MILWAUKEE/KENOSHA (WITI) -- The controversy over a proposed Kenosha casino just keeps heating up. The Potawatomi Tribe is withholding $25 million from the state, and could lose thousands of slot machines as a consequence.
As it stands, the Potawatomi Tribe has a complex contract with the state that requires it be reimbursed for losses suffered due to a new casino -- even though the project hasn't been approved yet.
The Tribe is worried that a new off-reservation casino will cut into its Milwaukee profits. It's refusing to make the annual payment because it says the state could end up owing it money.
Letters between the Potawatomi Tribe and state officials reveal a summer of legal wrangling.
In one letter, the tribe tells the state it's withholding a $25 million dollar payment, pending the Governor's decision on building a new casino in Kenosha.
The states responds that refusing to pay the fee could mean Potawatomi's Milwaukee Casino loses thousands of its slot machines.
"I can't think of any other project out that can create 5,000 permanent jobs and 3,000 construction jobs," said State Representative Peter Barca, Democrat Assembly Minority Leader.
Some of the state's top Democrat want Governor Walker to sign off on the Kenosha project now.
The Menominee Tribe is looking to build an $800 million Hard Rock Hotel and casino. The governor has until February to make a decision.
Some Republican leaders who favor the project, believe the governor is working as fast as he can.
"If it costs the state of Wisconsin hundreds of millions of dollars a year, you have to balance that off by how many jobs are being created," said State Representative Robin Vos, Republican Assembly Majority Leader.
A Potawatomi spokesman tells FOX6 News, if the new casino is built the state may end up owing the tribe money -- for revenue lost.
As for the possibility of losing 2,000 of it's 3,000 slot machines, he says the threat, "Makes a good headline, but has little to no legal merit."
Clearly there's lots of legal debate still ahead.
The Potawatomi tribe says it pays the $25 million fee in exchange for exclusivity. Meaning there will be no others casinos within 50 miles.
The state says withholding that money is already having an impact on the state budget.