Lottery rakes in record cash amid Connecticut’s push for third casino | Crain's Connecticut

Lottery rakes in record cash amid Connecticut’s push for third casino

  • The Connecticut Lottery launched its keno game in May at 3,000 locations statewide. | James Mosher/Crain's Connecticut

    The Connecticut Lottery launched its keno game in May at 3,000 locations statewide. | James Mosher/Crain's Connecticut

  • Foxwoods Resort Casino. | Photo by Justin Henry via Creative Commons

    Foxwoods Resort Casino. | Photo by Justin Henry via Creative Commons

  • Mohegan Sun in Connecticut. | Photo by grendelkhan via Creative Commons

    Mohegan Sun in Connecticut. | Photo by grendelkhan via Creative Commons

  • Bradley Teletheater OTB in Windsor Locks. | James Mosher/Crain's Connecticut

    Bradley Teletheater OTB. Windsor Locks. | James Mosher/Crain's Connecticut

  • Sportech Venues' Bradley Teletheater OTB and Bobby V's Restaurant. | James Mosher/Crain's Connecticut

    Sportech Venues' Bradley Teletheater OTB and Bobby V's Restaurant. | James Mosher/Crain's Connecticut

  • The Michael's Hess gas station in Waterford is among hundreds of locations statewide that offer Connecticut Lottery products including keno.  | James Mosher/Crain's Connecticut

    The Michael's Hess gas station in Waterford is among hundreds of locations statewide that offer Connecticut Lottery products including keno. | James Mosher/Crain's Connecticut

Connecticut Lottery revenues have been climbing for years but the growth won’t make up for lost dollars if Connecticut doesn’t build a third casino, an analyst said.

Connecticut Lottery Corp.’s fiscal year 2016 delivered a record $337.5 million to the state government’s general fund, according to a lottery spokesman. Sales increased 6 percent, or about $80 million, to $1.2 billion during the fiscal year, according to lottery records.

Meanwhile, contributions to the state general fund from Foxwoods Resort Casino and Mohegan Sun have fallen every year since fiscal 2011, according to statistics from the Connecticut Department of Consumer Protection. In fiscal 2015, the lottery’s contribution to state coffers was $319.70 million while the casinos contributed $267.99 million.

Fiscal 2013 marked the first time in 14 years that the lottery pumped more cash into Connecticut government than the casinos. The casinos’ contribution first topped the lottery’s contribution in fiscal 1999.

The Rocky Hill-based lottery, created in 1972, has contributed $8.53 billion to the general fund throughout its history. The casinos, with the first beginning operations in 1992, have contributed $6.96 billion from 25 percent of their slot-machine revenue. Revenue from table games and other sources are not part of the casinos’ contributions.

The lottery’s contributions to the general fund have increased every year since fiscal 2010.

Competing for gambling dollars

But anyone thinking lottery expansion could cover gambling dollars lost to a planned MGM Resorts International in Springfield, Massachusetts, slated to open next year, is bound to be disappointed, said Alan Meister, principal economist at California-based Nathan Associates Inc.

“While the state of Connecticut’s revenue from tribal casinos has declined a bit over time, it has been due to the dramatic increase in competition from the region,” said Meister, author of the annual Indian Gaming Industry Report. “Undoubtedly, the further increase in competition from surrounding states, including Massachusetts, will worsen this trend. A strategically placed third tribal casino will help to mitigate these losses. Even if the state lottery revenue increases, it is not likely to replace revenue from the tribes.”

Foxwoods, established 20 years ago, and Mohegan Sun, founded four years later, have formed a joint venture to find a location for a third casino and oversee its development.

There is more than a hint of self-preservation in this for the tribe-owned casinos, Meister said.

The New London County-based tribes recently announced that East Windsor and Windsor Locks are the two finalists for the third casino. With that, East Hartford, Hartford and South Windsor were eliminated. The tribal venture wants to create a casino in the Interstate 91 corridor that attracts motorists traveling between Hartford and Springfield.

While that process plays out, Edward Stringham, professor of economic organizations and innovation at Trinity College in Hartford, said the state should relax or abandon efforts to legislate certain outcomes in gambling and taxation.

“Although Foxwoods and Mohegan Sun are supposed to be tribal sovereign lands, Connecticut tax collectors have been living off them, and by extension their customers, for years,” he said. “The Connecticut Legislature should get out of the business of deciding where to travel to gamble and should not prevent Foxwoods and Mohegan Sun from becoming more competitive and offering more choices to us.”

Numbers game

While the state government and other Connecticut entities look to corral and grow gambling revenue, cross pollination is occurring with regularity.

Mohegan Sun is considering reinstating keno as the game rises in popularity in the hands of the Connecticut Lottery. The lottery launched its version in May at 3,000 locations statewide including bars, convenience stores and restaurants. Sales were between $10 million and $12 million during its first two months, according to lottery records.

The Uncasville casino has been without keno for about two years. It took its system down because a necessary software update was then unavailable, said Chuck Bunnell, chief of staff for the Mohegan Tribal Nation, which owns Mohegan Sun.

Several companies now offer products that makes a restart of keno a possibility, he said.

Foxwoods, owned by the Mashantucket Pequot Tribal Nation, has offered keno uninterrupted for many years, spokesman Adam Jalbert said. It began selling Connecticut Lottery scratch tickets through kiosks in September 2015.

Mohegan Sun began selling Connecticut Lottery tickets in 2013, including nine draw games and 25 scratch games.

Off track

Off-track betting contributions to Connecticut’s general fund have fallen every year since fiscal 2004, according to the state Department of Consumer Protection. OTBs contributed $3.6 million to the fund in fiscal 2015.

New Haven-based Sportech Venues is creating more OTBs, which feature televised horse races, with Stamford and Windham facilities to be completed this spring. It is considering offering lottery games in those and more products in existing locations.

The larger the setting the more likely lottery games will be added, Sportech Venues President Ted Taylor said. Stamford is planned as an “impressive” facility and will definitely offer lottery, he said.

“We don’t do lottery everywhere as some places are smaller than others and there just isn’t space or a desire amongst the customers,” Taylor said.

Sportech currently operates 14 OTBs statewide and is licensed to operate a total of 18. The Stamford and Windham facilities will bring the number of OTBs to 16. Sportech’s relationship with the Connecticut Lottery is strong heading into the future, Taylor said.

Lottery products including keno are offered in nine of Sportech’s 14 locations, including its flagship Sports Haven OTB in New Haven.

“We have a solid working relationship with the Connecticut Lottery as we supply many of their products throughout our estate of venues,” he said. “I can’t see anything that will stop us from continuing to do so in new locations.”

Sportech has also expressed interest in a partnership arrangement on the third casino, should it land near its Bradley Teletheater OTB in Windsor Locks. Sportech provides services to the OTB, also known as the race book, at Mohegan Sun.

The Department of Consumer Protection continues to investigate the lottery’s 5 Card Cash game, department spokeswoman Lora Rae Anderson said recently. The game produced more winners than should have been allowed among the state’s lottery retailers.

The lottery is also going through a major leadership change.

President and CEO Anne Noble in August announced that she would step down from the job she had held for eight years. Noble is remaining as an adviser until June 30, a lottery spokesman said.

Frank Farricker, chairman of the lottery corporation’s board, is serving as interim president and CEO. Committees have been formed to select a new CEO as well as general counsel, according to minutes from the lottery board’s November meeting.

Farricker didn’t respond to requests for comment made through the spokesman.

January 13, 2017 - 2:48pm