Attorney General: Hon. John G. Rowland, State of Connecticut, 1995-011 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

March 22, 1995

Hon. John G. Rowland
Governor
State of Connecticut
State Capitol
Hartford, CT 06106

Dear Governor Rowland:

You have asked this office whether, upon passage of Senate Bill No. 158, authorizing the creation of a "commission on the future of gaming in Connecticut," the Mashantucket Pequot Tribe and the Mohegan Tribe (if they commence casino operations) would continue to be obligated to the terms of the Memorandums of Understanding ("MOUs") related to the operation of video facsimile machines at tribal casinos. You have also asked about the State's ability to enforce its agreement with the Tribes, and its ability to prevent any loss of revenue from the monthly contributions made by the Mashantucket Pequot Tribe under the agreement. Your specific questions are:

  1. If the General Assembly passes the Bill, and it eventually becomes law, authorizing such a commission, will the Mashantucket Pequot Tribe (and the Mohegan Tribe if they commence casino operations) continue to be obligated to render "contributions" under the terms of the Memorandums of Understanding related to the operation of video facsimile machines at the respective tribal casinos?
  2. If the Attorney General's opinion determines that the Bill does not breach the Memorandums of Understanding, and the Mashantucket Pequot Tribe refuses to render further payments to the State, what remedies would be available to the State?

It is our opinion that the creation of a "commission on the future of gaming in Connecticut" would not violate the terms of the MOUs between the Tribes and the State of Connecticut. Should the Mashantucket Pequot Tribe not make the "contributions" specified in the Memorandum of Understanding, those actions would violate the MOU and the Tribe's operation of video facsimile machines under such circumstances would violate the federal Final Mashantucket Pequot Gaming Procedures, 56 Fed. Reg. 24996 (May 31, 1991) (the "Procedures") and IGRA.1

As to enforceability, there are a number of possible enforcement options, as discussed below, to bar the Tribe from unlawfully operating video facsimile machines. While the Tribe has no right to operate video facsimile machines pursuant to the Memorandum of Understanding if it does not make the required payments, it may assert that, independent of the MOU, it has the right to operate the machines under IGRA, based on the extent of other gaming permitted in Connecticut. Additionally, there are other legal and financial risks to the State in pursuing such litigation.

As you are aware, there is no Compact under the Indian Gaming Regulatory Act ("IGRA") (25 U.S.C. 2701, et seq.) between Connecticut and the Mashantucket Pequot Tribe specifying casino-type gaming on the Tribe's reservation. (See --- Conn. Op. Atty. Gen. --- (1993), Letter to Thomas D. Ritter and Edward C. Krawiecki, Jr., February 11, 1993, for a detailed history of the IGRA process followed by the State and the Tribe). Instead, gaming is governed by Procedures promulgated by the Secretary of the Interior, which Procedures have the full force and effect of federal law. As we stated in our February 11, 1993 opinion:

"The gambling activity on the Ledyard reservation is governed exclusively by the Procedures promulgated by the Secretary of the Interior pursuant to IGRA. These Procedures are a regulatory enactment of the United States Government and are specifically authorized by 25 U.S.C. 2710(D)(7)(b)(vii). The only authority to conduct gambling at this reservation is this regulatory enactment of the United States Government.

Id.

According to the Procedures, various types of Class III games are permitted on the reservation. However, because of an ongoing dispute between the Tribe and the State as to whether the Tribe had a right under IGRA to operate video facsimile games, a moratorium was imposed on video facsimile games until any of the conditions set forth in Section 15(a) of the Procedures was met. Section 15(a) provides:

Moratorium on Class III video facsimile gaming:

Notwithstanding the provisions of section 3(a)(ix), the Tribe shall have no authority under this Compact to conduct Class III video facsimile games as defined pursuant to section 3(a)(ix) unless and until either: (a) it is determined by agreement between the Tribe and the State, or by a court of competent jurisdiction, that by virtue of the existing laws and regulations of the State the operation of video facsimiles of games of chance would not be unlawful on the ground that the Tribe is not located in a state that permits such gaming for any purpose by any person, organization, or entity within the meaning of 25 U.S.C. 2710(d)(1)(B) (it being understood and agreed that there is a present controversy between the Tribe and the State in which the Tribe takes the position that such gaming is permitted under the existing laws of the State and the State takes the position that such gaming is not permitted under the existing laws of the State); or (ii) the existing laws or regulations of the State are amended to expressly authorize the operation of any video games of chance for any purpose by any person, organization or entity. Upon such determination the operation by the Tribe of video facsimiles of games of chance shall be subject to the applicable provisions of the Standards of Operation and Maintenance for Games of Chance adopted pursuant to section 7 of this Compact.

