When Massachusetts Governor Deval Patrick and the Mashpee Wampanoag tribe announced that they had agreed to a compact, the biggest fear was that the Interior Department would take its usual sweet time to approve it. Given that the tribe and the state have a July 31, 2013 deadline to get the deal done or the casino guaranteed to them would be open to bid by commercial companies, time was of the essence.
Well, now time is even more pressing, because Interior acted in a timely manner. Last month, the DOI’s Bureau of Indian Affairs rejected the compact between the tribe and the state because it forces the tribe to pay 21 percent of its revenues to the state, far higher than any other agreement in effect across the U.S., among other issues.
No government is permitted to tax revenue at tribal casinos, but can trade a percentage of the revenues for some sort of exclusivity, which Massachusetts has done in reserving one of the three authorized state casinos for the tribe, the one in the state’s southeastern region.
Kevin Washburn, the new head of the BIA, said the tribe needs to be treated more equitably.
“The revenue sharing provisions in this compact go beyond those permitted by the department,” he wrote in an 18-page opinion.
Patrick called the rejection “a setback.”
“The market, not the federal government, sets the value of gaming,” Patrick said. “Additionally, allowing the tribe early entry into this market represents a meaningful concession on the commonwealth’s part. It presents an enormous economic benefit to the tribe and justifies the proposed revenue sharing obligations in our agreement.”
Patrick will now return to the negotiating table with the tribe in an effort to craft a compact that will pass muster with the DOI.
“The compact calls for us to resume negotiations in the face of a federal disapproval and requires legislative approval of any renegotiated compact,” Patrick said in a statement. “Those conversations will begin in earnest as we work with our partners in the legislature to determine the next steps. I remain committed to striking an appropriate balance which protects the best interests of the commonwealth and the tribe.”
Any compact would have to return to the state legislature for approval, a process that was somewhat rocky the first time around. Although a deal must be struck by July 31, a spokeswoman for the commission said the gaming law sets no time limit on completion of the compact. The commission does have the authority, however, to open up bidding should the deal not materialize.
KG Urban Enterprises has already filed suit to force the state to open up bidding for the southeastern casino set aside for the tribe, which would be built in the town of Taunton, but has yet to achieve a favorable court decision.
Even if the challenge is a success and a commercial casino is approved by the state, the tribe would still be responsible for a 15 percent revenue payment, a clause the DOI also found objectionable.
