Gov. Dannel P. Malloy Tuesday signed controversial legislation that will allow the tribal operators of Foxwoods and Mohegan Sun to open the state's third casino in East Windsor.

"Over the years, our state has maintained a long-standing partnership and compact with the Mohegan and Mashantucket Pequot tribal nations, who employ thousands of Connecticut residents at their casinos," Malloy said. "Make no mistake about it — the legislation that I signed today is about jobs for the residents of Connecticut, and securing those jobs in our state."

The tribes chose East Windsor as their preferred location for a satellite casino intended to blunt the competitive threat of a $950 million casino and entertainment complex now under construction in Springfield by MGM Resorts International. MGM has vowed to fight the casino expansion in court.

Malloy has not yet signed a bill that expands off-track betting and sets up the framework for sports betting should it become legal. The legislation was crucial for getting the casino expansion legislation through the state House of Representatives.

An expansion led by a joint venture of the Mashantucket Pequots and Mohegans — MMCT Venture — would help preserve jobs tied to the state's gambling industry and stop further erosion of the 25 percent cut of slot revenue the state receives each month from Foxwoods and Mohegan Sun, supporters said.

Malloy had indicated that he would only support casino expansion led by the tribes if legislators chose to back the state's first casino off a tribal reservation. Lobbying on both sides of the issue was intense, with millions spent in the battle.

The legislation signed by Malloy provides, among other things, for the state to receive 25 percent of slot revenue and 25 percent of revenue from all other games at the third casino, 10 percent going to efforts to boost tourism in Connecticut.

While the tribes celebrated Tuesday's signing, MGM said it would challenge the constitutionality of the state giving preferential treatment to the tribes.

Through hours of legislative hearings in the regular session, MGM argued that the process should be open to proposals from all potential operators. Such a competition, MGM said, would produce the best deal for Connecticut and bring the most funds to state coffers, especially as Connecticut deals with a budget crisis.

Uri Clinton, senior vice president and legal counsel for MGM Resorts, said the state could lose out on estimated $100 million a year by going with the tribes and has no assurances that Foxwoods and Mohegan Sun will not cut their workforces.

MGM has said that Fairfield County would generate more casino revenue for the state. MGM said it was interested in Connecticut but did not present a specific proposal and is prohibited from establishing a competing venue within 50 miles of Springfield.

Tuesday's signing comes two years after the legislature first voted to allow the tribes to seek a location for a third casino. The selection was fraught with delays, with East Windsor being eliminated in one round of proposals only to be chosen in a second round.

MGM went to court after lawmakers backed the search by the tribes. Last week, a federal appeals court sided with the state, but the ruling also suggested that signed legislation with a specific location may strengthen MGM's case that the state wrongly denied it a chance to compete.

The tribes have said they will press ahead with construction on the site of an abandoned movie theater visible from I-91 even in the face of a lawsuit. An injunction against construction, however, would stop them, legal experts say.