The gamble

Virg Bernero says he’s wanted a casino in Lansing ever since he was elected mayor in 2005. 

He expressed this desire on several occasions since then, particularly once after appointing City Attorney Brig Smith in March 2006.

“When I started, the mayor said ‘I want a casino here,’” Smith recalled on Monday after the unveiling of the Kewadin Lansing Casino plan. “I said I’d like to be 6-foot-7 and play in the NBA.”

Smith — with a thin, roughly 5-foot-7-inch build — still doesn’t play professional basketball and probably never will. But he now believes Lansing has a sound legal argument for bringing a casino to Lansing, an about-face of where he was on the issue six years ago. Smith said he was involved in casino litigation before he came to the city with his former employer, Honigman Miller Schwartz and Cohn LLP in Lansing. Particularly, he worked on legal issues with the “big three” casinos in Detroit, he said.

“In the next several weeks and months we’ll have a lot of armchair legal experts” saying it won’t work, “but I am convinced it will in the long run work,” Smith said Monday. “I’ve become a believer in this thing. The Sault Tribe is probably in the best position to pull this off.”

And then there’s John Wernet, who was hired as the general counsel to the Sault Ste. Marie Tribe of Chippewa Indians in June. The Sault are working with the city on the casino plan. Wernet and Smith are part of the legal team trying to see the casino deal through.

“When I got involved, I initially was very skeptical,” Wernet said Monday afternoon. “We put a lot of time in carefully evaluating theories. I’m confident we’re on sound legal ground. That’s different from saying we’ll necessarily win, but I have a high degree of confidence in the theory.”

Wernet formerly served as Gov. Jennifer Granholm’s deputy legal counsel and has more than 30 years’ experience working on tribal issues.

The city and the Sault are hanging their hats on a provision in the Michigan Indian Land Claims Settlement Act of 1997 that they say makes the Sault unique from the other Chippewa and Ottawa tribes included in it. The act outlines the use and distribution of judgment funds for those tribes from the Indian Claims Commission. It sets up “self-sufficiency funds” to be used by the tribes.

Some legal experts dismiss the Lansing plan because of ongoing federal litigation between the Bay Mills Indian Community and the state in which the Bay Mills Community tried opening an off-reservation casino with money from its self-sufficiency fund. The case is before the 6th Circuit Court of Appeals.

But Wernet and Smith are quick to point out that the Sault are not the Bay Mills Community when it comes to the settlement act. They argue the Sault can set up an account to collect interest on the settlement money and buy land for a casino with that.

“Any lands acquired using amounts from interest or other income of the Self-Sufficiency Fund shall be held in trust by the Secretary for the benefit of the tribe,” a provision reads in the Sault’s section of the act. The act does not include this provision for the Bay Mills Community. Basically, Wernet argues, the Department of the Interior will have no choice but entrusting the land to the Sault Tribe once it’s purchased from the city using interest, allowing for a casino.

“Bay Mills doesn’t have a provision like this in their statutes. They didn’t have a choice to pursue mandatory trust,” Wernet said, adding that perhaps it was excluded because the “circumstances, culture and government is different” for each tribe. 

Wernet went on to admit: “I was not familiar with this very specific provision of the Michigan Indian Land Claims Settlement Act that is really unique to the Sault Tribe. But the language seems very clear and very compelling.”

Yet, theories from legal experts aren’t hard to come by and often differ. The narrative shaping up around the city’s casino announcement is between the believers and the non-believers of the city’s and the Sault’s legal theory: Those who believe a casino in Lansing is possible and those who don’t. Arguments about the potentially positive and negative impacts of a Lansing casino — culturally, socially, economically — are moot if the casino’s proponents can’t conquer the main legal hurdle.

The city’s opposition, namely the Saginaw Tribe of Chippewa Indians, hired an experienced Indian gaming attorney, Philip Hogen, who chaired the National Indian Gaming Commission for seven years to consult on this issue. Hogen, a South Dakota-based attorney, said the Land Claims Settlement Act should be taken in the context of the federal Indian Gaming Regulatory Act of 1988. That act specifically makes “crystal clear that tribal gaming can only occur on what is tribal land,” Hogen said.

“The Sault Tribe as well as Bay Mills are governed by the Michigan Indian Land Claim Settlement Act, which was intended to permit them to enhance their land claims,” he said. “But to go any place and every place in Michigan is far beyond what Congress intended in that scenario. To do this — to bet the farm, so to speak — and to build hopes that this will work before those lands fall into that category is a little disingenuous.”

Hogen is concerned a ruling in favor of the Sault and Lansing could “open the floodgates on a questionable legal theory” for a rapid expansion of Indian gaming facilities.

When asked who has the most to lose in all of this, Hogen said: “Basically the whole gaming industry. The integrity of the Indian gaming industry is so important — that’s what has made it the economic miracle it has become. We haven’t abused that privilege. If and when we look for loopholes different than what the original intention was — in consequence, if they can do it wherever they want to — statewide gaming no longer provides the ability for the tribe to build and sustain economic development through the gaming industry.”

