Thursday, May 21, 2009

Mohegan Gaming Authority Updates Outlook On Off-Reservation Casino Status

By Ken Davison
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The Mohegan Tribal Gaming Authority's most recent quarterly filing with the Securities and Exchange Commission, updated the status of the Tribe's two off-reservation gaming projects with the Menominee Tribe of Wisconsin and the Cowlitz Tribe of Washinton state.

Menominee:

"In January 2009, the BIA informed the Menominee Tribe of the decision by the United States Secretary of the Interior to decline to take the Menominee Project site in Kenosha into trust for the tribe," the report said. "We believe the rejection of the land-into-trust application for the Kenosha site announced in January decreased the probability that the Menominee Tribe will obtain the necessary regulatory approvals in order to proceed with the Menominee Project, and officials appointed by the new presidential administration."

Cowlitz:

MTGA's report further discussed the Cowlitz casino project, "Since the trust land application for the Cowlitz Project requires action by the Secretary of the Interior under the Indian Reorganization Act, the Carcieri decision may delay action on that application until the BIA and the United States Department of the Interior determine whether the Cowlitz Tribe was under federal jurisdiction at that time, and an adverse decision may lead to a rejection of the trust land application. The Cowlitz Tribe did not receive federal recognition until 2000, so the tribe must establish that it was under federal jurisdiction in 1934 by separate means."

Summary

MTGA has invested approximately $35 million in the two proposed casino projects, the equivalent to just over $30,000 per Tribal adult.

The Menominee Tribe has filed a lawsuit against the U.S. Department of the Interior seeking to overturn two of their policies that are seen as making it increasingly difficult to develop a casino on land that is not close to a tribe's reservation.

Indian gaming began in the 1970's when several tribes began to run high-stakes bingo operations. The state of California sought to impose criminal penalties on two tribes in that state - the Cabazon and Morongo Bands of Mission Indians - over their bingo operations. At that time, only charities in California could operate bingo and anyone else would be subject to a misdemeanor charge.

The two California tribes filed suit in federal court and in 1987 the U.S. Supreme Court made a ruling that distinguished between games that were permissible in the state and those that were outright illegal. Since charities could operate bingo, the game was deemed permissible but regulated as opposed to being illegal. The court's decision that California could not regulate Indian gaming in that state was deemed to also mean that no state could regulate Indian gaming.

In response to that court decision several states pressured congress into enacting the Indian Gaming Regulatory Act (IGRA) of 1988 so that states could exert some control over Indian gaming on reservations. IGRA is complex but the law basically allowed states to regulate certain aspects of Indian gaming while leaving the tribes some autonomy.

The state of Connecticut, under then-Governor Lowell Weicker, first negotiated a hard bargain with the Mashantucket Tribe that required the Tribe to pay the state 25 percent of its slot revenue. The Mohegans, federally recognized after the Mashantucket Pequots' Foxwoods casino opened, agreed to pay the same amount in its compact with the state.

Together, the two Indian casinos provide the state with about $400 million in payments out of their slot revenue, or about 2 percent of the state's budget, which is considered the most lucrative deal any state has ever struck with Indian tribes.

A February U.S. Supreme Court decision that went against the Narragansett Indian Tribe in Rhode Island further restricts the federal government's ability to take land into trust as reservation land for those tribes not under federal jurisdiction in 1934. Although the Mohegans can continue to add to their reservation (up to specified limits) because of a land claim settlement approved by Congress, many other Tribes will have difficulty unless Congress enacts a new law that expressly gives the Department of Interior more authority to take land into trust.

Although the February Supreme Court decision and recent federal policies are causing difficulty with the Menominee and Cowlitz proposed casino projects (both backed by the Mohegans) it is also causing difficulty with tribes that would compete for casino patrons that go to the Mohegan Sun and Foxwoods. The court decision will likely delay the Mashpee Wampanoag Tribe from building a megacasino in Massachusetts and will likely affect tribes seeking off-reservation casinos in New York's Catskill Mountains.

The U.S. Senate Indian Affairs Committee is holding a hearing today about possible "fixes" to the February court decision but many states are opposed to a quick solution that could benefit Indian gaming.

The newly-confirmed head of the Bureau of Indian Affairs, Larry EchoHawk, has been widely criticized for excluding Idaho tribes from gaming when he was attorney general of that state. EchoHawk did not provide in the Senate confirmation hearings any illuminated glimpses as to what his Indian gaming policies might look like in the future.