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Mohegans, lottery included in gaming agreement but not Mashantuckets

Gov. Ned Lamont’s office announced Tuesday it has reached an agreement on sports wagering and online gaming with the Mohegan Tribe and the Connecticut Lottery Corp., angering the state’s two other gaming operators — the Mashantucket Pequot Tribe and Sportech Venues, which runs off-track betting sites around the state.

All four entities want a piece of the sports-betting action, particularly the online variety.

Rodney Butler, the Mashantucket chairman, who earlier Tuesday had indicated a final “sticking point” regarding revenue sharing with the state was keeping his tribe from approving the deal, took issue with the late-afternoon announcement.

"After months of closed-door negotiations, it's offensive that Governor Lamont would announce an agreement with only one of the two Tribal Nations that have been a party to the negotiations,” Butler said in a statement. “We have participated in these discussions in good faith and consider today’s events extremely disrespectful in terms of process and substance. Now that Governor Lamont has laid bare the confidential terms of our negotiations, you can see the significant and substantial concessions made by both Tribes. Just permitting Lottery to participate in full sports betting, absent tax or revenue share, is a major allowance."

“We have one remaining point of contention that is easily resolved if some sense of mutual respect is afforded for the specific needs of our tribal community,” Butler said.

The 10-year agreement, which can be renewed for another five years, is expected to generate tens of millions of dollars in new revenue for the state, with the Mohegans’ online gaming revenue to be taxed at 20% while its sports-betting revenue — to be generated at Mohegan Sun and online via digital devices anywhere in the state — will be taxed at 13.75%.

The rates are substantially higher than had been proposed by lawmakers.

As a quasi-public agency, the Connecticut Lottery Corp. — in effect, the state’s gaming company — turns over all of its revenue to the state. According to the announcement, it's being granted the right to operate 15 retail sports-betting locations as well as an online sports-betting “skin,” or entity. The lottery will have the right to sublicense some of the locations to Sportech Venues, the state-licensed off-track betting operator.

Sportech promptly rejected the arrangement, however, issuing a statement through the McDowell Communications Group.

“One year ago, Governor Lamont stated he would seek a fair resolution regarding gaming expansion involving existing gaming operators that ‘must be designed to avoid and withstand endless legal challenges,’” Sportech said. “Regretfully, the governor’s announcement this afternoon, that principally excludes Sportech from expanded gaming, leaves us with little option but to pursue legal recourse on behalf of our 400 Connecticut employees.”

The announcement from the governor's office also said the lottery will undertake new retail sports betting venues in Hartford and Bridgeport, which appeared to be in conflict with Sportech expansion plans. On Monday, Sportech announced it was searching for new sites to relocate its existing venues in Bridgeport, New Haven and Hartford.

"This agreement represents months of hard work and dedication to getting a deal that's best for the residents of Connecticut and moves our state forward when it comes to the future of gaming," Lamont said in a statement. "We are incredibly fortunate to have such a devoted partner in these efforts like the Mohegan Tribe, as they have been open to negotiation, honest discussion, and a positive path forward that is beneficial for both their tribe and the State of Connecticut."

James Gessner Jr., the Mohegan chairman, said the agreement will enable the state to generate tax revenues from sports and online gaming that are competitive with other states.

The announcement came hours after members of Lamont's negotiating team, including Paul Mounds, his chief of staff; Melissa McCaw, secretary of the Office of Policy and Management; and David Lehman, commissioner of the Department of Economic and Community Development, testified during a public hearing conducted virtually by the legislature's Public Safety and Security Committee. At that hearing, Butler, the Mashantucket chairman, discussed the “sticking point” in the negotiations.

“It literally comes down to a question of fairness and equity,” he said. “In the context of the deal, the point is insignificant. It’s a revenue question. To my nation, it means sustainability.”

In a Zoom session with reporters following his testimony, Butler said the matter could be resolved at any point.

The Mashantuckets, who own Foxwoods Resort Casino, and the Mohegans have been engaged in renewed negotiations with the state since November in an effort to gain exclusive authorization to provide sports wagering online and at their casinos. The lottery and Sportech Venues also have sought a piece of the sports-wagering action.

Butler said the two tribes and the governor’s representatives negotiated until late Monday night in a bid to forge an agreement that satisfied all parties. He said the remaining point of contention involves “a million dollars” worth of revenue for his tribe, a sum he said represents an insignificant portion of the state’s $23 billion annual budget.

“We’re a small tribe and we have our challenges,” Butler said. “A million dollars here or there makes a huge difference to us in supporting our population. We’re no different than any other municipality.”

“If the state concedes the point, an agreement could come later today,” he said.

Butler said the tribes had significantly compromised during negotiations, providing the state with more generous terms than previously discussed. The lottery's inclusion in the deal is testament to that.

b.hallenbeck@theday.com

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