Final Mashantucket Pequot Gaming Procedures, 56 Fed. Reg. 24996, Section 15(a), pp. 53-54.

As we stated in our February 11, 1993 opinion, Section 15(a) provides "three ways that video facsimile games may be made permissible at the casino: by an agreement between the State and the Tribe; by a court order; or by a change in State law to allow video facsimiles in the State."

In accord with Section 15(a) of the Procedures, on January 13, 1993, a Memorandum of Understanding between the Tribe and the State was signed by former Governor Weicker. The MOU suspended the moratorium on video facsimile games if the Tribe and the State complied with the terms and conditions of the Memorandum. These terms included payments to the State by the Tribe which are to continue so long as Connecticut law is not changed to permit video facsimile games elsewhere in the State. The Memorandum of Understanding provided:

In the event that any change in State law is enacted to permit the operation of video facsimiles by any other person or any other person within the State lawfully operates video facsimile games, the Tribe shall not be bound by the provisions of the Memorandum of Understanding so long as it does not claim any right to operate video facsimile games by virtue of this Memorandum of Understanding, but the Tribe may thereupon assert any rights which it may otherwise have under the Procedures; provided, however, that in such event neither party shall be bound by any of the provisions hereof nor shall either party be barred from taking any position inconsistent with this Memorandum of Understanding.

The January 13, 1993 MOU was amended by a Second Amendment to Memorandum of Understanding dated April 25, 1994 and signed by former Governor Weicker and Richard A. Hayward, Chairman of the Mashantucket Pequot Tribe. The Second Amendment was agreed upon to account for the rights of the Mohegan Tribe under IGRA since the Tribe had received federal recognition and to resolve certain "ambiguities" and "uncertainties" in the January 13, 1993 MOU.

Pursuant to Paragraph 2 of the Second Amendment, the Mashantucket Pequot MOU now reads as follows:

The Tribe agrees that so long as no change in State law is enacted to permit the operation of video facsimiles or other commercial casino games by any other person and no other person within the State lawfully operates video facsimile games or other commercial casino games, the Tribe shall not assert the right to operate video facsimile games except in accordance with this Memorandum of Understanding. In the event that any change in State law is enacted to permit the operation of video facsimiles or other commercial casino games by any other person or any other person within the State lawfully operates video facsimile games or other commercial casino games, the Tribe shall not be bound by the provisions of this Memorandum of Understanding so long as it does not claim any right to operate video facsimile games by virtue of this Memorandum of Understanding, but the Tribe may thereupon assert any rights which it may otherwise have under the Procedures.

According to the Second Amendment to the MOU, the Tribe is required to contribute 25% of its gross operating revenues from video facsimile games so long as "no change in State law is enacted to permit the operation of video facsimiles or other commercial casino games by any other person." If such a law is enacted or if "any other person within the State lawfully operates video facsimile games or other commercial casino games," the Tribe's contribution to the State may cease and the Tribe may not claim any right to operate video facsimile games under authority of the MOU.

Irrespective of the termination of the MOU and the cessation of the Tribe's contributions, the Tribe nevertheless may claim a right to continue operation of video facsimile games under the Procedures. As stated previously, Section 15(a) of the Procedures provides that the Moratorium on Class III video facsimile games shall terminate if "the existing laws or regulations of the State are amended to expressly authorize the operation of any video games of chance for any purpose by any person, organization or entity." Thus, should the General Assembly "expressly authorize" video facsimile games for any purpose in the State, the Tribe may terminate its contributions to the State under the MOU and operate video facsimile games pursuant to the Procedures.

