Potawatomi would be compensated for losses under proposed compact amendment

The State of Wisconsin has agreed to make an annual payment to the Forest County Potawatomi in order to allow a proposed Menominee Indian Tribe of Wisconsin casino to move forward in Kenosha, according to an update from Gov. Scott Walker.

The payments, which are laid out in a federal compact amendment that is pending approval with the U.S. Bureau of Indian Affairs, would compensate the Potawatomi for any losses at its Potawatomi Bingo & Casino in Milwaukee that are incurred by the new casino and are not covered by the Menominee, Walker said.

But a legal counsel for the state has questioned whether such a unilateral payment agreement would be legal without an appropriation approved by the state Legislature.

According to a letter from attorney R. Lance Boldrey of Dykema Gossett PLLC on behalf of the state to Judge Kevin Washburn, the assistant secretary of interior for Indian Affairs: “Creating this type of annual obligation on the part of the state is likely beyond the power of the governor—it would invade the core legislative function of making policy choices with respect to the expenditure and appropriation of state funds.”

The Menominee’s proposed Hard Rock Casino was approved by the Bureau of Indian Affairs in August 2013, pending gubernatorial approval. Walker says the proposed amendment does not indicate whether or not he supports the project. He must make a decision about whether to approve the Kenosha casino by Feb. 19, 2015.

At Walker’s request, state Department of Administration secretary Mike Huebsch has been working with experts to conduct an independent analysis of the casino’s cost and economic impact, he said.

In June, the Potawatomi withheld its annual shared revenue payment to the state pending Walker’s decision.

According to Huebsch’s June report, the state’s gaming compacts with three tribes, the Ho-Chunk Nation, Potawatomi and Lac du Flambeau, indicate that the state must indemnify them or offset them for losses if a casino is built in Kenosha. The Lac Du Flambeau tribe waived its claim in October 2013 and the Ho-Chunk Nation’s compact has a “relatively clear and defined process that addresses the state’s obligations,” to compensate for a Kenosha casino, Huebsch said in his report.

“Due to the compact amendments negotiated by (former) Gov. (Jim) Doyle, the proposed casino could cost the state hundreds of millions of dollars over multiple years, so we want to make sure the project does not have an adverse impact on our state’s taxpayers and the budget,” Walker said in his update. “Tribes with casinos make yearly revenue sharing payments to the state, and we have already seen an impact on the state budget because of the Potawatomi’s decision in June to withhold their required payment.”

Jeff Crawford, attorney general for the Potawatomi, released the following statement about the amendment: “This compact amendment, coupled with the state’s mitigation agreement with the Ho-Chunk Nation, could result in the State of Wisconsin being responsible for over $100 million in annual payments to the tribes as a result of the Kenosha casino. The Potawatomi will continue to work with Gov. Walker and his administration in reviewing all aspects of this casino project. The tribe continues to oppose this project and believes Governor Walker will ultimately find that this project is not in the best interest of Wisconsin.”

According to the Menominee, the proposed casino would generate about $150 million in state revenue per year in its first five years of operation, under its 7.5 percent revenue sharing compact agreement.

“We believe total lost revenues to Potawatomi and Ho-Chunk combined will not be greater than $50 million,” the Menominee say in a statement on the tribal website. “Therefore, the revenue generated at the Kenosha Project can pay for all of Potawatomi and Ho-Chunk’s losses, and still provide an additional $100 million to the state.”

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