New Mexico attorney Sam Bregman recdntly petitioned the U.S. Supreme Court to hear a case involving an Albuquerque man who challenged a tribal casino over a malfunctioning slot machine, and which state courts refused to hear because they said the tribe had sovereign immunity.

The case involving the Sandia Resort and Casino, attorney Bregman, and his client, Gary Hoffman, over a slot machine that displayed a $1.6 million jackpot, but which the casino claimed was malfunctioning, addresses the issue of private businesses that sign business contracts with sovereign tribes.

At issue are not just disgruntled customers who think they should be paid a jackpot when the slot machine says they have won one, but also how investors get back their money when tribal casinos default.

There is lots of money involved, according to a 2009 article in the Financial Times, which noted that there are over $5 billion in high-yield bonds that have been used to finance tribal casinos. This wouldn’t be such an issue if the recession wasn’t taking such a bite out of an industry once thought to be recession-proof.

Some attorneys say there is a powerful argument to be made that tribes, being sovereign governments, cannot declare bankruptcy.

But until the Supreme Court settles whether tribes can be held liable for contracts, that uncertainty may affect whether some businesses are willing to do business with them—unless they are willing to waive sovereignty.

By GGB Staff

Staff writers for Global Gaming Business magazine. Las Vegas, Nevada.