile (e.g., slots) moratorium or payments to the state, and (2) the amendments must be approved by the state legislature and federal Department of the Interior (DOI) (see BACKGROUND).
The act requires MMCT to contribute $300,000 annually to the Connecticut Council on Problem Gambling by the date the new casino is operational. It also requires the company to (1) pay the state 25% of the gross gaming revenue from both the video facsimile games (e.g., slots) and all other authorized casino games (e.g., table games). Of the 25% from the video facsimile games, the act requires $4.5 million to be annually dispersed as grants to specific municipalities in the vicinity of the new casino: East Hartford, Ellington, Enfield, Hartford, South Windsor, and Windsor Locks. It also requires the facility to annually pay an assessment that covers DCP's regulatory costs.
The act requires DCP to adopt implementing regulations to ensure the proper, safe, and orderly conduct of casino gaming. Among other issues, the regulations must address security at a casino, audits and record keeping, and personnel training. The act also requires each casino gaming facility to develop management and operating standards, subject to DCP approval.
Lastly, the act allows East Windsor to fix the property tax assessment for real property, property improvements, and personal property used in connection with a casino gaming facility.
The act also makes minor, technical, and conforming changes.
EFFECTIVE DATE: Upon passage
§ 14 — CASINO AUTHORIZATION
The act authorizes MMCT Venture, LLC, subject to certain conditions (described below) to operate a casino at 171 Bridge Street, East Windsor, Connecticut and conduct authorized gaming at the facility. (The act could conceivably raise constitutional questions, including whether providing an exclusive right to the Mashantucket Pequots and the Mohegans violates the equal protection and commerce clauses of the U.S. Constitution.)
Under the act, “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 facsimile game, and any other game of chance the DCP commissioner authorizes. 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 IGRA.
Under the act, MMCT is a limited liability company (LLC) 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 in it. If MMCT ceases to be an LLC owned in this manner, the act's authorization to operate the off-reservation casino is void.
Conditions to be Met Before Authorization is Effective
Before the authorization is effective, the act requires the governor to enter into agreements with the tribes to amend the Mashantucket Pequot federal procedures, the Mohegan compact, and both tribal memoranda of understanding (MOUs). The MOUs give the tribes the exclusive right to operate video facsimile machines and casino gaming in Connecticut in exchange for 25% of the gross operating revenue from the video facsimile machines.
Amendments to Procedures and Compact. The amendments to the compact and procedures 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).
Amendments to MOUs. The amendments to the MOUs must include a provision that MMCT's authorization to conduct authorized casino games in the state does not relieve the tribes of their obligation to contribute a percentage of the gross operating revenues of video facsimile games to the state under the MOUs.
Legislative and Federal Approval. Upon the tribes and state reaching an agreement on the amendments to the procedures, compact, and MOUs, the amendments must be approved by the state legislature under the statutory process for approving tribal-state compacts (see BACKGROUND).
The amendments must also be approved or deemed approved by the DOI secretary, pursuant to IGRA and its implementing regulations. If a court overturns DOI's approval in a final judgment that is not appealable, the act's authorization ceases to be effective.
Waiver of Sovereign Immunity. The governing bodies of the tribes must enact resolutions providing that if MMCT fails to pay any fees or taxes due to the state, then the tribes, as members of MMCT, waive the possible defense of sovereign immunity with respect to any action or claim the state brings against them as members of MMCT, to the extent such action or claim is allowed against a member of an LLC under state law to collect any fees or taxes, while preserving any other defense available to the tribes. The resolutions must also provide that the venue for such action or claim must be the Hartford judicial district.
§ 15 — PAYMENTS
The act requires MMCT, within 30 days after being authorized to conduct authorized games at the new casino, 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 new casino conducts authorized games.
Under the act, within 30 days after the new casino begins to operate and monthly thereafter, MMCT must also pay the state 25% of the gross gaming revenue from:
1. video facsimile games, $4.5 million of which must be annually deposited into the municipal gaming account for municipal grants (see § 16 below) and the remainder deposited into the General Fund, and
2. all other authorized casino games, with 15% deposited into the General Fund and 10% into the statewide tourism marketing account.
