Dealing a blow to the region's gaming tribes, Attorney General George Jepsen advised Monday that it would be risky for the state to grant the Mashantucket Pequots and Mohegans the sole right to develop a third Connecticut casino.

Jepsen, in an eight-page letter to Gov. Dannel P. Malloy, writes that the risks, “while impossible to quantify with precision, are not insubstantial and cannot be mitigated with confidence.”

The opinion, prepared in response to the governor’s request, reinforces what Jepsen wrote in an April 2015 letter that raised flags about proposed legislation facilitating the tribes’ third-casino initiative. The questions Jepsen raised at the time prompted the legislature to adopt a two-part process that enabled the tribes to first form a partnership and pursue casino site proposals from municipalities.

Now immersed in the second part of the process, the legislature’s Public Safety and Security Committee is considering alternative casino-expansion bills, one of which would enable the tribes to build a casino in East Windsor, where it could protect the tribes’ existing casinos — Foxwoods and Mohegan Sun — from the anticipated impact of the $950 million resort casino MGM Resorts International is building in Springfield, Mass.

Jepsen again cautions that legislation authorizing a tribe-owned casino on nontribal land could run into constitutional issues.

“Third parties could claim that granting an exclusive right to conduct gaming to the Tribes off of reservation land violates the equal protection clause of the U.S. Constitution,” Jepsen writes.

As he noted in his 2015 letter, a third party could also file a claim under the Constitution’s commerce clause.

MGM cited both clauses in a lawsuit it filed over the law that enabled the tribes to form their partnership. The state won a dismissal of the suit in federal district court, prompting MGM to appeal to the 2nd U.S. Circuit Court of Appeals, which has yet to rule.

“We caution that the potential of equal protection or commerce clause challenges succeeding in this context is not at all insubstantial,” Jepsen writes.

The attorney general also addresses whether amendments to each of the tribes’ gaming agreements, or compacts, with the state pose risks. He cannot rule out, he writes, that a federal review of such gaming agreements would trigger a reconsideration of the revenue-sharing arrangement that requires the tribes to share 25 percent of their casinos’ slot-machine revenues with the state. 

While a U.S. Bureau of Indian Affairs official indicated a year ago that the tribes’ proposed compact amendments would likely pass muster with the agency, the official’s comments did not constitute a formal opinion. The official also did not say whether a review would be limited to the compact amendments or might encompass the tribes’ original agreements as well.

MGM and the tribes differed sharply on that count last week, with MGM submitting a letter from a former secretary of the U.S. Department of the Interior, who wrote that the proposed compact amendments would likely be rejected. Kenneth Salazar, the former secretary, also said the tribe’s original agreements with the state would be at risk.

At a public hearing last week, the tribes countered, introducing a former U.S. official who told legislators it’s highly unlikely the federal government would review the tribes’ decades-old agreements with the state if asked to consider amendments to them. Jepsen concurred with the official’s assessment.

“However, it cannot be ignored that there has been a change in presidential administrations,” the attorney general writes. “… Notably, in his past business ventures, President Trump was actively involved in pursuing casino gaming interests in Connecticut, and the significance of those activities, among other things, for our present considerations is, at best, difficult to judge.”

The tribes, through a spokesman for MMCT, their joint venture, reacted to Jepsen’s opinion. 

"While we appreciate the Attorney General's thoughtful response, it does not address the actual legislation pending in the legislature right now,” Andrew Doba said in a statement. “The Senate bill makes the authorization of a casino expressly contingent upon BIA approval of the Tribes’ compact amendments, which should assuage concerns about losing the Tribes’ sharing of slot revenues.

"Moreover, we have heard from people who spent their careers working at the BIA that the proposed changes will not adversely impact anything. The speculation that the Trump administration might nonetheless disregard the law, past practice, and the purpose of IGRA is just that — pure speculation.”

IGRA is the Indian Gaming Regulatory Act, the federal law that governs tribal casinos.

MGM Resorts, which has opposed the legislation favoring the tribes in favor of a bill that would establish a competitive bidding process for casino operators interested in a Connecticut gaming license, also issued a statement.

“Once again, the conclusion is clear and unmistakable: Connecticut risks hundreds of millions in annual revenue if it proceeds with a commercial casino — even if that casino is to be operated jointly by the two federally recognized tribes," Uri Clinton, senior vice president and legal counsel, said. "Connecticut cannot afford to take this and the other risks identified by Attorney General Jepsen, especially in the midst of budgetary shortfalls and economic uncertainty.”

Jepsen issued his opinion with the Public Safety and Security Committee nearing a vote on the casino-expansion bills. The committee, which was scheduled to meet Tuesday, has rescheduled the session for noon Wednesday in Room 2D of the Legislative Office Building. It faces a Thursday deadline for acting on bills.

“I’m optimistic that both bills will be voted out of the committee,” Rep. Joe Verrengia, D-West Hartford, a committee co-chairman, said. “For me, the elephant in the room is the change in administrations at the president level. Those agencies don’t operate in a vacuum.”

Verrengia said Jepsen’s opinion “underscores the complexities of the issues.”

“This is a complicated issue with profound financial implications for the state,” he said. “I’m not sure how the opinion will sway members of the committee. … At the end of the day, it’s going to come down to their comfort level with it — and the extent to which they want to take risks.”

The legislature’s Finance, Revenue and Bonding Committee also is drafting a casino-expansion bill that calls for a competitive bidding process.

b.hallenbeck@theday.com