New Bedford casino contender KG Urban loses lawsuit
A federal judge has ruled that the state's casino law does not unfairly tip the scales in favor of the Mashpee Wampanoag Tribe.
U.S. District Judge Nathaniel Gorton issued the widely anticipated ruling Thursday in the lawsuit brought by KG Urban Enterprises, a developer with hopes of building a commercial casino in New Bedford, saying the state law is not unconstitutional.
KG Urban lawyers filed suit the day the Expanded Gaming Act was signed into law by Gov. Deval Patrick in November of 2011, alleging that aspects of the law that set deadlines and parameters for a possible Indian casino in Southeastern Massachusetts, known as Region C in the legislation, violated the Equal Protection Clause and amounted to a "race-based, set-aside."
Gorton, in dismissing the suit, said he finds "no express racial preference" in the Massachusetts Gaming Commission's procedures or standards.
The state's contention all along is that it included the possibility of a tribal casino in the state law because federal law allows tribes to open gambling facilities on Indian lands in states that allow expanded gambling. State leaders wanted to account for the tribe because gambling studies showed three casinos would be the preferred maximum in the Bay State.
While Gorton found KG Urban "has established a prima facie case that the Gaming Commission is acting with discriminatory purpose," he concluded that commissioners could also show they would come to the "same decision in the absence of any discriminatory purpose."
The court's decision is a blow to KG Urban, which filed an application for a commercial casino in New Bedford in September, but has struggled to find a willing investor in the project because of the lurking presence of the Mashpee Wampanoag Tribe's proposal to build a $500 million casino in Taunton.
Paul Clement, a KG Urban lawyer, issued a statement Thursday saying the casino developer plans to appeal.
"We are pleased that Judge Gorton found that KG demonstrated a 'prima facie' — a facially valid — case that the commercial licensing process described by Chairman (Stephen) Crosby violates the Constitution's Equal Protection Clause," Clement said. "We believe that Judge Gorton misconstrued Chief Judge Lynch's 2012 First Circuit decision, and that his conclusion should have resulted in an injunction. We have already filed a notice of appeal with the First Circuit."
The KG Urban case initially had been dismissed in federal court in early 2012, but was sent back to Gorton by Lynch saying any set-aside for the tribe could only be for a limited period.
Gorton's latest decision comes as the Wampanoag tribe has some apparent momentum in the race for a Southeastern Massachusetts casino. Last week, the tribe learned that its compact with the state was approved by the federal Bureau of Indian Affairs.
Still, the tribe faces a major hurdle in having its Taunton land taken into federal trust by the BIA.
That application is under review, but a key decision awaits on whether the tribe can overcome a 2009 U.S. Supreme Court ruling known as the Carcieri decision. That ruling calls into question the BIA's authority to take land into trust for tribes recognized after 1934.
The Mashpee tribe was federally recognized in 2007, but tribe leaders insist they've made the case that Carcieri does not apply because the Wampanoag were under federal jurisdiction in 1934.
Opponents have said the Carcieri ruling is insurmountable for the tribe and that its ties to anywhere other than Mashpee are suspect.
Tribe leaders could not be reached for comment Thursday night.
Elaine Driscoll, a spokesman for the Gaming Commission, said in an email that commissioners would have no comment on the federal court ruling until after it is reviewed by commissioners today.
Even after opening up Region C to commercial bids and accepting the KG Urban application in September, the commission has said it will factor in where the Mashpee tribe is at in the process in deciding whether to issue a commercial license in Southeastern Massachusetts.
Gorton noted that in his decision. "The court acknowledges that the commission has, of course, on several occasions invoked the possibility of an Indian casino as a potential influence on a future decision," Gorton wrote. "A careful reading of this evidence, however, indicates that the commission has done so as a means of illustrating a specific instance of how it would apply a neutral criterion, namely the economic consequences, to the subject casino."
Under the terms of the tribal-state compact, the tribe wouldn't have to pay anything to the state if a commercial casino exists in Region C — something that would make it hard for a state-licensed casino, paying 25 percent taxes, to compete against.
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