Economic Development, Government, and Law

Tribe reaches partial settlement with state

July 26, 2016
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Gun Lake Casino spring payment is $8.4 million
Gun Lake Casino in Wayland opened in 2011 and features 47 table games and more than 2,000 slot machines. Photo via

A tribe in the region has reached a partial settlement with the state over more than $21.7-million in withheld revenue-sharing payments, which are related to a compact dispute.

The Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, also known as the Gun Lake Tribe, said yesterday that it has reached an agreement with the State of Michigan that provides a short-term resolution to a compact dispute that arose from the expansion of online sales by the Michigan Lottery and establishment of video lottery terminals at social clubs.

The tribe operates Gun Lake Casino in Wayland, which opened in 2011. It has maintained the Michigan Lottery expansion and video lottery terminals violate its gaming exclusivity agreement with the state, rendering the compact void.

Allocating millions

Under the partial settlement agreement, the tribe and state will split the more than $21.7 million in withheld state revenue-sharing payments the tribe has escrowed since the dispute began.

The sum will be split equally between the tribe and state: 50 percent to the state; 35 percent to the tribe; and 15 percent to GLIMI, an entity formed under tribal law as a subsidiary of the tribe’s investment arm, Gun Lake Investments, to promote non-gaming economic development initiatives.

The distribution formula will be maintained going forward until the parties reach a final settlement, but the 35 percent to the tribe remains disputed under the terms of the partial settlement agreement.

The state’s portion of the revenue-sharing funds will be directed to the Michigan Economic Development Corporation, or MEDC, to “support economic growth through investment in statewide business initiatives.”

The tribe’s portion of the funds will be used to create the D.K. Sprague Education Endowment Fund, which will provide financial assistance to tribal citizens and high school students in the local area.

Compact dispute

In 2015, the tribe began to withhold state revenue-sharing payments after the state began offering Michigan Lottery games via the Internet and authorized certain social clubs to operate electronic gaming devices, which the tribe said violated the gaming compact reached in 2007, which established local and state revenue-sharing procedures.

The tribe said under the compact, it is no longer obligated to share revenue with the state if certain state-sanctioned games of chance expand within the tribe’s nine-county zone of exclusivity or the tribe’s state revenue-sharing obligation is reduced by 50 percent if certain state-sanctioned games of chance expand anywhere within Michigan’s borders.

During the time of the compact dispute, the tribe has continued to make local revenue-sharing payments, which total $17.3 million to date.

The tribe and state said they have agreed to continue to work together in good faith to reach a permanent settlement via an amendment to the compact, which requires ratification by the federal government.

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