The Bay Mills Indian Community’s pending Supreme Court case has sucked a lot of the oxygen out of the room here in Michigan.  And it has definitely overshadowed an impending showdown between the State of Michigan and seven six* tribes over the negotiation of new Class III gaming compacts.

The negotiation of new tribal-state gaming compacts here in Michigan will offer a unique case study in how the Indian Gaming Regulatory Act’s compact provisions affect the negotiation of “second generation” gaming compacts – compacts that follow, rather than extend, a tribe’s previous compact.

We’re going to take a closer look at these negotiations in upcoming posts.  But, first, it is important to understand how the current agreements – approved in 1993 – came into effect. WARNING: Marathon Blog Post.

THE HISTORY

As in other parts of the country, a number of Michigan tribes were already operating Class III gaming when IGRA was enacted in 1988.  In enacting IGRA, Congress required tribes to negotiate a gaming compact with states to engage in Class III gaming – even for those tribes that were already operating such games.  Congress also required states to negotiate these agreements in “good faith.”

Six Michigan tribes sought to negotiate Class III gaming compacts with the State of Michigan almost immediately after IGRA’s enactment.  Then-Governor Jim Blanchard refused to negotiate over Class III slot machines, and ultimately refused to enter into a compact.

In 1990, those six tribes filed a lawsuit against the State of Michigan in the U.S. District Court for the Western District of Michigan, alleging that the State violated IGRA’s requirement to negotiate in good faith, and seeking a declaratory judgment that Class III slot machines would be permissible to include in the Compact.

In 1992 – 4 years before the Supreme Court’s decision in Seminole –  the Western District of Michigan ruled in that lawsuit (Sault Ste. Marie Tribe v. Engler) that the Tribes’ lawsuit was barred by sovereign immunity. 

After an unsuccessful appeal, the Tribes amended their lawsuit to name then-Governor John Engler as the defendant in an Ex parte Young action.  That case – Sault Ste. Marie Tribe of Chippewa Indians, et al. v. Engler – ended through a negotiated settlement agreement.  That agreement was entered by the U.S. District Court for the Western District of Michigan as a Consent Judgment in 1993.  That Consent Judgment included several key provisions that will impact ongoing compact negotiations:

• The seven tribes that were party to the litigation agreed to pay 8% of the net win from electronic games of chance to the State of Michigan’s “Strategic Fund” – provided that the Tribes “collectively enjoy the exclusive right to operate electronic games of chance in the State of Michigan.” (Sections 6 and 7 of the 1993 Stipulation)

• The Tribes also agreed to pay 2% of the net win from electronic games to “any local units of state government in the immediate vicinity of each tribal casino.”  Importantly, the Tribes were permitted to determine which local units of government would receive the payments (Section 8 of the 1993 Stipulation).

• Section 5 of the Consent Judgment expressly states that the Tribes are only obligated to make revenue sharing payments to the state “only so long as there is a binding Class III compact in effect between each tribe and the State of Michigan…and then only so long as the tribes collectively enjoy the exclusive right to operate” electronic games of chance in Michigan.

• Section 8 of the Consent Judgment states that both the Stipulation and the Consent Judgment may be modified or rescinded “only in the above captioned case, and only by the mutual written consent of all parties and with the Court’s concurrence.”

Concurrent with the Western District of Michigan’s entry of the Consent Judgment, the seven Tribes and the State of Michigan entered into separate Class III gaming compacts that were identical to one another.  Those gaming compacts were approved by the Department of the Interior in 1993.

Each of those compacts stated that they would remain in effect “for a term of twenty (20) years from the date it becomes effective[.]”  In other words, they would remain in effect until November 2013.

But those compacts also included language that has created some…(ahem) room for interpretation:

[12(B)]  At least one year prior to the expiration of twenty (20) years after the Compact becomes effective, and thereafter at least one year prior to the expiration of each subsequent five (5) year period, either party may serve written notice on the other of its right to renegotiate this Compact.

Continue reading →