Partner tribes question Pawlenty casino fee

Posted on Wed, Jan. 26, 2005
PATRICK CONDON
Associated Press

ST. PAUL - The chairman of an Indian tribe looking to build a new casino with the state said that Gov. Tim Pawlenty dropped a big obstacle in the plan's path by calling on the partner tribes to come up with $200 million to get it started.

"If we had access to that kind of money we certainly wouldn't be pitching a casino in the metro area," George Goggleye, chairman of the Leech Lake Band of Ojibwe, said Wednesday.

The White Earth Band of Ojibwe and the Red Lake Band of Chippewa - the other likely partners in a state-tribal casino - also couldn't afford it, Goggleye said.

The chairmen of the White Earth and Red Lake tribes did not immediately return phone calls seeking comment.

Pawlenty's chief of staff, Dan McElroy, said the $200 million figure is "an estimate and certainly subject to being discussed."

The governor's proposal calls for a new casino at a yet-unnamed site in the Twin Cities area. It would be built and owned by the Indian tribes from northern Minnesota that don't currently own large casinos, but the games would be operated by the Minnesota State Lottery.

Pawlenty called the proposal his "Plan B," after the tribes that own large casinos refused to give a portion of their earnings to the state in exchange for a continued casino monopoly.

Under the governor's plan, the $200 million casino licensing fee would be used by the state to help erase a projected $700 million spending deficit even as spending is increased on K-12 education, higher education and other programs.

"We're fully aware the tribes don't have those kinds of resources as cash on hand," McElroy said, suggesting the tribes might have to borrow the money, as they'd likely have to do to pay building construction costs as well.

John McCarthy of the Minnesota Indian Gaming Association, which represents the tribes with large casinos, said that's asking a lot.

"Everyone knows these tribes are financially strapped," McCarthy said.

It again raises the specter, McCarthy said, that private gaming interests would help pay to build the casino and manage it - a move he called "opening the door to Las Vegas."

"It's the beginning of the end for tribal gaming as we know it," McCarthy said. "Once you have Las Vegas here they will never go away. The state will become addicted to gambling money."
McElroy said no decision has been made on the casino's management structure. "There are lots of options," he said.

Goggleye said the tribes want to manage the casino themselves and not hire an outside company to do it.

"The three tribes would rather not go down that road," Goggleye said. "We feel very confident in our ability to manage our own properties. There's plenty of people out there in Indian gaming that are capable of stepping up and taking that kind of responsibility."

Despite the $200 million glitch, Goggleye said the northern tribes are excited about Pawlenty's proposal and are ready to delve deeper into negotiations with the governor's office.

Under the new plan, beyond the initial $200 million licensing fee the state would earn about $114 million a year from the casino starting in 2008.

Goggleye said the yearly state take has always been part of the negotiations - "I'm all for that," he said - but not the licensing fee.

Kevin Washburn, a University of Minnesota law professor and Indian gaming expert, said most Indian tribes spurn outside managers because it means giving up a portion of profits.

Washburn, the former general counsel for the National Indian Gaming Commission, warned the northern tribes to approach Pawlenty's offer carefully. A state-tribal casino partnership is uncharted territory and holds many potential pitfalls, he said.

Pawlenty "was forced into a corner politically and only when he was forced into a corner did he embrace some Indian tribes," Washburn said. "The cost is high to have to join forces with someone who is doing so only out of absolute necessity."