A federal appeals court dealt another setback Wednesday to efforts by MGM Resorts International to open a Connecticut casino, but hinted that the setbacks may prove temporary because of fast-paced changes taking place in the state's legalized gambling industry.
The Second U.S. Circuit Court of Appeals upheld a lower court's dismissal of MGM's claim that the state wrongly denied it a chance to compete for a third Connecticut casino when it effectively limited the competition to the operators of Foxwoods and Mohegan Sun.
In the appeal, MGM — developer of a $950 million casino and entertainment complex in Springfield — argued it was put at a disadvantage by a 2015 law that allowed only the Mashantucket Pequots and Mohegans to search for a site and seek final approval from the legislature.
The appeals court, in a decision Wednesday, said MGM's claim of having been kept out of the competition was premature because the company could not show at the time the case was argued that it had specific development plans for the state.
But the court suggested in a footnote that movement in the gambling industry — including legislation that would allow a joint enterprise by Foxwoods and Mohegan Sun to open a third casino — may strengthen MGM's case that the state wrongly denied it a chance to compete.
"Our conclusion does not rule out the possibility that MGM's alleged harm may at some future point become sufficiently imminent," the appeals court said. "That possibility, though, is at this time only hypothetical and we therefore need not address it."
Earlier this month, the legislature approved East Windsor as the site of a third casino that would be developed by a joint venture of the tribes, MMCT Venture. Gov. Dannel P. Malloy has yet to sign the legislation but has indicated support for it.
MGM reacted swiftly to Wednesday's decision. The casino giant said that if Malloy signs the legislation, it believes the appeals court has signaled it would have a strong case for challenging the law.
The legislation "violates the equal protection clause and commerce clause of the United States Constitution by authorizing two identified tribes — and no one else — to operate Connecticut's first commercial casino," said Uri Clinton, senior vice president and legal counsel for MGM Resorts. "The attorney general himself has recognized that MGM's likelihood of success is not at all insubstantial."
A spokesman for Attorney General George Jepsen declined to comment Wednesday, saying the office was still reviewing the decision. A Malloy spokesman referred calls to Jepsen's office.
Meanwhile, a statement from MMCT's leaders — Rodney Butler, chairman of the Mashantucket Pequot Tribal Council, and Kevin Brown, chairman of the Mohegan Tribal Council — praised the decision of the court.
"Our focus remains on savings the thousands of jobs and millions in state tax revenue that would have been lost had the legislature not passed Senate Bill 957," they said. "We look forward to developing an exciting new casino and continuing to build our state's economy in the weeks and months ahead."
The third casino is aimed at blunting the competitive effects of MGM's Springfield complex scheduled to open in fall 2018. The expansion was among the most controversial issues in this year's regular legislative session. The state draws 25 percent of slot revenue from Foxwoods and Mohegan Sun annually — $264 million this year — but that number has been declining amid intensifying casino competition in surrounding states.
Supporters also warned that thousands of jobs tied to the casino industry could be lost if Connecticut did not answer MGM's challenge in Springfield.
Some legislators argued the state should open up the process and seek more proposals, in addition to what MMCT was offering. MGM said it was interested in the Connecticut market but argued that Fairfield County, not north central Connecticut would be the most lucrative location for driving revenue to state coffers.
MGM seized on the footnote in the appellate decision, predicting that the legislation giving the tribes a third casino ultimately will buttress its argument about special treatment.
If Malloy signs the new legislation, MGM said the "hypothetical" immediately becomes reality.
"We view today's ruling as nothing more than a matter of timing and remain undeterred in our goal of having the opportunity to compete in Connecticut," said MGM's Clinton.
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