The U.S. Bureau of Indian Affairs on Friday shot down a tribal gaming compact amendment that calls for the state to be on the hook for millions of dollars if a Kenosha casino opened and the Potawatomi tribe saw business at its Milwaukee gambling hall fall as a result, according to letters released Friday.
“We have never been presented with a compact or amendment that goes so far as to attempt to guarantee the continued profitability of one tribe’s casino at the expense of another tribe,” BIA head Kevin Washburn wrote in letters to Gov. Scott Walker and Harold Frank, Potawatomi chairman.
Washburn added that a gaming compact is intended to deal with “legitimate regulatory concerns” about Indian casinos. The proposed amendment to the Potawatomi compact, which calls for the tribe to be indemnified against any revenue lost to a proposed $800 million Menominee casino in Kenosha, goes far beyond that.
“Its intent is to protect the Potawatomi Hotel & Casino revenue losses due to competition” from a Kenosha casino, Washburn wrote.
The state and Potawatomi in November sent the BIA the proposed amendment to its 2005 gaming compact that includes protections against it incurring losses to a new off-reservation casino located within 50 miles of the Milwaukee casino. An arbitration panel determined the meaning of the language and how to enforce it. But a lawyer for Walker questioned whether the governor could legally commit the state to help cover any losses at the Potawatomi casino.
The BIA got this right. As I understand it, this absolves the taxpayers or anyone else from making the Potawatomi whole if they lose business due to competition. That’s good. It takes that off the table. I believe the Potawatomi still might be able to withhold its payments to the state because of a provision in its gaming compact, but even that is suspect.
This removes one more barrier to Walker approving the Kenosha casino. Now he just needs to actually do it.
Owen–I need more help understanding this because it sounds to me like the Potos and the State came to an agreement through arbitration whereby the State would reimburse the Potos for any lost gambling revenue IF the Menomonee were unable to or chose not to reimburse the Potos. This subsequent agreement was in response to the fact Doyle’s compact prevented any competing casinos nearby and the State wanted a way to see if the Menomonee place could be built.
But does this still mean that the Poto’s can force the Menomonee to pay them lost revenue under the Doyle compact?
Or did this BIA official basically invalidate ALL the anti-competitive clauses from the Doyle agreements themselves?
As I follow it, you are correct. This was a proposed amendment to the compact that would have obligated the state to reimburse the Poto for lost revenue due to competition from the Kenosha casino. By rejecting it, the state isn’t on the hook for it.
I believe that this leaves the anti-competition clause in the existing compact in effect, but there isn’t, as far as I know, an enforcement mechanism for that clause. That leaves the only recourse for the Poto is to withhold their payments to the state. But that is dubious because that may render the entire compact in breach and force it back into negotiation with the state.
By rejecting the amendment, the only thing the Poto can even try to do now to make the decision painful for the state is to withhold their payments, but they may lose that battle in court eventually anyway. My hope is that Walker approves the casino and the Poto end up wishing they had taken the deal from the Menominee when all of this started.
My read is different, and far darker for the Menomonee and Kenosha. The state is already going to be on the hook for any lost Potawatomi revenue due to a Menomonee casino in Kenosha because of an arbitration panel’s decision putting the state 110% on said hook, even for lost revenues that are not allowed to be negotiated upon. The BIA said that it would not allow the Menomonee under any circumstances, including a bilateral agreement between the Menomonee and the Potawatomi, much less as part of an agreement it is not officially a party to, to be put all the way on that hook.
I highly doubt the Menomonee and the Potawatomi will come to any sort of agreement in the month that is left for Walker to make a decision. I only hope that Walker can find a way to void the agreement with the Potawatomi and shut down their Milwaukee operation.