One way or another, MGM Bridgeport would be a gamble.

In unveiling its plans last month for a waterfront casino in the state’s largest city, MGM Resorts International said state revenue from the new facility would more than make up for what would be lost from the two existing casinos in southeastern Connecticut. But according to analysts from Fitch Ratings, there are questions that need to be answered before that determination can be made.

At the same time, the risk of an overheated casino market will only increase in years to come.

“The Northeast in general is a pretty saturated market at this point,” said Colin A. Mansfield, a director of corporate finance at Fitch. “We’ve seen the number of casinos in the region increase over the last decade.”

And while a number of recently opened casinos in upstate New York have delivered underwhelming results in the early going, coming changes in the New York City market could mean plenty of competition for Bridgeport down the road.

State budget questions

The state relies on 25 percent of slot machine revenue from the Mashantucket Pequots and Mohegans to help balance its budget. That meant $265 million in the most recent fiscal year, according to Fitch, which comes each year in return for the tribes holding a monopoly on casinos in the state.

In the context of a roughly $20 billion annual state budget, that amount would be difficult to replace, especially with lawmakers unable to reach an agreement on any spending plan at all this year, said Marcy Block, senior director of U.S. public finance for Fitch.

But if the state were to allow MGM to build in Bridgeport, it could mean the immediate end of those payments, with the new casino needing years before it could be built and begin operating. That interim period raises questions about how the state would fill the hole, Block said.

“The state is predicting deficits years into the future and is looking at fairly significant cuts,” she said. “I don’t know that they can afford to roll the dice on that and think the new casino can provide sufficient compensation for that loss.”

Protecting investments

MGM says it would provide a one-time $50 million licensing fee to the state, as well as $8 million in annual payments to Bridgeport, $4.5 million annually to be distributed among its neighbors and a job-training facility planned for New Haven.

As much as MGM’s Bridgeport move is about the New York City market, it’s as much about protecting its investment in Massachusetts. MGM Springfield, a $960 million project, is on track to open within the next year, and its proximity to Connecticut means many customers would come from this state.

Connecticut’s response, a proposed third casino in East Windsor that would be run by the tribes that operate Mohegan Sun and Foxwoods, is meant to stem some of that cross-state business. MGM Bridgeport is in many ways the company’s counter-move.

“We were not completely surprised by the proposal coming out,” Mansfield said. “They’re trying to protect their investment in Springfield.”

Tax rate uncertain

MGM says the projected taxes from its Bridgeport facility would total almost $1.6 billion to the state from 2019 to 2023, more than either of the current casinos would provide or the amount that would come in with the addition of the East Windsor casino.

But analysts said it’s difficult to judge that claim without knowing at what rate casino earnings would be taxed.

“It’s a big question mark and a very fluid answer,” Mansfield said. “Can a commercial casino in Bridgeport make up dollar for dollar what the tribes have been paying?

“To make the math work, you’d probably have to tax at the high end to make up for lost years of revenue-sharing payments,” he said. “But if you have a high gaming tax, it discourages investment by the commercial operator. It makes it harder to make the returns pencil out.”

MGM representatives did not say on what proposed tax rate they were basing their predicted returns. Roy Occhiogrosso, who is representing MGM, last week said the company did not “want to negotiate the rate in public.”

Competitive landscape

Much of MGM Bridgeport’s appeal lies in its proximity to New York City, but that landscape could change quickly.

New York state in 2013 signed a law allowing for seven casinos to be built upstate to help spur economic growth. The initial results have been underwhelming if not necessarily surprising, analysts said.

But Connecticut’s neighbor won’t stay out of the local market forever. Mansfield said while the law was written to give upstate cities a head start with their casinos, operators have the option to open closer to New York City after seven years. New Jersey and Pennsylvania, too, are looking to take greater advantage of the 20 million people in the metropolitan region.

“It’s hard to also say what the competitive landscape would look like if they did this,” Mansfield said. “If Bridgeport is legalized, would there still be a casino in East Windsor? It’s difficult to forecast what can be generated.”

The biggest issue, both analysts said, comes back to oversaturation.

“We’re seeing a shift in where revenue is coming from,” Block said. “In general, it is cannibalization across state lines that is having an impact on the bottom line.”

hbailey@hearstmediact.com