The act also requires MMCT, by the date the new casino is operational and annually thereafter, to contribute $300,000 to the Connecticut Council on Problem Gambling.
Gross Gaming Revenue
Under the act, “gross gaming revenue” means the total of all sums a casino actually received from gaming operations after subtracting the amount paid as winnings to casino patrons. This total does not include any promotional gaming credit. For these purposes, the winnings paid to patrons do not include the cash equivalent value of any merchandise or thing of value included in a jackpot or payout.
§ 6 — REGULATORY COSTS
The act requires each casino gaming facility to pay DCP for the costs the agency incurs to regulate them.
Beginning in any fiscal year that a casino is authorized to conduct casino games and before September 30 each fiscal year thereafter, the act requires the DCP commissioner to:
1. estimate, after consulting with each casino gaming facility, the reasonable and necessary costs DCP will incur the next fiscal year to regulate the casino gaming facilities and
2. assess each casino gaming facility's proportional share of such estimated costs according to its annualized share of the gross gaming revenue of all casino gaming facilities in the prior fiscal year, if any. (The act authorizes only one casino gaming facility.)
Under the act, DCP's estimated regulatory costs cannot exceed the estimated expenditures the commissioner transmits to the Office of Policy and Management (OPM) as part of its budget estimates. The assessment for any fiscal year must be proportionally (1) reduced by the amount of any surplus from the prior fiscal year's assessment, which must be maintained according to the act's requirements, or (2) increased by the amount of any deficit from the prior fiscal year's assessment.
Under the act, each casino must pay its assessment by the date the commissioner specifies, provided that such date is at least 30 days after the assessment. The commissioner must remit the funds to the state treasurer.
State Gaming Regulatory Fund
The act establishes a new “State Gaming Regulatory Fund” and requires the state treasurer to use the fund to pay the costs DCP incurs to regulate casino gaming facilities. The fund must contain any money the law requires or allows to be deposited into it. The treasurer must deposit the amounts she receives from the casino gaming facilities as set forth above into the fund and hold it separate and apart from all other money, funds, and accounts. Investment earnings credited to the fund's assets must become part of the fund's assets. Any balance remaining in the fund at the end of any fiscal year must be carried forward to the next fiscal year.
The act requires the comptroller, by September 30 each year, to calculate the actual reasonable and necessary costs incurred by DCP to regulate casino gaming facilities during the prior fiscal year. The treasurer must set aside within the fund the amounts received in excess of the actual costs. Such excess amounts must be considered surplus for the purposes of the assessment calculation described above.
Under the act, any casino gaming facility aggrieved by an assessment for regulatory costs may request a hearing before the DCP commissioner within 30 days after such assessment. The commissioner must hold an appeals hearing within 30 days after receiving the request. The hearing must be held according to the Uniform Administrative Procedure Act (UAPA).
§ 16 — MUNICIPAL GAMING ACCOUNT
The act establishes the “municipal gaming account” as a separate, nonlapsing account within the Mashantucket Pequot and Mohegan Fund. The account must contain any money required by law to be deposited into it. OPM must use the account funds to provide annual grants to specified municipalities.
On and after the date the OPM secretary finds that a minimum of $4.5 million has been deposited into the account, OPM must provide annual grants of $750,000 to (1) Ellington, Enfield, South Windsor, and Windsor Locks and (2) the distressed municipalities of East Hartford and Hartford. This amount must be reduced proportionately in any year that the total of the grants exceeds the funds available.
§ 2 — GAMING REGULATIONS
The act requires the DCP commissioner to adopt regulations for the administration of a casino within 12 months after the effective date of any authorization of such a 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 gaming.
