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Two Takes: Gambling on a deal

The Fond du Luth Casino is lit up at night along Duluth’s Superior Street. (2006 file / News Tribune)

They used to be partners, the city of Duluth and the Fond du Lac Band of Lake Superior Chippewa. Their cooperation was necessary to create the off-reservation downtown Fond-du-Luth Casino in 1986. Their revenue sharing made it a profitable good deal for all for many years.

But then came the Indian Gaming Regulatory Act, the National Indian Gaming Commission (NIGC) and the decision by the Fond du Lac Band in 2009 to cease sharing revenue with the city. The deal with the city didn’t jibe with the law, the band said it was told. The mess has been tied up in the courts ever since with decisions pending on $12 million in revenue sharing since 2009 and on the agreement overall.

At a breakfast forum this month in Duluth, Mayor Don Ness was asked for an update on the situation. What he said is published here.

The News Tribune Opinion page then contacted Fond du Lac Band Chairwoman Karen R. Diver for her view of the situation. Her written response also is published here.

NICG ruling was political favoritism and won’t hold up

“It’s ongoing. We’re hopeful to hear from the district court on the $12 million from the first contract. That’s obviously very important to the city of Duluth. $12 million is a lot of money. We have prevailed on that, and the band is running out of their appeal options on that $12 million. So we feel very confident about that.

“Then, on the larger question of going forward with the revenue sharing, what is becoming more and more clear is when the NIGC issued their opinion in 2011, what they were saying essentially was we have a new interpretation of the Indian Gaming Regulatory Act that was passed in 1989 (and was) approved by both parties, approved by the federal courts, approved by the NIGC and the Department of the Interior. And then (what) they said in 2011 was, ‘Well, our interpretation of this law has changed, has evolved, and so now we’re applying this new interpretation to our agreement. …’

“The interesting thing is they haven’t applied these mysterious standards to any other contract across the nation, many of which are very similar to or more generous than the contract that the (Fond du Lac) band has with the city of Duluth. So as time goes on not only are they not applying that to existing contracts but they’re also approving new contracts, like in Massachusetts in which the revenue sharing is 22 percent. And they’re saying our 19 percent is too much. It just doesn’t make any sense.

“So as time goes on, it’s being proved that this was … political favoritism. This was a political favor done by a political appointee to the NIGC. And it is not holding up. It’s not being applied universally, so you can’t say this is a regulatory action when you don’t apply it to every other contract across the country.

“We are growing more and more confident in our position. It’s unfortunate that it continues to be (dragging) on all these years now, but eventually I think we need to prevail on the $12 million from the first terms of the contract so that we are in a position that we are negotiating on going forward with the band — and then allow them to make investments in their property. We want them to invest in our downtown. We want them to be a partner in some of the exciting things that are happening in our downtown. But clearly their decision to stop payment to the city of Duluth has been a huge detriment.”

Don Ness is mayor of the city of Duluth.

Change in federal law made payments to the city illegal

The Fond du Lac Band hopes that the dispute with the city of Duluth over the Fond-du-Luth Casino can be laid to rest so that the city and band can focus instead on a cooperative approach to meeting the needs of our communities.

Indian gaming is heavily regulated by federal law. After paying the city more than $75 million from 1994 until 2009, the band stopped making these payments because federal law had changed and the payments became illegal. When the federal court said that the federal agency responsible for regulating Indian gaming should review the city-band agreement, the band promptly followed the direction of the court. The city was actively involved in the agency’s review and fully presented its arguments. The agency agreed with the band and ruled that any continued payments to the city would violate federal law. When the agency directed the band to stop making payments to the city, the band complied.

Both the U.S. District Court for Minnesota and the U.S. Court of Appeals found that the agency’s order relieved the band of any obligation to make future payments to the city.

The band has not initiated litigation against the city. We have only responded to lawsuits the city has filed against the band. Recently, the city chose to file more lawsuits, including some against federal agencies and a new lawsuit against the band. We disagree with the arguments the city is advancing in those cases, and we will respond in the courts. We think the city’s reliance on other agreements with other tribes, based on other terms and conditions, is misplaced, and we are confident that the courts will reject the city’s attack on the federal agency ruling.

The band and city share many interests and would both benefit from working together to advance those interests. We both must meet our communities’ needs for jobs, education, health care, housing, and a safe and vibrant place to live. The band provides many benefits to the residents of Duluth through jobs at the casino and health care services within the city. We remain hopeful the litigation finally will stop and that the band and city can instead focus our respective resources on improving the lives of our citizens.

The band stands ready to engage in productive discussions with the city to do this.

Karen R. Diver is chairwoman of the Fond du Lac Band of Lake Superior Chippewa in Cloquet.