Online Gaming Coming to Connecticut?

For the states that have chosen to legalize and regulate online gambling for those physically located within the state (you don’t have to be a resident), the usual setup is that the online casino(s) must be affiliated in some way with the land casinos in the state.

In general, there are two ways for that to happen:

1.) The land-based casino will either create or directly contract with one online gaming provider (which may or may not be also operating in another state) and come to some sort of revenue-sharing agreement by which that online casino operates using them as their land-based Commercial Casino link.

2.) The same thing as #1, except one land-based casino might have several online casinos running through it.

The State of New Jersey, for example, authorizes multiple casinos that have some relationship with one of the Atlantic City land casinos.

As you can see, there are a total of 33 regulated and legalized online casinos in the state that have been recognized by the state’s Division of Gaming Enforcement. 

However, the state is currently home to only nine land casinos, of which, four are operated by the same company (Caesars Entertainment).

In other states, such as West Virginia, online casino companies that operate for other casinos in other states may have some sort of agreement in place with land casinos. One example of this is that the online casino affiliated with Wheeling Island Hotel, Casino, Racetrack is BetMGM, despite the fact that Wheeling Island is owned by Delaware North, not MGM Resorts.

One thing that we have yet to see is one or more online casinos being legalized and regulated by a state that are only tied to a Tribal Casino, as opposed to a Commercial one.

That might be about to change in the State of Connecticut, and almost did several years ago as our own Feelin Froggy reported.

As was reported in her editorial, the Governor was stated to have no intention of really pushing through online gambling, and indeed, that measure did not even make it out of committee.

If it had, then Connecticut would have been one of the first states with legalized and regulated online gambling, but now, they’re lagging behind.

Obviously, as with land casinos, regulated online gambling represents a huge opportunity for revenues for not only the casinos, but also for the state Government. New Jersey is an excellent example of this as land casino win was absolutely pummeled during the Covid-19 pandemic (being closed for a good part of a year, and then open with limited offerings will do that), but that damage was at least partially mitigated by the continued rise in online gambling related casino win.

Additionally, sports betting was a relatively new revenue source for the State of New Jersey, which in the case of The Garden State, also extended to online gambling. For very good reason, New Jersey was at the forefront of the push to eliminate PASPA (Professional and Amateur Sports Protection Act) which was Federal Legislation instituted in 1992 and made sports betting illegal in most states.

The question of PASPA’s legality would eventually make its way to the Supreme Court, and the SCOTUS would eventually go on to overturn the measure. This was reported by our own Alexis Gold here.

The underlying matter was a question of the Tenth Amendment. For those of you who aren’t up on the Constitution of the United States, the Tenth Amendment states that any matters that are not specifically delegated to the Federal Government are left up to the individual states.

In the case of PASPA. The Federal Government had passed sweeping legislation that would make sports betting illegal, but that’s the only gambling-related legislation that the Federal Government had even enacted. Everything else that had anything to do with gambling was handled by the states, which is why:

Some states have casinos; others don’t.

Some states have lotteries; others don’t.

Some states have pari-mutuel; others don’t.

The list could go on forever when we compare the gambling legalizations that have been instituted in all of the different states.

Given that such was always the case, what reason would there ever be to believe that the Federal Government had the ability to ban one specific form of gambling, and even if the Federal Government did have that authority, why would it be in some states and not others?

The good news is that the Supreme Court got this one right and, in a 7-2 vote (6-3 vote on saying that the entire concept of PASPA was completely Unconstitutional) the law was struck down as being in violation of the Tenth Amendment.

Score one for the good guys!

It sure seems like I went off on a tangent there, but actually not, because in addition to online gambling, the Tribal Casinos in Connecticut are also gearing up to be able to offer sports betting. I bet the handle on UCONN NCAAW Basketball is going to be insane!

As the Online Poker Report, well, um...reports.

The measure that would legalize and authorize Foxwoods and Mohegan Sun to legally offer both sports betting and online casinos has passed both the House and Senate (overwhelmingly), has been signed by the Governor and needs only to be approved by the National Indian Gaming Commission, which we would hope would be a shoe in.

In other words, it’s coming folks! Later this year, in fact, just in time for the start of women’s hoops!

How Will it Work?

You guys know me well enough to know that I want to know what’s actually in the bill, so of course, I looked it up. Mainly, I'm interested in what the revenue split, if any, is going to be associated with sports betting and online gaming. I would be very surprised if the State of Connecticut, as hospitable as they might be, is just going to give this to the tribes without expecting anything in return.

All quotes for the remainder of this article are from the bill, if you wish to read it for yourself, then simply Google Search, “Connecticut House Bill 6451.”

One thing that is similar with online gaming as it is in other states is that an individual must physically be present on the reservation at the time of placing an online sports bet:

Permit the Mashantucket Pequot Tribe and Mohegan Tribe of Indians of Connecticut to each conduct (A) in-person sports wagering on the reservation of the tribe, (B) online sports wagering, provided an individual may only place a sports wager through such online sports wagering if the individual is physically present on the reservation of the tribe conducting the online sports wagering when placing the wager, and (C) fantasy contests, provided an individual may only participate in such a contest if the individual is physically present on the reservation of the tribe conducting the fantasy contest when paying the entry fee for such contest.