The regulations must include the following:
1. minimum accounting standards;
2. minimum security procedures, including video monitoring of the facilities;
3. approved hours of operation for gaming and nongaming activities;
4. procedures governing the manufacture, sale, lease, and distribution of gaming devices and equipment;
5. procedures for casino patrons to recover winnings;
6. procedures governing how gross gaming revenue is calculated and reported;
7. requirements for regular auditing of the casino's financial statements;
8. procedures for cash transactions;
9. procedures for maintaining lists of persons banned from the casino and security measures to enforce such bans;
10. standards for providing complimentary goods and services to casino patrons;
11. minimum training standards for casino employees;
12. procedures for submitting casino management and operating standards to the commissioner; and
13. requirements for information and reports from the facility to enable effective auditing of casino gaming operations.
The act allows the casino gaming facility to operate under its own standards of operation and management until DCP regulations are adopted, provided the facility's standards are approved by the commissioner (see § 3 below).
§ 3 — OPERATIONS AND MANAGEMENT STANDARDS
Under the act, each casino must submit to the DCP commissioner a description of its operating and management standards for all gaming operations.
The description must include:
1. accounting controls to be used in casino gaming operations;
2. job descriptions for all casino gaming positions;
3. procedures for securing chips, cash, and other cash equivalents used in authorized games;
4. procedures for keeping casino patrons safe and secure;
5. procedures and rules for conducting authorized games;
6. a certification by the casino's attorney that the submitted operation and management standards conform to state law and regulations for casino gaming;
7. a certification by the casino's chief financial officer or an independent auditor that the submitted operation and management standards (a) provide adequate and effective controls, (b) establish a consistent overall system of procedures and administrative and accounting controls, and (c) conform to generally accepted accounting principles; and
8. any other standards the commissioner requires.
The act requires the DCP commissioner to approve or reject the standards within 60 days of receipt. Standards not approved or rejected within that timeframe are deemed approved. The act prohibits the casino gaming facility from operating until its standards are approved or deemed approved.
Under the act, the commissioner must periodically review a casino gaming facility's compliance with state law and regulations governing such facilities.
The act prohibits casino gaming facilities from revising any operating and management standards previously approved or deemed approved 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 a casino gaming facility is aggrieved by an action of the commissioner under these provisions, it may request a hearing before the commissioner. The commissioner must hold the hearing according to the UAPA.
§§ 4 & 11 — GAMING LICENSES FOR INDIVIDUALS AND BUSINESSES
The act requires several individuals and businesses performing various tasks associated with the casino to be annually licensed by DCP. As with other existing gaming licenses, the applicant 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 records checks.
The act 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 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. The nongaming vendor license fee is $250 and the gaming services license fee is $500.
Under the act, no business, other than a shareholder in a publicly traded corporation, may exercise control in or over any of these licensees unless the business holds a gaming affiliate license. The license fee is $250.
The act requires each applicant for any of these licenses to submit a completed application on a DCP-prescribed form. The application forms may require information on the following: (1) financial standing and credit; (2) moral character; (3) criminal record, if any; (4) previous employment; (5) corporate, partnership, or association affiliation; and (6) ownership of personal assets. The form may also require any other information the commissioner deems pertinent.
As soon as practicable after receiving a completed license application, the commissioner must grant or deny the license. All such licenses the commissioner issues are effective for up to one year from issuance, and applicants must reapply annually on a DCP-prescribed form. Any licensee who submits a renewal application may continue to be employed by a casino or provide services to a casino until the commissioner denies the renewal.
The act allows the commissioner to issue a temporary license at the request of anyone who has submitted such a license application. She must require the applicant to submit to state and national criminal history records checks before granting him or her a temporary license. The checks 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.
Under the act, the commissioner may investigate any licensee at any time and may suspend or revoke any 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 the UAPA.
§ 5 — AGE LIMIT
The act prohibits people under the minimum age required to purchase alcohol (i.e., under age 21) from participating in any authorized game. It limits entrance to the casino gaming floor to people age 21 or older, with one exception: 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.
§ 7 — 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 act 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 gaming facility or (2) owning or leasing any property or premises used by or for the facility.
The act also prohibits the commissioner and unit heads from directly or indirectly playing any authorized game conducted at the casino. Existing law allows the commissioner to adopt regulations prohibiting DCP employees from engaging, directly or indirectly, in any legalized gaming in which such employees are involved because of their employment.
