Casino ruling means challenge ahead for DuluthIf a ruling handed down by a district court Monday stands, the Fond du Lac Band of Lake Superior Chippewa will be able to keep about $6 million a year in casino revenues it had been paying to the city of Duluth.
By: Peter Passi, Duluth News Tribune
If a ruling handed down by a district court Monday stands, the Fond du Lac Band of Lake Superior Chippewa will be able to keep about $6 million a year in casino revenues it had been paying to the city of Duluth.
The decision would allow the Fond-du-Luth Casino to continue to operate without forking over any more of its gaming profits to the city.
And Duluth Mayor Don Ness predicted the consequences for the city could be severe.
“It would be devastating,” he said. “It would mean the loss of a very significant revenue source that we’ve depended on to fund our street improvement program. There are no good options to respond to that. We would have no source of revenue for any significant street improvements.”
But Tribal Chairwoman Karen Diver said the band can put the money to good use itself, assisting with land reclamation, promoting economic development and delivering services to its members.
“It means this money can now be used for our own community,” she said.
While Judge Susan Richard Nelson ruled the band had no future obligation to share casino revenues with the city, she said the city was entitled to receive payments through April 2011, when a prior 25-year agreement came up for renewal negotiations.
Those payments would amount to about $14 million, and would help the city in the short term, said David Montgomery, Duluth’s chief administrative officer.
“We know we’re good for 2012. The question is what to do in 2013. If this stands, we will have to evaluate our options and look at a wide array of things,” he said.
The band had sought to recover past payments made to the city, and if it had prevailed, Ness said the city would be in even worse straits.
“If we had been forced to repay $74 million to the band, it would have bankrupted the city,” he said.
Even so, Ness said the city faces a daunting challenge.
“Going forward, the question is: How are we able to invest in critical infrastructure?” he said.
The city is weighing the possibility of an appeal.
“We’re trying to understand the logic and basis of the court’s decision to determine whether this is something we need to pursue further,” Ness said.
The judge’s decision to release the band from future obligations to share casino revenues with the city is predicated on a recent ruling by the chair of National Indian Gaming Commission that the agreement with the city of Duluth was improper.
But Ness said it’s still not clear to him what authority the NIGC chair has to negate a signed contract.
“I’ve never before heard of a situation where the weight of a political appointee’s opinion could be used to invalidate a contract signed by both parties,” he said.
If the previous contract is no longer binding, Ness said, it would seem the city would be released from its prior commitment not to bring any competing gambling establishment into the community.
“It would only be natural to explore our other options,” Ness said.
The city also could ask the band for at least some payment in lieu of property taxes to continue providing other services, such as fire protection, law enforcement and parking in a city-owned parking ramp next door to the casino.
Diver wouldn’t rule out some such agreement, saying: “That remains to be determined. But there is a school of thought that the $80 million or so we’ve already paid the city should more than cover the tab.”