Feds reject deal that required Wisconsin to reimburse Potawatomi for Kenosha casino losses

The Bureau of Indian Affairs has rejected a deal that called for Wisconsin to reimburse the Forest County Potawatomi for any losses the tribe suffers at its casino in Milwaukee if the Menominee Nation opens a casino less than 50 miles away in Kenosha, state and tribal officials announced Friday.

The federal agency's decision is not the final word, however. Gov. Scott Walker has until Feb. 19 to approve or deny the proposed off-reservation casino. The Menominee said the Bureau of Indian Affairs removed a large financial obstacle to getting the governor's approval, while the Potawatomi vowed to sue and said they're confident the courts will reinstate the agreement, which they've said could require the state to pay them $100 million if the project moves forward.

Walker's administration was noncommittal, however.

"The rejection of this compact amendment should not be interpreted as a step toward Governor Walker rejecting or approving the proposed Kenosha casino," Cullen Werwie, the administration's spokesman on the casino, said in a statement. "As we review BIA's decision, we will continue to gather information about the overall economic and financial impact of the proposed Kenosha casino. Moving forward, we will continue to have discussions and negotiations with interested parties."

In a letter to Walker, Assistant Secretary for Indian Affairs Kevin Washburn said the bureau was troubled that the agreement would "shift to the Menominee the significant financial burden of preserving all of the Potawatomi monopoly profits" because the deal would have allowed the state to shift its payment obligations to the Menominee, one of the poorest tribes in the state.

The Menominee Nation has been pushing the proposal for more than two decades, hoping that a facility on the Wisconsin-Illinois border would draw gamblers from both the Milwaukee and Chicago areas and help pull the tribe out of poverty.

The Potawatomi tribe wants to protect its revenues from its own lucrative casino in Milwaukee, the only casino in the area. Its 2005 gaming compact required the state to reimburse it for losses linked to a Kenosha casino, but the details of how that would happen were murky. Arbitrators came up with a compact amendment in November that formally held the state responsible for making sure the Potawatomi got paid, and that was the deal that the bureau rejected Friday.

Menominee spokesman Michael Beightol said in an interview that the decision is "really terrific news for all of the state as well as the Menominee because ... it removes this attempt to extort $100 million from the taxpayers of the state and clears the way for Gov. Walker to negotiate a new compact with the Menominee that addresses any of the budget concerns the state might have."

The Kenosha casino would be run by Hard Rock International, which is owned by the Florida-based Seminole tribe, and the Potawatomi contends that means dollars spent at it would flow out of Wisconsin.

"The Potawatomi remain confident that Governor Walker will not find it in the best interest of Wisconsin to approve a project that could simultaneously cost the State hundreds of millions of dollars over multiple years and send hundreds of millions of dollars to Florida," Forest County Potawatomi Attorney General Jeff Crawford said in a statement.