Oct. 12 2011 12:00 AM

Legal experts say bringing a tribal casino to Lansing faces huge hurdles

Building a tribal casino in Lansing might be harder than
you think — in fact, its almost impossible to bring a tribal casino to
the city, legal experts say.

“I don’t see any possibility of a tribal casino being
allowed to be constructed in the city of Lansing,” said Robert Stocker
II, chairman of the gaming practice group at Dickinson Wright law firm
in Lansing. The group deals with both Indian and commercial gaming
issues and MGM Grand is listed on the firm’s client list on its website.

Stocker’s remarks should be taken in the context of the
highly competitive nature of the $10 billion-a-year casino industry in
Michigan, since his firm’s website says it represents Detroit’s MGM
Grand Casino. Still his remarks are consistent with those of other
experts who don’t have clear ties to other casinos.

Two weeks ago, Ted O’Dell of the Lansing Jobs Coalition,
which led a petition drive seeking a referendum on whether voters want
a casino, told City Pulse that the Sault Ste. Marie Chippewa Tribe was
in negotiations with city officials to build a tribal casino in the
city. The proposal would create 1,500 new jobs and 300 construction
jobs, O’Dell said. The Lansing Jobs Coalition has been researching
building a casino since January as a way to bring jobs to Lansing.

The Bernero administration has neither confirmed nor
denied that such negotiations are under way, but Mayor Virg Bernero
issued a statement strongly endorsing the idea of a casino in Lansing
because of the “tremendous” economic benefit.

Marquette  is
the site of one of only five off-reservation casinos in the country,
according to federal records. The casino is owned by the Keweenaw Bay
Indian Community and located 88 miles away from its reservation in
Baraga. The land that the casino is built on was owned by the tribe
before the federal law being signed in 1988, but was held in trust by
the state and not released until September 1990. The tribe opened the
casino in 1994 after signing a compact with the state that governs how
the casino should be run. The U.S. Interior Department, which handles
tribal matters including gaming, sued the tribe, saying that a state
compact was not enough to keep the facility open. However, the judge
ruled that having a valid state compact was sufficient in this
instance. The remaining off-reservation casinos are located in
Milwaukee, Airway Heights, Wash., Needles, Cal., and Big Horn County,
Mont., according to federal records.

Calls to the Keweenaw Bay Indian Community were not returned.

While federal records count five off-reservation casinos,
this count only applies to casinos opened under the “two-part
determination” exemption of the federal Indian Gaming Regulatory Act,
which governs Indian gaming, said Attorney R. Lance Boldrey, who
specializes in Indian law at Dykema Gossett PLLC’s Lansing branch. The
exemption allows an off-reservation casino only if the U.S.  interior
secretary determines that opening a casino would be in the best
interest of the tribe and not detrimental to the surrounding community.
This approval must be accompanied by approval from the surrounding
tribes, state and local officials and the state governor, according to
the federal law. The five-casino count does not apply to Indian casinos
opened under any other exemption of federal law, so higher numbers that
include all casinos opened under a federal exemption are sometimes
reported. This number would be in the double digits, Boldrey said, but
he didn’t know the exact amount. One 2009 article from the Wall Street
Journal stated that there were 22 off-reservation casinos and another
20 off-reservation casinos in the works by tribes across the country.

O’Dell also told City Pulse that the city had retained
Dickinson Wright to look into the legal nuances for bringing a casino
to the city, but Stocker denied those claims.

“We haven’t been hired by anybody to give any advice about looking into a casino for Lansing,” he said.

O’Dell could not be reached for comment.

James Nye, spokesman for two other Michigan tribes, the
Saginaw-Chippewa Indian Tribe, which owns Soaring Eagle Casino, and the
Nottawaseppi Huron Band of Potawatomi, which owns Firekeepers in Battle
Creek, said the tribes he represents are against Sault Ste. Marie
opening a casino in Lansing because they feel it violates both the
federal  regulatory act and
the state compacts signed between the tribes and the state, which
impose additional state requirements such as giving a portion of the
casino proceeds to local governments.

“There is nothing novel about trying to put a casino hundreds of miles from the tribe’s reservation,” Nye said.

Under section 20 of the federal regulatory act, a tribe
needs to put land into trust before it can build a casino, Stocker
said. This can only be done in very specific cases.

