Monday, January 30, 2006


Court strikes down casino deal
Justices say Doyle exceeded authority with new games, open-ended compact
Posted: May 13, 2004

Madison - The state Supreme Court shuffled the deck on tribal casino gambling in Wisconsin on Thursday, ruling that Gov. Jim Doyle overstepped his authority in negotiating an expansive gaming compact with the Forest County Potawatomi tribe.

The court's 4-3 ruling says that Doyle's gambling deal improperly cut the Legislature out of the decision, overstepped state constitutional bounds by allowing craps, roulette and other Las Vegas games and that Doyle had no authority to give up the state's sovereign immunity as part of the deals.

But there was a lot the ruling did not say, raising thorny questions without any clear-cut answers:

Whether tribal casinos in Milwaukee and around the state could be prevented from continuing to offer craps, roulette and poker games authorized by gambling deals now ruled invalid. The Potawatomi casino remained open for business Thursday, and the tribe said that no games would be shut down.
Milwaukee County District Attorney E. Michael McCann, who sided with Republican lawmakers against the compacts, said he was barred from taking any action against the Milwaukee casino by a federal injunction still in force.

Whether Wisconsin tribes would withhold more than $100 million in casino payments due June 30, under terms of the invalidated gambling compacts, and how the Legislature will fill a new hole in a precariously balanced state budget.
Potawatomi tribal attorney Jeff Crawford said that tribe's $40.5 million payment due June 30 would not be paid. He said the tribe might instead pay the $6.4 million it would have owed under terms of its old gambling compact.

How ongoing uncertainty over the rules on Indian casinos jeopardizes casino expansion plans around the state. Crawford said the Potawatomi tribe's ambitious $240 million upgrade of its Menomonee Valley casino was on hold as a result of the ruling.
"The highest court in the state decided rather convincingly that those compacts are unconstitutional," Assembly Speaker John Gard (R-Peshtigo) said. But he conceded: "Everybody is going to have a lot of questions as to what this (ruling) means."

Crawford said the ruling "throws Wisconsin into economic and legal chaos," putting thousands of new casino jobs and massive development projects in jeopardy.

Marc Marotta, a top aide to Doyle, said: "Right now, there's just a lot of confusion." He said the state would try to negotiate some interim amendments to the tribal compacts, while an expected federal lawsuit over the issue simultaneously is litigated.

Different deals

Not all 11 Wisconsin tribes will be affected in the same way. While all compacts are similar, each tribe has different terms on casino payments and a variety of other details.

One key difference: Three tribes - the Oneida, Stockbridge-Munsee and St. Croix Chippewa - have fallback provisions that say if a court invalidates the clause that would allow the deals to continue in perpetuity, their compacts would stay in force for 99 years.

Doyle said the state could be the biggest loser in the case, because Wisconsin had negotiated such favorable terms in the new compacts. The $206.6 million the state expected to receive under the new compacts in the next two years and $2 billion over 10 years would make Wisconsin the No. 2 state in the amount of money collected from tribal gaming, he said.

"The issue here is whether the state is going to get any money out of Indian gaming," Doyle said, noting that the casino payments he negotiated helped balance the state budget.

Thursday's ruling says some changes approved last year must be renegotiated, and Republican lawmakers said they were eager to have the casino discussions resume. Meanwhile, the rules that applied under prior gambling agreements take effect, the Supreme Court decision says.

"We hold that the governor exceeded his authority when he agreed unilaterally to a compact term that permanently removes the subject of Indian gaming from the Legislature's ability to establish policy and make law," said the 71-page majority opinion, written by Justice David Prosser.

Doyle said an appeal to federal court was likely but probably would be made by the Potawatomi, not the state. Crawford said the tribe was considering a federal lawsuit and predicted a flood of litigation from other parties.

Gordon Baldwin, a retired University of Wisconsin Law School professor who argued the case for Gard and Senate Majority Leader Mary Panzer (R-West Bend), said he didn't see any issues in the lawsuit that would merit an appeal in federal court.

The ruling was a major victory - at least for now - for Republican lawmakers, who filed the lawsuit last year after saying Doyle got a lousy deal from the tribes.

While the case decided Thursday focuses only on the Potawatomi gambling deal, the ruling is expected to affect similar agreements with Wisconsin's other 10 tribes.

Panzer and Gard were emphatic in their hope to work with Doyle to renegotiate the contracts in a way that would be more appealing to the Legislature.

Though Panzer and Gard are looking for a greater voice in dictating the terms of the compact, it's unclear whether they have any role to play.

While the court ruled that Doyle's agreement went too far, nevertheless, the decision upheld the governor's right under state law to negotiate such deals without receiving legislative approval.

Crawford said the tribe would respond if asked by the state to discuss its gaming compact, but he noted that the ruling makes it unclear with whom the tribe should negotiate.

While roulette, craps and poker games are at risk as a result of the ruling, the removal of an old limit of 1,000 slot machines for the Potawatomi Bingo Casino in Milwaukee is not at issue, Crawford said. Slots account for the vast majority of casinos' revenue. The ruling specifically mentions only the open-ended duration of the Potawatomi compact and the new games as having run afoul of the state constitution.

Big dollars at stake

Gard encouraged Doyle not to delay any talks that would address the $206.6 million budget shortfall the ruling could create. "My hope is that (Doyle) takes the opportunity to have the do-over he's been given to make up for the worst mistake he's made as governor," Gard said.

Gard said in other states, Indian tribes were offering states up to a 25% cut in their revenue.

The Oneida Indians of Wisconsin don't expect that the Supreme Court's decision will affect their operations, said Bobbi Webster, the tribe's spokeswoman. Under the terms of its compact, the tribe is scheduled to make a $20 million payment to the state in June.

"We're going to continue to honor the terms of the compact," she said, but declined to say specifically whether that full payment would be made.

Webster said the Oneida plan to continue to offer a full range of gambling activities - including poker, roulette and craps.

Three justices, in a dissenting opinion, said Thursday's majority ruling "raises substantial federal issues, rendering this court a stopping point on the parties' way to the federal courts."

The ruling will jeopardize not only the tribal payments to the state but also the 35,000 current casino-related jobs in Wisconsin and an additional 20,000 jobs and estimated $1 billion in casino expansions the 2003 gambling agreements were projected to generate, wrote Chief Justice Shirley Abrahamson and Justices Ann Walsh Bradley and N. Patrick Crooks.

Prosser's majority opinion, however, dismisses such concerns as the state's hunger for additional revenue.

"This court does not decide cases on these grounds," Prosser wrote.

Overstepping authority

The ruling said although a 1992 state law gave the governor sole authority to negotiate casino deals with tribes, the 2003 compacts were so sweeping they deprived the Legislature of its role in shaping the state budget.

By agreeing to the perpetual term of the new compacts, Doyle improperly curbed the Legislature's role, the ruling states.

When the Legislature gave then-Gov. Tommy G. Thompson sole power to cut casino deals, it was "extremely unlikely" it intended to cut itself out of any role on tribal gambling, Prosser states in the ruling.

The ruling says the 1993 state constitutional amendment barring new forms of gambling beyond the lottery, raffles and pari-mutuel betting also precluded approval of new casino games in the 2003 compacts.

But slot machines and blackjack at the casinos remain legal because they were authorized under terms of original tribal-state gambling deals in 1992, the decision says.

The ruling said Doyle also exceeded his power by agreeing to submit the state to arbitrators' rulings on disputes with tribes over gambling compacts, thereby waiving the state's sovereign immunity.

Voting with Prosser in the majority ruling were Justices Jon Wilcox, Patience Roggensack and Diane Sykes.


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