Slot Play Coupons: Should Connecticut Get Its Fair Share

Coupons that patrons at Foxwoods Resort Casino received in the mail for gambling on slot machines may be a violation of an agreement the Mashantucket Pequot Tribe, owners of Foxwoods, has with the State of Connecticut.

Patrons received varied amounts of coupons based on their gaming play determined by their Wampum Rewards accounts which tracks their play.

This month, the new program coincides with the casino's former program of rewarding players with extra point coupons in the mail.

Marketing supervisors at Foxwoods say the new "Free slot play" will hurt players who play bingo only but those who have high play at table games will get rewarded probably through a similar "free table play" coupon or comp.

The coupons are dubbed "Free Slot Play" and require patrons to redeem them at a Wampum Rewards counter and exchange it for a voucher which must be played in a slot machine and cannot be cashed out at a cashier's cage.

Those coupons, according to Attorney General Richard Blumenthal, are wagers and should be calculated as part of the tribe's gross operating revenues.

A 1993 memorandum of understanding between the state and the tribe states that Connecticut will receive 25 percent of all slot machine revenues in return for allowing Foxwoods and Mohegan Sun to be the only casinos allowed in Connecticut.

State Division of Special Revenue Executive Director Paul A. Young sent a letter Friday to the tribe, demanding it change the promotion. Blumenthal said he will take the tribe to court if necessary.

"Huge amounts of money are potentially at stake," Blumenthal said. "These coupons are a way to force taxpayers to pay for their promotion."

John O'Brien, president of Foxwoods, said State Comptroller Nancy Wyman has said such promotions do not constitute a wager under the Internal Revenue Service definition. He said Foxwoods will put any of the disputed revenue in escrow in case a judge rules against the Mashantuckets in the future.

In a Sept. 15 letter to Young that addressed a similar promotion being considered by Mohegan Sun, the world's second largest casino in Uncasville only about 10 miles away from Foxwoods, Wyman said a "preliminary review of these materials appears to indicate that the 'free plays' would not constitute revenue to the casino, but that the amount paid out to a player would be considered a liability to the casino."

Wyman stressed she was only providing an accounting opinion and not a legal opinion on the MOU or the state's compact with the tribes.

While the "free plays" are a "gift" from the casino to customers, it must be recognized that the recent approval of a casino in the Pocono Mountains which will be managed by Mohegan Sun gives back 60to 65 percent of annual slot revenue profits back to the Pennsylvania State, county, and town governments.

"Connecticut's attorney general has unfortunately decided to turn a legitimate disagreement into a media event," O'Brien said in a written statement. "Our free slot play promotion is a marketing program that provides a benefit for our customers and ultimately helps the state, which would share in any increased slot revenue that results."

It's unclear how much revenue the state has lost since the promotion began earlier this month.

State officials said they've learned $50,000 worth of coupons are being redeemed daily at Foxwoods. Letters containing the coupons were sent to 700,000 customers.

While the state would still receive a percentage from slot machine revenues, it can be argued that the "slot play" coupons are the "casino's money" in a similar instance as a gambler who wagers $50 at a slot machine and wins $150 and wagers that money again.

Under the state law, each dollar put in the slot machine, including the "casino's money", 25 cents must go to the state.

"This is really an industrywide issue," Young said. "It isn't just them. It's happening at casinos in Nevada and casinos in Atlantic City and all. It's happening everywhere. We just happen to have a very good MOU that allows us to participate in the slot revenue."

This is not the only promotion Foxwoods has done that has been questioned by Blumenthal and other state officials.

A Playaway promotion enabling gamblers to buy tickets at Foxwoods and play slot machine games online with a passcode and then print out a voucher of won monies to cash at the casino was subsequently terminated since it was possible adults could give these passcodes to children.

It was also determined at that time that the Mashantucket Pequot's do not have jurisdiction to have gambling off the reservation in this manner and that online gaming is not part of the agreement they signed with the state.

Blumenthal said he is concerned that the coupon concept will be expanded. For example, he said, Foxwoods might decide to give patrons a $50 coupon for gambling if they play 18 holes of golf at the tribe's golf course or use the tribe's spa.

"If we permit this evasion - it really is an evasion of the agreement - there really is no limit to the amount of money or devices that could be applied," he said.

Connecticut receives about $200 million each year from the slot machines at Foxwoods and Mohegan Sun, Young said.
It has never been determined, however, cost of services customers of Foxwoods and Mohegan Sun require which would significantly subtract from that money.

Such services include police, fire, and medical for accidents or incidents at or on the way to/from the casino, added traffic congestion during rush hour and non rush hour periods on highways such as Interstate 95, 395, and Route 2A, demand on electricity, water, and sewage utilities.

While many understand the easy access to alcohol at both casinos, and free alcohol to gamblers able to find a cocktail waitress covering the area, they claim the number of drunken while intoxicating cases has not drastically increased since the casino's opening.