The act generally prohibits gaming on
land acquired by a tribe after Oct. 17, 1988, when the law was signed,
unless it meets one of two criteria. The act  states
the land in question either needs to be touching the boundary of the
tribe’s reservation land on Oct. 17, 1988, or the tribe had no
reservation when the act was signed into law so newly acquired land can
be used for gaming. The Sault Ste. Marie tribe’s reservation is based
in the Upper Peninsula, so Lansing is not close to its border, and the
tribe had a reservation before the act took effect,  so the second criterion doesn’t apply.

The rules are so strict that Boldrey called the casino
proposals that came in when he worked for former Gov. John Engler on
gaming issues “casinos of the month” because ideas would constantly be
proposed but nothing would be built.

“I’ve been pretty amused by people saying that getting a
casino in Lansing can be a simple and short process,” Boldrey said in
an e-mail Monday. “Even without any opposition, a tribe would either
need special federal legislation or go through an administrative
process that can’t be completed in probably less than five years.”

While the federal  act
does have exceptions, they do not apply to Lansing’s proposal, Stocker
said. “From a practical standpoint, from all the rulings that have been
made … it’s just not a possibility (to build a casino in Lansing).”

In addition to the “two-part determination” exemption,
land can also be taken into trust to build a casino if it was acquired
through the settlement of a land claim, the land is part of an initial
reservation that is acknowledged under federal law or the land is
restored to a tribe and federally recognized.

Nye said the tribe could be considering a legal argument
related to the land claim exception as a way to attempt to open a
casino in Lansing. The argument would be similar to what the Bay Mills
Indian Community used when it attempted to open a casino in Vanderbilt
in March.

In 1997, Congress passed the Michigan Land Claims Act,
which awarded funds to Michigan tribes in reparation for lands being
taken away, Nye said. The Bay Mills Indian Community used a portion of
its settlement from the Land Claims Act to purchase 45 acres in
Vanderbilt and built a casino off its reservation. The tribe claimed
that since it bought the land with money awarded from a land claim, the
casino had tribal distinction and qualified for an exception under the
federal act.

Instead, five of Michigan’s 12 tribes openly spoke out
against the casino, saying it was illegal under Indian law, Nye said.
One tribe, the Little Traverse Bay Band of Odawa Indians, sued the Bay
Mills Indian Community, asking for the casino to be shut down. In the
end, the secretary of the Interior determined the casino was illegal
because it went against the spirit of the regulatory act. The case’s
federal judge agreed and the facility was shut down by a federal court

“If (the Sault Ste. Marie leaders) intend to use the same
approach that Bay Mills used in Vanderbilt, we feel it will be dead on
arrival,” Nye said. “The residents of Lansing, the leadership of the
city of Lansing and businesses in Lansing should understand that there
is a zero possibility of opening an Indian casino in Lansing under
these procedures.”

However, the tribe could have an additional — albeit a
long shot — option available to open a casino, said Eric Bush,
administrative manager for the Michigan Gaming Control Board.

The Ste. Sault Marie tribe — the one that supposedly
wants to bring a casino to Lansing — owned and operated the Greektown
Casino in Detroit.  (The
casino went bankrupt, but the tribe still owns the land on which a new
casino is operating). The tribe waived its sovereign immunity before
building Greektown, essentially becoming a commercial investment group.
This allowed the tribe to buy land, build a casino and open the doors
as a commercial facility rather than a tribal one.

“Taking land into trust did not come into play,” Bush said.

However, Bush said, opening a new commercial casino would
require amending the Michigan Gaming and Regulatory Act, which says
that there will only be three commercial casinos in the state of
Michigan and they will all be in the Detroit area. . “It would be
difficult to amend, not impossible,” he added.

Since the Michigan law began as a ballot initiative, a
three-fourths majority vote is needed from the state legislature. The
governor’s approval is also needed before the law can be changed,
Stocker said. The proposal would then require both a statewide vote and
a local vote to approve the casino. The Detroit casinos as well as the
nearby tribal casinos would most likely oppose this action as it
increases their competition, he added.

“Those are very very difficult things to achieve,” Stocker said.

While a casino could potentially bring an influx of jobs
to a hard-hit region of the state, Stocker, Nye and Boldrey are not
convinced that a legal argument can be made that allows a casino to

“I think as a practical matter we are not going to see a
casino, either tribal or commercial, in the city of Lansing,” Stocker
said. “The hurdles are too great. It’s not a realistic expectation.”