Attorney General George Jepsen has concluded that the legal risks in authorizing a new third casino in the state of Connecticut are "not insubstantial." He issued his formal opinion to Governor Dannel Malloy on Monday.
The only casinos currently in Connecticut are on tribal land, and each subject to a compact with the state that was approved by the federal Department of the Interior. Under those agreements, Foxwoods and Mohegan Sun each pay 25 percent of their slots revenues to Connecticut.
The tribes now want to jointly open a third casino in East Windsor, off of their reservations. There’s been speculation that might void the state’s agreement with the tribes and put their regular monthly payments to the general fund at risk.
There’s also the possibility that allowing the tribes exclusive permission to begin commercial gaming in the state might be judged unconstitutional because other gaming companies weren’t allowed to bid.
Jepsen’s newly issued opinion says that there isn’t a whole lot of clear legal guidance in the area, and Connecticut’s situation is unique.
But given those caveats, Jepsen said if the legislature gives the go-ahead to the East Windsor facility, there is an increased likelihood a court could consider a constitutional challenge to the no-bid process.
The AG's office successfully argued for the dismissal of a lawsuit filed by MGM International last year, because the legislature was still at a preliminary stage in approving any expansion of gaming in the state.
But, says Jepsen's new opinion, "if the state were to pass a law permitting only the Tribes to operate a casino, we would be unable to present in a future challenge the same arguments asserted in the motion to dismiss."
"We do believe there are potentially meritorious defenses that we would be able to raise against these constitutional claims," he goes on. "However, the relative novelty of the legal issues such claims would present makes it difficult to predict their outcome with confidence."
On the compacts, he said there is precedent to suggest the federal government will leave the agreements alone, including a technical assistance letter issued to the tribes in April last year. But he notes that the Interior Department would not adjudicate any disputes arising -- that would be up to the federal courts.
And the new presidential administration is another layer of uncertainty, with Jepsen suggesting there's no guarantee the Interior Department will follow past practices.
"Notably, in his past business ventures, President Trump was actively involved in pursuing casino gaming interests in Connecticut, and the significance of those activities...is, at best, difficult to judge," said the letter.
In conclusion, he said, "the risks attendant to authorizing a casino gaming facility operated by an entity jointly owned by [the tribes], while impossible to quantify with precision, are not insubstantial and cannot be mitigated with confidence."