Senate Bill No. 158 would neither "permit" nor "expressly authorize" the operation of video facsimile games in the State of Connecticut as those terms are used in the MOU and the Procedures. Instead, Senate Bill No. 158 would establish a nine-member Commission to "assess the desirability of reducing, maintaining or expanding the amount of legalized gaming permitted in this state." Section 3(a). The Commission would be required to determine "if ... it is, in the Commission's judgment, appropriate" to reduce or expand legalized gaming in the state and to recommend in what manner and what degree such gaming shall be reduced or expanded "by the governor and the general assembly." (Section 3(b), (c)). If the Commission determined that it was "appropriate for the governor and the general assembly to expand legalized gambling in the state to include casino gambling," the commission could "select a preferred developer for a casino complex, which would be located in Bridgeport." (Section 3(d)). Senate Bill No. 158 sets forth a proposed application procedure for "preferred developer status" (Sections 6, 7, 8) and the eligibility criteria for such applicants. (Section 9). Indian Tribes are specifically made eligible for "preferred developer" status. (Section 9(c)(2)). Additionally, the Commission would be authorized to "adopt rules with respect to any proposed casino or casino complex development," (Section 4) and "report to the governor and the general assembly not later than October 1, 1995, on the results of the Commission's activities." (Section 3(e)).

The Commission would also be required to notify "the town clerk of the town within which such activity is proposed to be carried on a statement specifying the prospective applicant, the proposed activity, the site on which such activity is proposed to be conducted, such details of the project as may be available and the fact that an application has been granted preferred developer status by the Commission." Section 12(a). Thereafter, a special election would be held in the municipality notified and the preferred developer status would not become effective "unless approved by a majority of those voting on the question." Section 12(a).2 Finally, the preferred developer designation would be subject to revocation by the Commission. (Section 10(b)).

It is clear from its express language that Senate Bill No. 158 would not "expressly authorize" or "permit" casino gaming or the operation of video facsimile games anywhere in the state. The Commission which would be established would only have the power to recommend to the Governor and the General Assembly the reduction or expansion of casino gaming and video facsimile games. Any expansion of casino gaming or the operation of video facsimile games would require subsequent legislation by the General Assembly, subject to the veto of the Governor. Even the Commission's choice of a preferred developer would require approval by a municipal referendum, and the preferred developer chosen by the Commission could not conduct either casino gaming or operate video facsimile games unless and until State law was enacted to permit such gaming in Connecticut.

The bill, if enacted, clearly would not violate the MOU. As with any contract, the words of the MOU are the key to determining the intent of the parties. Tomlinson v. Board of Education, 226 Conn. 704, 722 (1993); Spicer v. Spicer, 33 Conn. App. 152, 157 (1993). The State and the Tribe could have agreed that any legislation concerning legalizing video slot machines and casino games would be sufficient to end the Tribe's obligation to make payments, but that is plainly not what the MOU says. Nor does Senate Bill No. 158 lift the moratorium under the Procedures by amending existing State law to "expressly authorize" the use of video games of chance, because it does not so amend State law.

Accordingly, if Senate Bill No. 158 were to be enacted and signed into law in its current form, and if the Tribe unilaterally ceased making the required contributions to the State under the MOU but continued to operate video facsimile games, the Tribe would be in violation of Section 15(a) of the Procedures. As set forth above, the Procedures provide only three ways that the moratorium can be lifted to allow the Tribe to operate video facsimile games: (1) by agreement with the State; (2) through legislative action which "expressly authorizes" such gaming, or (3) by court order. Should the Tribe terminate its agreement with the State, embodied in the MOU, because of the enactment of Senate Bill No. 158, which does not "expressly authorize" video facsimile games, the Tribe would have no authority under federal law to lawfully operate video facsimile games unless and until it obtained a court order authorizing it to do so.

