Milwaukee Journal Sentinel, The: Potawatomi withhold $43.6 million; Tribe wants to be covered if it

The Forest County Potawatomi tribe declared Thursday that it was withholding a $43.6 million casino payment it owes the state, with fears over potential competition for its lucrative Milwaukee casino behind the move.

Jeff Crawford, the Potawatomi attorney general, said the tribe wants the state and the Menominee tribe to agree to cover any losses the Potawatomi casino in Milwaukee might suffer if the Menominee win approval for an off-reservation casino in Kenosha.

The "indemnification" proposal has been one of the hang-ups in long-running negotiations on amending the Potawatomi state-tribal compact governing its casino operations. The cash that was due the state Thursday won't be paid until that and other outstanding issues for modifying its 2003 compact deal are resolved, Crawford said.

He declined to say whether the Potawatomi want to negotiate a lower payment for the one that's now one day overdue.

"The important thing for us right now is to make sure we are protected in the event of a Kenosha casino," Crawford said.

The Menominee plan to build an $808 million casino complex on the site of the Dairyland Greyhound Park racetrack "would adversely impact Milwaukee," he said. "That needs to be accounted for."

At odds over competition

Potawatomi officials maintain that if approved, a Kenosha casino would cut deeply into the take at the Potawatomi tribe's Milwaukee casino. A study commissioned by the Menominee, however, says a large untapped potential gambling market in southeastern Wisconsin could boost revenue at an expanded Potawatomi casino in Milwaukee as well as provide lucrative trade for a Kenosha casino.

The Kenosha casino has won local endorsement but still needs federal and state approval.

Any attempted requirement that would force the Menominee to make payments to the Potawatomiwould "break the back" of the Kenosha casino project, said Evan Zeppos, a spokesman for the Menominee tribe.

There is some precedent for the type of protection the Potawatomi tribe is seeking from potential competition. The Ho-Chunk tribe has such a provision in its compact, sought as a hedge in case an off- reservation casino proposal for Beloit wins approval.

However, that provision does not demand payments from the state or competing casino tribes. Instead, it would trigger a new round of negotiations over terms of Ho-Chunk's compact, said Sean Dilweg, a state official involved in tribal compact talks.

He declined to comment on the Potawatomi bid to have financial protection from a Kenosha casino because it's a subject of current negotiations.

"That's a very good issue that's in flux that hasn't been hammered out yet," said Dilweg.

Money to be held in escrow

Crawford said the Potawatomi tribe was placing the $43.6 million owed to the state in an escrow account pending completion of a revised casino deal. He blamed two lawsuits challenging tribal gambling for upsetting the casino revenue projections that were the basis for the large state payment sum.

A state Supreme Court ruling last year said Gov. Jim Doyle had overstepped his authority by agreeing to casino deals that ran forever and allowed new games, such as craps and roulette. That decision spawned a new round of negotiations between the state and its 11 tribes over gambling compact terms.

Another case, filed by the Dairyland track, argues that a 1993 state constitutional amendment outlawed tribal casinos. A decision from the state Supreme Court is pending.

The Ho-Chunk tribe has also said it would withhold a $30 million payment due to the state for the second year in a row. The Ho-Chunk and the state are at odds over how much the tribe should pay.

That means with the Potawatomi holdout, the state isn't getting $73.6 million of the $104 million in casino payments that came due Thursday, or about 71% of the total.

Other tribes with casino payments due Thursday were expected to pay them within a week or two of the deadline, said Dilweg, an aide to Administration Secretary Marc Marottta. A $20 million check from the Oneida tribe the third largest payment due this week was sent Thursday, Dilweg said.

The state may seek arbitration with the Potawatomi to resolve the impasse, he said. The Ho-Chunk tribe has already filed for arbitration with the state on revising terms of its compact.

The process could take up to six months.

Despite the delayed casino payments, the state will finish its fiscal year in the black, Dilweg said.

And although the state would have preferred to get the payments on time, the tribes have the option of deferring payments while in negotiations over gambling compact terms, he said.

$104 million

Tribal casino payments due

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