Goodwin Gaming
March 20, 2013

Governor and Mashpee Tribe Reach Revised Compact, Scurry to Keep Exclusivity on Southeast Region

By Robert Crawford and Eleanor C. Simon

The Mashpee Wampanoag Tribe and the Gov. Deval Patrick administration have come to an agreement on a revised Compact under which the Tribe will pay the Commonwealth a share of its gross gaming revenue from a proposed tribal casino in Taunton based on a tiered revenue-sharing arrangement.

Under the Compact, which is a 20-year deal, the Tribe will pay the Commonwealth 17 percent of its gaming revenue as long as the Tribe retains exclusive casino gaming rights in the Southeastern Region (Region C) of the Commonwealth.  That revenue-sharing percentage will vary, however, based on other gaming activity in the region and the Commonwealth.  If, for example, a commercial slot parlor is licensed by the Massachusetts Gaming Commission in the same Southeastern Region, then the amount the Tribe is required to pay the Commonwealth under the Compact drops to 15 percent of its gaming revenue.  That payment drops all the way to zero if a commercial resort casino opens in the Tribe’s region.  However if a tribal casino were to offer Class II games of chance, such as bingo, the Commission could license another casino in the Southeastern Region without reducing the Commonwealth’s revenue share.  The amount required to be paid to the Commonwealth increases to 21 percent as long as the Tribe is operating the only casino anywhere in Massachusetts.  This last scenario, however, is extremely unlikely given the intense competition that exists in the other regions of the Commonwealth (a total of 11 development groups have submitted applications for the remaining casino and slot parlor licenses, detailed here).

This revised revenue-sharing arrangement represents a decrease in the amount to be paid to the Commonwealth from the previous Compact entered into between the Commonwealth and the Tribe, which was rejected in October 2012 by the U.S. Department of the Interior, Bureau of Indian Affairs.  In that previous Compact, the Tribe was to pay the Commonwealth 21.5 percent of its gaming revenue in exchange for exclusivity (not including slot parlors) and 15 percent of its gaming revenue if another casino opened in the Southeastern Region.  The Bureau of Indian Affairs, however, considered these amounts to be paid to the Commonwealth too large and believed the revenue-sharing arrangement undermined a key tenet of the Indian Gaming Regulatory Act, namely that gaming should primarily benefit the tribe.  While the decrease in the revenue going to the Commission under the new Compact is notable, the current proposal is still higher compared to other compacts signed by tribes and states around the country (often between 8 and 12 percent, for example).

In addition to the revised revenue-sharing, the new Compact excludes certain compromises agreed to by the Patrick administration and the Tribe in the previous Compact.  For example, the previous Compact covered certain non-gaming issues, such as hunting and fishing rights, land claims and the regulation of non-gaming suppliers and ancillary entertainment services, which the Bureau of Indian Affairs deemed beyond the scope of a gaming compact and a violation of the Congressional intent of the Indian Gaming Regulatory Act to prevent states from using gaming compacts to leverage power over tribes on matters unrelated to gaming.

The Compact retains certain agreements from the previous Compact, including that the Tribe operate a smoke-free casino, comply with state worker’s compensation, health and other laws and contribute to the Public Health Trust Fund for gambling addition services.

The Massachusetts Legislature must now vote on the Compact and if approved by a simple majority, the Bureau of Indian Affairs will then have 45 days to decide whether or not to accept the new Compact.

The Bureau of Indian Affairs provided technical assistance throughout the process of drafting the new Compact, and the Tribe and the Governor recently traveled to Washington, D.C. to meet with certain members of the Bureau of Indian Affairs to discuss the redrafted Compact.

The Massachusetts Gaming Commission is set to meet tomorrow, March 21, at 4 p.m. at Bristol Community College in Fall River to discuss the status of Region C and the progress of the Tribe in its bid to run a tribal casino in the region.  The new tribal Compact will undoubtedly be an important topic of conversation and a significant factor for the Commission in considering the course forward.  In connection with the Region C meeting, the Commission has posted comments received on the issue thus far as well as a preliminary list of speakers.

Many of the comments posted by the Commission, and many of the individuals scheduled to speak at the Region C meeting, are opponents of the Tribe’s exclusive bid and advocate for opening up Region C to commercial developers.  Many of these arguments center around the concerns that the Tribe will be unable to overcome to the various legal obstacles to establishing tribal gaming in Region C, that any commercial developers potentially interested in the region will move elsewhere because of the uncertainty of the tribal process, and that the Southeastern region may miss out on job creation and economic development.  The legal obstacles include the Carcieri decision which calls into question the federal government’s authority to take land into trust for tribes that were not “under federal jurisdiction” in 1934 and the Patchak decision which gives anyone opposed to the federal government’s grant of land in trust up to six years to challenge that decision.  These legal obstacles could delay a tribal casino for six years or longer.

On the other side of the issue, Tribal Chairman Cedric Cromwell is scheduled to speak during the March 21 meeting.  Chairman Cromwell has indicated that he will update the Commission on the progress made by the Tribe and demonstrate why “it is unnecessary to make any changes in the Southeastern Region.”  He and other supporters of the Tribe will argue that the progress forward thus far has been substantial enough that the Commission should give the Tribe more time to seek approval of the Compact and complete its land-in-trust application without also allowing commercial bidders in the region.