Proposed Kenosha casino controversy: Potawatomi Tribe withholds payment to the state

KENOSHA (WITI/AP) -- Governor Scott Walker on Tuesday, August 26th issued a letter to state lawmakers who have been seeking an update on the proposed Kenosha casino. He says the Potawatomi Tribe hasn't made its annual revenue sharing payment to the state of Wisconsin for their casino in Milwaukee. The Potawatomi Tribe says it's because they anticipate the state will owe them money if Governor Walker approves a casino in Kenosha.

The Menominee Tribe wants to open an off-reservation in Kenosha to help pull its members out of poverty. A final decision on the project rests with Walker.

The federal government, through the Bureau of Indian Affairs took nine years to review the proposal from the Menominee Tribal Nation to build and operate a casino in Kenosha. The project was approved in August 2013.

Governor Walker says after the project was approved by the federal government, he met with the state's Secretary, Mike Huebsch and the Wisconsin Department of Administration to begin working with affected tribal nations within the parameters of each of the tribal compacts negotiated by Governor Jim Doyle's administration -- seeking to arrive at a position that would be a win for all involved.

Governor Walker says the Potawatomi Tribe is withholding $25 million from the state of Wisconsin. The Potawatomi Tribe's revenue sharing payment was due to the state on June 30th.

Wisconsin Secretary Mike Huebsch says: "This has already had a significant revenue impact on the state of Wisconsin."

Secretary Huebsch says when the federal government approved the Kenosha casino project, understanding that many years ago, the state entered into complex and unique compacts with each tribe in the state of Wisconsin that conducts gaming, three tribes were identified that would need to potentially be indemnified, or have their losses offset based on the establishment of a new casino.

Those tribes included: the Ho-Chunk Nation, the Lac Du Flambeau Tribe and the Potawatomi Tribe.

Secretary Huebsch says the Lac du Flambeau Tribe on October 1st, 2013 waived their claim in writing.

Secretary Huebsch says the Ho-Chunk National compact contains a relatively clear and defined process that addresses the state's obligations. If the Kenosha casino project is approved, the Ho-Chunk Nation's annual revenut sharing payment would decrease by the impact caused by the Kenosha casino, according to Huebsch. Eventually, the revenue sharing payments could stop, and the state could end up owing the Ho-Chunk Tribe.

The Potawatomi Tribe's compact, however, does not contain a clear definition of indemnifcation. Instead, it says the state must enter into arbitration to create an amendment to the compact that would establish a process. That amendment would then need to be submitted to the federal government.

Because of this, Huebsch says "substantial challenges lie ahead with the Potawatomi."

Governor Walker says in his letter to lawmakers: "Terms of the (tribal) compacts approved by former Governor Doyle could lead to a significant financial problem for the state of Wisconsin if a casino is approved in Kenosha before we have reached agreements with the impacted tribes."

Governor Walker says the Potawatomi Tribe believes it could recover about $100 million from the state, plus millions more through a process spelled out in the tribal compacts and through the withholding of compact payments to the state -- if in fact, the Kenosha casino is approved.

Governor Walker says because of this, the state is moving forward with "extreme caution."

Secretary Huebsch says: "It is still unclear how the compacts negotiated by Governor Doyle with the Potawatomi will play out. It appears the complicated provisions may have been designed to block a Kenosha casino. It is possible the impact of the Doyle compact provisions will not be fully known until early January. As we continue to evaluate the long-term effects of our state budget and Wisconsin's economy as a whole, one thing is clear -- taking action on the proposed Kenosha casino project prior to following the processes laid out in the Doyle compacts could cost taxpayers hundreds of millions of dollars."

The Forest County Potawatomi Tribe has issued the following statement:

“According to the terms of the Forest County Potawatomi Community’s compact, the Tribe may get a reduction in, or refund of, the payments made to the State of Wisconsin should the State approve another casino within 50 miles of the Potawatomi Hotel & Casino in Milwaukee. The State may end up owing Potawatomi money should the Kenosha casino be approved. Consequently, Potawatomi put its 2014 state compact payment into a segregated / reserve account.”

The Ho-Chunk Tribe has issued this statement:

The Ho-Chunk Nation remains opposed to any off reservation gaming efforts in our traditional homelands, including the proposed Kenosha casino project. The existing compact between the Nation and the State of Wisconsin compels a negotiation process to examine the imminent negative economic impacts, a process which has now concluded.

“The State is responsible for offsetting the adverse financial impacts of the proposed Kenosha casino,” says Ho-Chunk Nation President Jon Greendeer.  “The State’s economic experts have determined these impacts are projected to exceed the Nation’s annual payments to the State, and we have no assurances that the State will fulfill the terms of this agreement. That shortfall will lead to loss of jobs throughout Wisconsin, payments to counties, and much needed services that we currently happily provide.”

“We, along with the rest of the State, await Governor Walker’s decision on this proposal,” President Greendeer concluded.

Governor Walker must make a decision on the proposed Kenosha casino before February 19th, 2015.

READ IT: Governor Walker's letter to lawmakers, Secretary Huebsch's Kenosha casino update