Under such circumstances, the State would pursue all legal avenues available to bar unlawful Class III gaming, i.e., the operation of video facsimile games by the Tribe.3 Although litigation obviously involves risks, the State would have a number of enforcement options to pursue, including petitioning the National Indian Gaming Commission to close down the Tribe's video facsimile machines as unlawful gaming operations, see 25 U.S.C. 2713(b), 25 C.F.R. 573.6; asking the Secretary of the Interior to bring suit under 25 U.S.C. 2710(d)(7)(A)(iii) to enforce the Procedures by shutting down the machines as unlawful and violative of the Procedures; and the State bringing suit itself under 25 U.S.C. 2710(d)(7)(A)(ii) or (iii) and section 13(c) of the Procedures to enforce the Procedures and enjoin use of the video games as being conducted in violation of the Procedures.4

In our opinion, looking at the clear, plain language of the bill and the Memorandum of Understanding, this proposed legislation would in no way undermine or abridge the continued validity of the agreement requiring contributions by the Tribe to the State. If the Tribe ceases its contributions, using this bill as an excuse, it would breach both the spirit and letter of the Memorandum of Understanding and would violate federal law under Section 15(a) of the Procedures and IGRA. Yet, to say that the Tribe's termination of payments would be illegal does not mean we would get relief from the courts easily or swiftly -- a fact that perhaps makes the Tribe's threatened action all the more outrageous. There are, in short, risks involved in litigating this issue.5 (FN5) Without minimizing the practical and legal obstacles and risks, however, it is our opinion that enactment of Senate Bill No. 158 would not give the Tribe authority to operate video facsimile games without continuing to make payments to the State under the Memorandum of Understanding.

We trust this answers your concerns.

Very truly yours,

Richard Blumenthal
Attorney General


1 As you have noted in your letter, the Mohegan Tribe does not yet operate a casino or video facsimile games. Nor have they stated any intention to abandon their agreement with the State should Senate Bill No. 158 be enacted into law. In all respects relevant to this opinion, the Mohegan Tribe-State of Connecticut Gaming Compact signed on April 25, 1994 by former Governor Lowell P. Weicker and Ralph W. Sturges, Chief G'Tine' Mong contains language identical to the Mashantucket Pequot Procedures. Additionally, the Memorandum of Understanding between the Mohegan Tribe and the State, also signed on April 25, 1994, is virtually identical to the Mashantucket Pequot MOU. Therefore, should the Mohegan Tribe commence casino operations, this opinion would be directly applicable to questions concerning their MOU and the Tribe-State Compact.

2 A special election, however, would not be held in a municipality which, "within one year prior to the date of the granting of preferred developer status" had submitted to its electors "a question substantially in the following form 'shall casino gaming activity associated with family entertainment attractions be permitted in (name of town)?, which question was approved." Section 12(b).

3 Under Section 15(a) of the Procedures, while agreeing to the moratorium, the Tribe preserved its position that, under IGRA, video facsimiles should be considered permissible under Connecticut law, and the State preserved its position that video facsimiles are barred under State law. A court would thus be asked to resolve this issue left open by the moratorium. In such litigation, therefore, the Tribe would likely assert that, given the current law on gaming in Connecticut, including Senate Bill No. 158, it has a right, independent of the MOU, to operate video facsimile games. In other words, the Tribe would seek to have the moratorium contained in the Procedures lifted by seeking a determination by a "court of competent jurisdiction, that by virtue of the existing laws and regulations of the State the operation of video facsimiles of games of chance would not be unlawful" because Connecticut permits "such gaming" within the meaning of IGRA. As stated previously, the Tribe would require a court order to lift the moratorium under Section 15(a) of the Procedures.

4 Were the State to bring such a lawsuit, the Tribe may claim that, pursuant to 25 U.S.C. 2710(d)(7)(A)(iii), the District Court only has jurisdiction over an enforcement action brought by the Secretary of the Interior. This issue has never been tested in court. The Procedures themselves, however, which were promulgated by the Secretary, specifically provide that the State may bring an action in District Court pursuant to this statutory provision, reflecting the Secretary's interpretation of the statute.

5 In addition to the issues raised in footnotes 3 and 4 supra, an additional and important litigation risk to the State is whether the court would grant the State preliminary injunctive relief while the case is being litigated, and if it did, whether the Tribe would choose to make the payments rather than stop using the video facsimiles during the litigation. If the Tribe was not compelled to continue the payments to the State, and the State ultimately won the litigation, it will be necessary to litigate the issue of whether the State can, as a matter of law, collect back payments that the Tribe should have made during the course of the litigation.


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