Matthew Fletcher, a Michigan State University law professor and director of the Indigenous Law and Policy Center, said “it seems so fanciful” to rely on the Michigan Indian Land Claims Settlement Act as the city’s and Sault’s argument. “It boggles my mind this kind of money, revenues and promises about jobs are being made in the paper given the incredible uncertainty of the legal situation. But, anything can happen.”

Fletcher is a member of the Grand Traverse Band of Ottawa and Chippewa Indians, for which he said he has “done a little work” in the past, including at times when the Grand Traverse Band had testified against other tribes coming downstate. The Sault Tribe is based in the Upper Peninsula and operates five casinos there, but Fletcher said the Grand Traverse Band is “officially neutral when it comes to these sorts of things.”

Wernet, of the Sault Tribe, offered a couple of possible scenarios of how this will move forward, both of which involve several years of waiting on federal approval and potential litigation. First, if the U.S. Department of the Interior denies the application for holding the land in trust, Wernet said the parties would likely appeal the decision. If it is approved, Wernet said it’s likely that opponents will file suit against the tribe in attempts to block it.

Fletcher said the Interior Department’s review process takes at least two to three years. “And the secretary’s decision is ultimately a very political one. The politics is just brutal when it comes to off-reservation gaming.”

Meanwhile, a development agreement is drawn up and Smith, Lansing’s city attorney, speculated the Lansing City Council would vote on it in March. It’s also worth noting that the Sault is paying the city’s legal fees and that the city is indemnified so that “when or if a lawsuit develops, the city is held harmless,” Smith said.

Redrawing the Stadium District

For planning’s sake, let’s just say the Sault is granted approval from the Interior Department, the tribe’s opponents lose in a lawsuit to appeal the decision and Kewadin Lansing Casino becomes a reality.

The city estimates 2,200 jobs, $5 million to $6 million in four-year scholarships for Lansing high school graduates and $1.2 million for police and fire protection will stem from the plan. The school and public safety money would come from a small percentage — 2 percent and 1/2 percent, respectively — of net wagers, which is the total money wagered at the casino minus what is paid out to winners. Following a temporary casino on-site, the ultimate goal is to build a permanent casino with a nearly 300,000 square-foot imprint on prime waterfront real estate downtown. That would include about 2,900 parking spaces, but an obvious question is: Where would all these visitors stay? Wouldn’t people be interested in staying overnight within walking distance of the casino?

The Radisson Hotel across the river from the site has 256 rooms. Yet, even on a big Michigan State University football game Saturday, the Radisson is booked up.

“Neither the city nor the tribe are in the hotel business” and plans for either parties to build a hotel are nowhere in the development agreement, Smith said. Further, an agreement between the city and the Radisson prevents the city from subsidizing another hotel likely until 2018, Smith said. But that doesn’t prevent a private developer from building one. “If someone wants to come in at market rate, then God bless them,” Smith said. “We’re truly not in the hotel business and don’t need to be.”

Bernero said Sunday that “we expect the private sector will come up in all sorts of ways,” when asked about the prospect of another downtown hotel.

One of the more than 100 people on hand at Monday’s casino announcement was local developer Pat Gillespie. Gillespie has a natural stake in this whole plan because he owns the land adjacent to the City Market (just north of the planned casino site) and also across the street north of Cooley Law School Stadium.

Gillespie announced his “Market Place” and “Ball Park North” development plans years ago that included several-story, mixed-use buildings and apartments on these properties.

Those plans may fall by the wayside if the casino deal happens, depending on what the market demands, Gillespie said.

“We’ll look for uses that complement a casino,” Gillespie said. When asked if that could include a hotel, he said: “I hope so.”

Gillespie said he’s been considering different uses than what was originally planned for eight months, which includes “450 to 500 emails going out.”

Indeed, Bernero is pitching the idea not just as an economic boon and a potentially historic transformation of the Lansing School District, but also as another card in the city’s entertainment deck. Yet some argue that casinos aren’t the healthy kind of entertainment; that they further gambling addiction; or that they are a regressive tax on lower income populations.

Former Mayor David Hollister — who Bernero said would be leading the Lansing Promise scholarship program as part of the casino proposal — was against a Lansing casino when rumors surfaced about one during his administration and again last January. Hollister could not be reached for comment for this story, but he told City Pulse last January: “I don’t think it’s an appropriate economic development strategy. … Gambling would be a diversion, a sideshow with lots of downsides as far as addiction and impoverishing people. It over promises and under delivers.”

Bernero argues Lansing’s casino would be different. “A lot of casinos in the state are slapped up and city life develops around the casino. In Lansing, it’s the opposite of that. The casino will augment the entertainment district,” he said Sunday. “It kind of rounds us out. It’s not as if we have nothing here without it.”

Bernero believes a casino is merely entertainment, no different from the lottery or online poker. “We look at it as part of a strong, diversified local economy. It is worth our investment of time and energy.”

When asked about the mounting opposition to his plan, Bernero says it’s merely “sour grapes. They want to hoard the benefits and think a monopoly on this is a good thing,” he said, referring to other tribes. “They want to keep it all to themselves. I guess all that kind of greed is human nature, they don’t want us to have a piece of the pie. Well, too bad. We think Lansing’s time has come.”