That’s a little bit unfortunate, as we would have hoped that the state would have went ahead and allowed it even in state’s land, since the state is not home to any Commercial Casinos. However, this might open the door to sports betting and online gaming legislation that could be offered to all residents of the state---possibly through the lottery department.

It seems as though that’s exactly what might happen:

Sec. 4. (NEW) (Effective July 1, 2021) (a) If amendments to the Mashantucket Pequot procedures and to the Mashantucket Pequot memorandum of understanding with the Mashantucket Pequot Tribe, or a new compact with the Mashantucket Pequot Tribe, and amendments to the Mohegan compact and to the Mohegan memorandum of understanding with the Mohegan Tribe of Indians of Connecticut, or a new compact with the Mohegan Tribe of Indians of Connecticut, are effective pursuant to section 2 of this act, amendments to the agreements entered into pursuant to section 12-806c of the general statutes, as amended by this act, are effective, and the commissioner has determined that the requirements to issue a master wagering license to the Mashantucket Pequot Tribe, or an instrumentality or an affiliate wholly-owned by said tribe, and a master wagering license to the Mohegan Tribe of Indians of Connecticut, or an instrumentality or an affiliate wholly-owned by said tribe, under section 3 of this act have been met, the commissioner may issue a master wagering license to the Connecticut Lottery Corporation to permit the corporation to: 

(1) Operate retail sports wagering, pursuant to the provisions of sections 5 to 16, inclusive, and section 18 of this act, as applicable, at not more than fifteen facilities located throughout the state, provided no such facility shall be located within twenty-five miles of either tribe's reservation; 

(2) Operate one skin for online sports wagering outside the reservation of either tribe, pursuant to the provisions of sections 6 to 16, inclusive, and section 18 of this act, as applicable, and the corporation may enter into an agreement with an online gaming operator for the provision of services for such skin provided:

Okay, there’s a lot less to unpack here than you think, but if you read all of that---you’re an absolute legend.

Simplified, this section just means that the Connecticut State Lottery (earlier, you would find that they are the ones with the, ‘Master Wagering License) are authorized to open as many as fifteen sports betting facilities within the state, as long as none of them are within 25 miles of any Native American Reservation lands. Essentially, this will also give the State Lottery to offer sports betting, but it will essentially not compete directly with the tribes when it comes to physical betting.

When it comes to online casino gaming, the State of Connecticut gets either 18% or 20% of the actions, as you will find quoted here:

Sec. 17. (NEW) (Effective July 1, 2021) (a) A master wagering licensee, if licensed to operate online casino gaming pursuant to section 3 of this act, shall pay to the state for deposit in the General Fund: (1) Eighteen per cent of the gross gaming revenue from online casino gaming authorized under section 3 of this act during the five-year period after the first issuance of a license for such gaming under section 3 of this act, or (2) twenty per cent of the gross gaming revenue from online casino gaming authorized under section 3 of this act during the sixth and any succeeding year after the first issuance of a license for such gaming under section 3 of this act. Each such licensee shall commence payments under this subsection not later than the fifteenth day of the month following the month such licensee began the operation of online casino gaming under section 3 of this act, and shall make payments not later than the fifteenth day of each succeeding month, while such online casino gaming is conducted.

The remainder of the legislation is highly specific, mostly procedural and basically just says that everything else about the Tribes’ compacts with the State of Connecticut is going to remain the same.

Conclusion

Ultimately, this follows the trend of gambling expansion in the United States in terms of Commercial games being legalized and regulated by individual states.

Connecticut is a bit of an unusual state in that they are one that gives the tribes exclusivity, as part of the compact, when it comes to the operation of slot machines, video poker and video keno. In exchange for that exclusivity, the state receives a percentage of the tribe’s revenues, so in that sense, it’s not much different than how Commercial Casinos would work in other states.

We have seen more than twenty states authorize sports betting in some form and that’s just so far. We do not expect that this will slow down as it is a highly popular means of betting and even states critical of house-banked games will consider sports betting something more akin to a game of skill. While many of these states only have physical sports betting, Connecticut will soon be one that offers online betting provided people are on reservations, and also, physical sports betting either at the Native American casinos or with one of the up to fifteen locations that will be authorized to handle the book by the Connecticut State Lottery.

Connecticut will also be soon joining the fray with online casinos, though judging from the wording of the Legislation, there aren’t going to be very many of them. I might have misunderstood something (the wording is needlessly complicated), but it seems to me that there is only supposed to be one online casino tied to each physical casino.

Anyway, get ready, Huskies! The gambling options available to you have just improved remarkably. I sure don’t want to be at Foxwoods during March Madness 2022...it’s going to be a madhouse!