WILMERHALE Ken Salazar +1 720 274 3181 +1 720 274 3133 SECRETARY U.S. DEPT. OF THE 2009-2013 U.S. SENATOR REPRESENTING COLORADO 2005-2009 ATTORNEY GENERAL STATE OF COLORADO 1999-2004 March 7, 2017 Governor Dannel P. Malloy 210 Capitol Avenue Hartford, Connecticut 06106 Dear Governor Malloy: I write on behalf of MGM Resorts International regarding legal risks in the legislation currently under consideration in the state legislature to authorize an off-reservation casino in Connecticut. The legislation (Raised Bill No. 957) would grant the right to operate that casino to a limited liability company owned by the state?s only two federally recognized Native American tribes, the Mashantucket Pequot and the Mohegan (?the Tribes?). Pursuant to their gaming compact with Connecticut, the Tribes give the state 25 percent of the slots revenue that they generate at their in?state casinos, Foxwoods and Mohegan Sun. But under the compact, if the state authorizes any entity?even the Tribes? own open another in?state casino, then the 25?percent revenue obligation terminates. The Tribes have proposed to amend their gaming compact so as to avoid such a termination in the event that Raised Bill 957 is enacted. Under federal law, however, amendments to a tribal gaming compact require approval by the U.S. Department of Interior, which I led for five years during the Obama Administration. Based on that experience (and on my work on Native American legal matters), I believe there is a substantial risk that the Tribes? proposed amendments would not receive the requisite approval, in which case Connecticut? 3 entitlement to the 25-percent revenue stream would likely terminate. In conducting its review, for example, the Department could consider the extent to which the proposed amendments are consistent with overall structure and purpose. More speci?cally, I expect the Department would inquire into whether the Tribes? proposed amendments, which seek to help the Tribes engage in off-reservation gaming, circumvent the Wilmer Cutler Pickering Hale and Dorr LLP, 1225 17th Street, Suite 2600, Denver, Colorado 80202 Belling Berlin Boston Brussels Denver Frankfurt London Los Angeles New York Pate Alto Washington WILMERHALE Governor Dannel P. Malloy March 7, 2017 Page 2 mechanism that IGRA established for tribes to operate casinos in new areas, namely by having land taken into trust for that purpose. If the Tribes submitted proposed compact amendments to the Interior Department, moreover, the Department would review the entire compact, not simply the proposed amendments. In my opinion, there is a signi?cant chance that such a review (even if it did not produce an outright termination of the 25?percent revenue entitlement) would lead the Department to require a reduction of the 25-percent royalty provision in the current compact. That is because the 25- percent rate is unusually high. In fact, it is higher than the rate in the overwhelming majority of Indian gaming compacts?and the Department has repeatedly disapproved even lower rates. Scrutiny of the 25-percent rate is particularly likely given the length of time since that rate was adopted (two decades) and the changes in the marketplace that have occurred in that time. In addition, it is important to bear in mind that the Mashantucket Pequot royalty agreement has never been reviewed or approved by the Department. Finally, Interior Department review of the Tribes? gaming compact would likely include an examination of whether Connecticut is using tribal revenue?sharing payments for general-fund programs that have no relationship to regulation of Indian gaming. Both courts and the Interior Department have concluded that such uses violate IGRA, on the ground that that statute prohibits each state from levying taxes, fees, or other assessments on Indian gaming except as necessary to defray the state?s regulatory costs. The April 25, 2016, ?technical assistance? letter that the Tribes obtained from the Interior Department does not alter my views on these matters. The letter expressly states that it ?should not be construed as? even ?a preliminary decision[] or advisory opinion[] regarding? a compact amendment that has not been ?formally submitted to the Department for review or approval.? The letter manifestly does not bind the Department. We would appreciate an opportunity to discuss these issues further with you and members of your staff. Sincerely, Kenneth Salazar /9th