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Connecticut gaming report faults state’s distribution of casino revenue

HARTFORD, Conn. – A comprehensive study of gambling in Connecticut reports that Mohegan Sun and Foxwoods Resort Casino pumped almost $5 billion directly into the state and municipal governments since 1992, but also found that those funds were not distributed equitably, largely because the state has glommed a bigger share of the revenue over the years.

“Of the various forms of legalized gambling in Connecticut, Indian gaming has had the most pronounced impact,” the report states. “The two destination casino resorts, Foxwoods Resort Casino and Mohegan Sun, attracted 24 million visits between them in 2007. They draw revenues into Connecticut from out of state that, in turn gets redistributed to create even more jobs and profits – all of which leads to the consumption of goods and services from other businesses and industries. Such a scenario is vital to the establishment of a strong and competitive economic base.”

The almost 400-page report, called “Gambling in Connecticut: Analyzing the Economic and Social Impacts” was conducted by Spectrum Gaming Group for the state’s Division of Special Revenue, and released at the end of June. Spectrum’s mission was to conduct a comprehensive analysis of the social and economic impacts of all forms of legal gaming in Connecticut.

The study found that the two casinos are responsible directly and indirectly for $1.2 billion worth of personal income in Connecticut.

According to the report, “Since 1992, they have accounted for about 12 percent of the net new jobs growth in Connecticut.”

The casinos contribute 25 percent of their gross slot machine revenue to the state and business has increased hugely since Foxwoods opened. In fiscal year 1993, when the Mashantucket Pequot Tribal Nation first put slot machines in Foxwoods, the state’s take was $30 million. In fiscal year 2008, that figure had ballooned to $411.4 million with expansions and the addition of Mohegan Sun.

“To put that amount in context, the state’s corporate income tax – which collects revenue from every corporation in the state – generates $750 million in revenue. The Mashantucket and Mohegan Fund consisting of just two entities, generate about 60 percent of what the corporate income tax generates. Casino revenue was the fifth highest source of revenues of Connecticut in FY 2007,” the report states.

Through 2008, the two casinos have contributed $4.87 billion to the state and 169 municipalities; the state received about $3.3 billion and the towns around $1.6 billion.

The casinos have boosted tourism in southeastern Connecticut; nearly 300,000 people visited the $193 million Mashantucket Pequot Museum and Research Center in the last three years ending in September 2008.

The casinos’ purchases of goods and services benefit vendors in 90 percent of the 169 municipalities.

In 2007, the two casinos directly employed more than 21,000 people, for an annual payroll of almost $700 million. The total number of direct, indirect and induced jobs is around 30,000.

While the casinos have had a tremendously positive impact on the state’s economy, the report also documents negative social and economic impacts to the communities within a 10-mile radius of the casinos, among them increased traffic, an increase in drunk driving, increases in education costs to handle the influx of the non-English speaking children of immigrant workers attracted to casino jobs, substandard housing, embezzlement and problem gambling.

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“From the day slot machine gaming began in 1993, towns close to the casinos bitterly complained that the formula to distribute the Mashantucket Pequot and Mohegan Fund failed to consider local gaming-related impacts,” the report states.

The legislature has increased funding to some of the nearby towns in recent years, but local officials say it’s not nearly enough and it’s dependent on the state’s fiscal health.

The direct dollar amount from Indian gaming flowing into the state’s general fund increased from $24 million in fiscal year 1994 to $340 million in 2007, according to the report. But the amount allocated for distribution to the towns has stayed relatively constant during those years. In fiscal year 2007, the 169 municipalities got $86.3 million, $2 million less than they received in 1994.

In other words, the state has kept more and more of the gaming revenue over the years. In 1994, the first full years of Indian gaming, the General Assembly allocated 78 percent of the gaming revenue to the towns; by 2007, that figure had plunged to 21 percent.

“In interviews with Spectrum Gaming, municipal officials throughout Connecticut continually emphasize the need to restore the funding formula to a more balanced level to enable municipal officials to reduce property taxes,” the report reads. “The expectation was that the state’s 169 municipalities would receive the lion’s share of the slot contribution funds when then Governor Lowell Weicker entered into a memorandum of Understanding with the Mashantucket Pequot Tribal Nation that permitted. … slot operations at Foxwoods.”

The report’s authors noted that elected officials and state agencies recognize the need for the comprehensive analysis of gaming in the state in order to develop and implement policies to benefit the state’s citizens.

But the state is hampered in those efforts by what the report calls “factors beyond its control,” although those factors include gaming compacts the state agreed to, which cannot be re-negotiated unless both parties agree to do so, and state policies, such as the decision to eliminate county governments, which limit the ability to address issues on a regional basis.

“The economic and social impacts listed in this report result from a variety of policies made, and those that were not made. These policies – whether developed in recent months, or 50 years ago – have consequences. “Spectrum suggests that, if this report is to have value going forward, policymakers should heed that cautionary note,” the report states.

The report suggests the state address the negative impacts that it details, but notes that “the positive impacts of the casinos should not and cannot be overlooked.”

They include tens of thousands of jobs, $4.87 billion to the state and towns, as well as millions more in contributions to charitable causes in southeastern Connecticut.

“Gaming policies require significant investments, such as improved roadways, employment training and mass transit that would improve access between pockets of unemployment and job opportunities. It is incumbent on policymakers to identify and develop a statewide policy that maximizes the benefits of gaming in Connecticut and minimizes as much as possible the negative impacts,” the report states.

Bruce “Two Dogs” Bozsum, chairman of the Mohegan Tribal Council, said the council is still reviewing the report. “On first impression, we find flaws in their research that should be the subject of further discussion.”

The Mashantucket Pequot Tribal Nation did not respond to a request for comment by press time.