DOI Rejects Mashpee Wampanoag/Genting Deal

Another version for the record --

Department of Interior Rejects Mashpee-State Gaming Compact

By Gale Courey Toensing

October 16, 2012

 

Mashpee Wampanoag Tribal Chairman Cedric Cromwell, standing, and Massachusetts Gov. Duval Patrick are surrounded by tribal members at the signing of the tribal-state gaming compact that will allow the Mashpee Tribe to build a casino in the southeastern part of the state. (Gale Courey Toensing)

The Department of Interior has rejected the casino compact between the Mashpee Wampanoag Tribe and the Commonwealth of Massachusetts, saying it unfairly gives the state too much money and unwarranted authority over tribal matters, threatening the tribe’s sovereignty.

In an October 12 letter to Massachusetts Gov. Deval Patrick, the Interior Department’s newly appointed Assistant Secretary-Indian Affairs Kevin Washburn said the compact violates the Indian Gaming Regulatory Act (IGRA) in a number of ways, including an excessive 21.5 percent share of all gross gaming revenues, while asserting “illusory concessions” by the state.

“Congress included the tribal-state compact provisions to account for states;’ interests in the regulation and conduct of Class III gaming activities. … [and] in doing so, sought to establish ‘boundaries to restrain aggression by powerful states,’” Washburn said, quoting case law. “We deeply regret that this decision is necessary, and understand that it constitutes a significant setback for the tribe. Nevertheless, the Department is committed to upholding IGRA and cannot approve a compact that violates IGRA in the manner described (in this letter).”

Patrick and Mashpee Wampanoag Tribe Chairman Cedric Cromwell signed the compact in a standing-room-only ceremony in the governor’s office July 30. The Mashpee tribe plans to build a $500 million destination resort casino in Taunton, Massachusetts, in the southeastern part of the state. In a prepared statement, Cromwell said the parties will go back to the negotiating table. “While disappointing, this possibility was anticipated in our agreement with the Commonwealth, which requires that we return to the negotiating table immediately to address the outstanding issues in the Compact and come to a revised agreement. We believe that these issues can be resolved quickly and cooperatively, and the Compact can be re-submitted to the [Bureau of Indian Affairs] for swift action,” Cromwell said. “The Mashpee Wampanoag Tribe and the Commonwealth have negotiated respectfully and collaboratively to come to an initial agreement and we will continue to negotiate in that same spirit.”

Washburn provided a detailed analysis of the compact’s extensive IGRA violations in his 18-page letter to Patrick, which was also sent to Cromwell. The compact provides the state with a “significant share” – 21.5 percent – of the tribe’s gross gaming revenues. But the tribe is required to continue paying the state 15 percent off the top of all gaming revenues even if the state violates the tribe’s exclusivity zone, a geographic area called Region 1. Furthermore, while a tribe can negotiate revenue sharing in exchange for a tangible benefit, such as an exclusivity zone free of competition, the exclusivity provision in the compact does not protect the Mashpee Tribe from competition. The compact guarantees the tribe the exclusive right to operate a Category 1 License, meaning a casino offering both table games and slot machines, but it doesn’t prohibit a Class 2 License – a casino operating only slot machines – from opening in its exclusivity zone. “Thus, the tribe could still be faced with the prospect of competing against another facility operating up to 1,250 slot machines,” Washburn wrote.

The compact itself “makes it clear that the tribe and the Commonwealth believe that the tribe’s exclusive right to conduct gaming in Region C is worth 6.5 percent of the Tribe’s Gross Gaming Revenue,” Washburn said. “The Compact does not contain any other concessions by the Commonwealth to the tribe that would justify revenue sharing beyond that rate,” Washburn wrote.
The state and tribe have tried to use the compact negotiation process to determine non-gaming issues, such as the tribe’s hunting and fishing rights and its land claims. Washburn said these efforts are “in clear contravention of IGRA’s express limitation that gaming compacts may only address matters directly related to gaming.”
Washburn dismissed the tribe’s assertion that the state had made a concession in offering the tribe a “First Casino Advantage” to operate the first casino in Region C “at great economic cost to the Commonwealth.” “We believe that this asserted concession is illusory and that it does not constitute a meaningful concession for purpose of this analysis,” he said since the tribe already has the exclusive right to operate a casino in the region.

Another “illusory” concession is the Commonwealth’s offer to support the tribe’s application to acquire trust land for the casino. The compact says this support is a concession in exchange for the tribe’s sharing of the gaming revenues with the Commonwealth. Washburn said the support is “symbolic,” but “it is not a concession at all. The Commonwealth does not have the authority or ability to approve the tribe’s application, and is not giving anything tangible to the tribe. Thus, this offer constitutes an illusory concession to the tribe and is not meaningful for the purposes of this analyses,” Washburn wrote.

The Interior decision also made it clear that the state had inappropriately addressed the tribe’s aboriginal hunting and fishing rights as well as land claims and water right. This is not only a legal violation, Washburn said, but also poses a threat to a tribe’s sovereignty. “If hunting and fishing rights and land and water rights are subject to negotiation in gaming compacts, then other rights central to tribal sovereignty will be at stake in gaming compacts.” This section “of the Compact is clearly unrelated to the operation of gaming activities, and is not permissible under IGRA. Moreover,

Secretarial approval of such as provision may violate the United States’ trust obligations to Indians, given that such aboriginal rights can be extinguished only by Congress,” Washburn said. He noted in a footnote that the highest court in the state has already recognized the Wampanoags’ aboriginal hunting and fishing rights.

The compact also impermissibly gives the state regulatory authority over several non-gaming activities including suppliers, ancillary entertainment services, ancillary non-gaming amenities, and the construction, maintenance and operation of the facility. “Congress expressly sought to prevent states from using gaming compacts to leverage power over sovereign tribes about matters unrelated to gaming. This is especially important because a tribe may be strongly tempted to agree to such terms for political expediency to obtain the state’s agreement,” Washburn wrote.

Additional issues in the compact include the state’s regulation of the tribe’s conduct of Class II gaming, measures the tribe will take to collect state taxes, limitations on how the tribe will use its net revenues and other infringements on the tribe’s right to self-governance.

Patrick posted a statement on his website in which he criticized the Interior Department for “substituting its judgment for the tribe’s.” He said the compact was “extraordinarily fair to both sides” and “recognized and respected” the tribes sovereign rights. “I believe Interior’s approach is outdated and does not adequately take into account our unique circumstances here in Massachusetts,” Patrick said. He insisted that the tribe’s “early entry” into the casino market justified the state’s 21.5 percent cut of gaming revenues. The negotiations will pick up again, Patrick said. “The Compact calls for us to resume negotiations in the face of a federal disapproval and requires legislative approval of any renegotiated compact. I remain committed to striking an appropriate balance which protects the best interests of the Commonwealth and the tribe. I believe our Compact struck that balance. We will try to do so again.”

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