Where Does All the Casino Money Go?

“Where does all the casino money go?” It is perhaps the one question that I am asked more than any other. With the state continuing to face a substantial budget deficit, people are even more interested in finding out exactly how much revenue the state receives from its two casinos and how these funds are allocated. The purpose of this week’s column is to give you some background about Connecticut’s agreement with the casinos and how money is distributed.

In 1993, then Gov. Lowell Weicker and the leaders of the Mashantucket Tribal Nation agreed on a compact that would allow the Mashantucket Pequots to conduct slot machine gaming in exchange for the state receiving 25% of all slot machine revenue. This was later expanded to include the Mohegan Tribe’s slot revenue when their casino opened in 1997.

To this day, Connecticut has collected over $5.2 billion in slot revenue from the state’s two operating casinos (Foxwoods and Mohegan Sun) since the accord was brokered. Last year alone, the state received nearly $378 million in revenue from the casinos. While this is indeed a lot of money it is down considerably from the over $430 million the state received in 2007, certainly a sign of these troubled economic times.

So where does all of this money go? The simplest answer is that it goes back to the taxpayer. Nursing homes, schools and public safety programs all benefit from money raised by the casinos. In fact, all 169 municipalities in Connecticut get a portion of the funds raised through slot machine revenue through a fund created solely to ensure that each town receives funding.

Known today as the Mashantucket Pequot and Mohegan Fund (Pequot Fund), a portion of the money raised through casino gaming is set aside and placed into this separate nonlapsing account so that it can be allocated to each and every municipality in the form of state aid. In its 17 years in existence, the fund has provided hundreds of millions of dollars in state aid to our local communities.

Money is distributed from the fund to towns based on number of various formulas and criteria, including size and location. Unlike other state grants to municipalities that are designated for a specific purpose, towns can use money from the Pequot Fund for anything; giving them great flexibility to fund education initiatives, public works projects or any need in that community.

Money that does not get diverted into this fund goes directly into the General Fund. One of the reasons that I opposed last year’s Democrat state budget is that it took more than $30 million (of the $90 million allocated in 09) out of the Pequot Fund in order to reduce the deficit in the General Fund. This meant that every city and town saw their portion of the fund reduced. In fact, the towns of Avon, Canton and Simsbury together received less than half lost of their fund allocation from last year to this year.

One misconception is that the money the state receives from the casinos was intended to go to education. This was never the case and is often confused with revenue generated from the state lottery. The lottery was established in 1971 and from 1975-1977 the revenue from instant games went to education equalization grants. This was later discontinued and now all money, included the $283 million raised last year from the lottery, goes directly into the General Fund.

For a breakdown of what each town receives in aid from the Pequot Fund, or for more information regarding money the state receives from the casinos, please contact me at 1-800-842-1421.