Milwaukee Journal Sentinel, The: Potawatomi may halt payment; Legal battle could cost state

The Forest County Potawatomi tribe may withhold the $40.5 million it agreed to pay the state this year because legal challenges have put a planned $240 million expansion of its Milwaukee casino on indefinite hold, a tribal leader said Monday.

The tribe pledged that sum in each of the first two years of its 2003 gambling compact negotiated with Gov. Jim Doyle. The tribe, which operates the state's most lucrative casino in Milwaukee's Menomonee Valley, forked over the sum last year.

But the tribe's anticipated revenue growth hasn't happened, calling into question whether the $40.5 million due to the state by June 30 will be paid, said Jeff Crawford, the Potawatomi tribe's attorney general.

"We need to justify making a premium payment for a benefit we are not receiving now," Crawford said in a meeting with Journal Sentinel editors and reporters.

The 2003 gambling deal between the tribe and the state was set to run forever. But the perpetual term was struck down by a state Supreme Court ruling, and negotiations to come up with a definite compact duration have not been completed.

The court ruling and a second pending Supreme Court decision on gambling not only put a crimp in the tribe's expansion plan, they have also meant revenue hasn't grown as fast as it might have with a bigger, glitzier casino, Crawford said.

"It's very excruciating trying to operate a business in this environment," he said. The tribe's Milwaukee casino took in about $260 million last year.

Crawford said withholding the $40.5 million payment was one option the tribe was considering, among several. That could also mean discontinuing new casino games such as craps and roulette that were approved along with the new gambling deal, he said.

Another possibility might be a federal lawsuit seeking to clarify the scope of gambling, he said. That option depends on how the state Supreme Court comes down in a ruling expected sometime this year. The owners of Dairyland Greyhound racetrack have sued the state, claiming that a 1993 state constitutional amendment banned all tribal casino gambling in Wisconsin.

Crawford said the tribe wants a deal that runs 25 or 30 years long enough to persuade lenders to provide the money to expand its Milwaukee casino.

Ho-Chunk also have refused

If the Potawatomi refused to pay, it would be the second tribe to withhold payments as a result of the court ruling. The Ho-Chunk Nation has refused to pay a scheduled $30 million payment that was due last year.

But Doyle is counting on the Ho-Chunk to come through with its back payment over the next year and is banking on the Potawatomi money being paid as well. The governor's 2005-'07 budget proposal envisions receipt of $134 million in '05-'06 and $150.7 million the following year from gambling payments from all of the state's 11 tribes.

A move by the Potawatomi tribe to withhold its $40.5 million payment would be surprising, said Sean Dilweg, a Doyle official involved in tribal gambling revision talks. He described discussions with the Potawatomi as going well, but declined to speculate on a new compact duration.

Republican lawmakers have objected to the open-ended feature of the compacts, saying Doyle should have gotten far more in payments.

Crawford said the tribe's delayed expansion plans mean 500 construction jobs and 1,000 additional permanent casino jobs are in jeopardy.

He said the tribe remains open to the possibility of moving its casino downtown, an idea floated more than a year ago by some local business leaders. But he said obstacles to that appeared substantial.

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