By law, a “unit head” is any managerial employee with direct oversight of a legalized gambling activity.
§ 8 — ENFORCEMENT REGULATIONS
The act requires the DCP commissioner to adopt regulations concerning (1) the inspection of casino gaming facilities and (2) proper, safe, and orderly conduct at such facilities.
§ 9 — 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 act, the commissioner must require the casino gaming facility to display the information at the casino, just as other gaming licensees (e.g., OTB operators) must do under existing law.
§ 10 — CASINO AUDITS
The act requires annual DCP audits of the casino's books and records. The commissioner must keep the audit records on file at DCP. Casino gaming facility operators must permit access to their books and records for the audits and 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.
§ 12 — CASINO GAMBLING EXEMPT FROM GAMBLING BAN
The act exempts gambling at the casino 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 is a class B misdemeanor (see Table on Penalties) (CGS § 53-278b).
§ 12 — GAMBLING DEVICES ALLOWED FOR TRAINING AND TESTING
As under existing law applicable to the tribal casinos, the act allows a casino gaming facility, or its agents, to use a gambling device at any location in the state, but only for the purpose of training an employee or for testing purposes, and only if no money or other thing of value is paid to anyone operating the device.
Under existing law and the act, anyone receiving such training or testing the device may 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.
§ 13 — CASINO LIQUOR PERMIT
The act 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 also allows the permittee to manufacture, store, and bottle 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).
§ 17 — EAST WINDSOR FIXED PROPERTY TAX ASSESSMENT
The act allows East Windsor, with its board of selectmen's approval, to fix the property tax assessment for up to 10 years for real property, improvements, and personal property owned, leased, or used in connection with a casino gaming facility. (Fixing the assessment freezes the property's taxable value for a set period, thus allowing its owner to improve the property without paying taxes on the improvement's value.) Improvements eligible for the fixed assessment include the rehabilitation of any structure that exists upon the act's passage and is rehabilitated for use by a casino gaming facility.
Under the act, East Windsor may, by the affirmative vote of a majority of the town's board of selectmen, enter into a written agreement with any party owning or proposing to acquire an interest in real property in the town that fixes the assessment of (1) any real property that is the subject of the agreement, and all improvements that are or will be constructed on the property, and (2) all taxable personal property, whether owned or leased, to be located on such real property.
Under the act, any such agreement or any modification, renewal, or extension cannot last for more than 10 years. The agreement may provide that the owner or lessee of such personal property is not required to submit a personal property declaration in East Windsor while the agreement is in effect.
Casino Gaming at the Foxwoods and Mohegan Sun Casinos
Gambling at the Foxwoods Casino is conducted under federal procedures, which are a legal substitute for an IGRA-negotiated compact. Gambling at the Mohegan Sun Casino is conducted under a legally negotiated IGRA tribal-state compact. Both the compact and procedures are like federal regulations. As such, they supersede state law.
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 before the end of a regular session, the legislature can either (1) convene 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.
Moratorium on Video Facsimiles (e.g., Slot Machines)
The federal procedures and the compact authorize the tribes to operate video facsimile machines only 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 video facsimile machines by any person, organization, or entity. Currently, both tribes are able to operate video facsimile machines because of the MOU each has with the state (see below).
The Mashantucket Pequots and Mohegans have separate binding MOUs with the state that give the tribes the exclusive right to operate video facsimile machines and other casino games in exchange for a monthly contribution of 25% of their gross video facsimile machine revenue to the state. Under the terms of the current MOUs, if the state enacts a law to permit any other person to operate video facsimile machines or other casino games, the tribes would no longer need to pay the state any of their video facsimile revenue.
PA 17-209, among other things, establishes an Advisory Council on Large Entertainment Venues to coordinate large entertainment events at certain facilities and address other issues related to operating such facilities. The council includes representatives from large Connecticut entertainment facilities and, upon the authorization of a casino gaming facility, representatives from the tribes.