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Kansas’ 12-year-old legal challenge to the 7th Street Casino in Kansas City, Kan., has been dismissed by a federal judge on a technicality — again.

This time, however, the case may finally be over, clearing the way for the tribal casino to upgrade its games and possibly expand.

“This case is moot,” U.S. District Judge Richard D. Rogers said in a 23-page decision made public Thursday. The ruling turned on the issue of the federal government’s sovereign immunity from lawsuits brought against it.

It remained unclear Thursday whether state officials and three of four competing tribes with Kansas casinos that joined in the state’s challenge will appeal.

If the case is finally clear of the federal courts, the Oklahoma-based Wyandotte Nation, which owns the casino, will seek a formal compact with the state under federal law to upgrade gambling at its Kansas casino. It now has 500 Class II bingo-based slot machines, which could be upgraded to full-scale Class III slot machines and table games.

“That’s always been the ultimate goal, just as the other four tribes have” in Kansas, said tribal second chief Billy Friend.

“We’ve stayed in touch with the governor’s office, and we’re ready to put the contentions of the past behind us and work toward a compact.”

Gov. Kathleen Sebelius in the past has publicly agreed to meet with the tribe once all litigation is settled. A spokesman Thursday said the governor would have no comment while a possible appeal was pending.

Friend added that the tribe probably would not seek to use its federal compact rights as a bargaining chip to develop a larger casino elsewhere in the county.

“Our goal right now is to stay right where we’re at,” he said, adding slot machines “and maybe a couple of table games and a craps table.” But he joked that maybe “we could go straight up” and expand the structure vertically.

The tribe spent $20 million remodeling an old Masonic temple across the street from City Hall. It opened in January. Tribal revenues are not publicly disclosed, but the facility has been estimated to gross between $15 million and $20 million a year.

The first time the tribe opened a gambling parlor on the site — in 2004 inside mobile building units — state and local law enforcement officials raided the place and shut it down. A Kansas City Municipal Court judge who later resigned after admitting a gambling problem was among players rousted from the property during that early morning raid.

The tribe sued and later won a ruling that the raid breached its tribal sovereignty.

The state has unsuccessfully fought the tribe since its first legal action was filed in 1996. But the state has never had a definitive ruling on its key issue in the case.

The state claims the tribe improperly purchased the old Masonic lodge and half-acre tract in downtown Kansas City, Kan., with federal funds that were not allowed for such purposes.

If the state was correct, the land would be disqualified for federally approved gambling on the site. But Rogers’ ruling never got that far.

“Equitable concerns cannot trump settled principals of sovereign immunity,” the judge said.

State officials were disappointed in the ruling.

“The court has still not ruled on the merits of our claim,” Mike Leitch, civil litigation chief for Kansas Attorney General Steve Six, said Thursday. “We’re obviously disappointed by that.”

He would not discuss specifics and said the state is considering an appeal.

A federal appellate court panel last fall also dismissed the state’s case on technical grounds. In a concurring opinion at the time, however, two of that panel’s three judges agreed judicial mistakes had been made over the years that hobbled the state’s legal position. They urged the case to be restarted and decided on its merits.

In April, Rogers agreed and reopened the case. But the main issue — the money — was never resolved, and when the U.S. Department of the Interior claimed the government’s sovereign immunity in the matter, Rogers concurred and tossed the case out of court.

The state’s argument turns on an obscure but crucial financial issue.

In 1984, the federal government paid the tribe $100,000 in long-delayed compensation for lands in Ohio it had ceded to the United States in the 1800s.

Under federal law, if that money was used to buy other land — and if no other tribal funds were used for that purchase — then the secretary of the interior would be obliged to take the land into trust for the tribe. Since 1988, such trust status has qualified Indian lands for federally chartered casinos.

However, if other tribal funds were used for such a purchase, trust status was not automatic and would be subject to other challenges by the state.

The state contends that Interior Department records show clearly that $25,000 of the $100,000 was spent by the tribe years ago to buy land near Wichita. Besides that, other federal records show that the tribe spent either $180,000 or $325,000 for the Kansas City, Kan., land and building.

Either way, automatic trust status was improperly granted, since the tribe “obviously” used unqualified funds for the land purchase, the state said.

Interior’s 2002 decision to place the land in trust acknowledged the $100,000 had been partially drawn down and commingled with other tribal funds, with the account at one time growing as large as $212,170.

But U.S. District Court Judge Julie Robinson later ruled that federal law regarding tribal land purchases was sufficiently ambiguous to trigger application of another federal law that she said “required a resolution of any ambiguity … in favor of the tribe.”

After that 2006 ruling by Robinson, the state’s case lost legal traction.

Kansas City Times

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Unlike hurricanes Katrina and Rita, Hurricane Gustav caused more disruption than destruction to the Gulf Coast casino industry.

The storm made landfall on Labor Day and brought about minimal damage to casinos in New Orleans, Lake Charles, La., and the Mississippi gaming communities of Bay St. Louis, Gulfport and Biloxi. Most casino operators expect to welcome customers by the weekend.

“We believe we’ll be ready to reopen later this week, pending regulatory and other approvals and the return of our employees,” Pinnacle Entertainment Chief Executive Officer Dan Lee said Tuesday.

The Las Vegas-based company closed Boomtown New Orleans and L’Auberge du Lac in Lake Charles over the weekend in preparation for the storm. Both casinos reported minimal exterior damage to their main facilities and never lost power.

MGM Mirage said its Beau Rivage resort in Biloxi suffered minor flooding on its lower levels. Highway 90, which connects the Mississippi gaming communities of Bay St. Louis, Gulfport and Biloxi, was flooded by Gustav’s storm surge. MGM Mirage spokesman Alan Feldman said the company planned to have workers back in the building Tuesday for cleanup.

Mississippi Gaming Commission executive director Larry Gregory told The Associated Press on Tuesday that many of the Gulf Coast casinos took in water on their ground floors but there was no structural damage.

The damage done by Gustav was vastly different from 2005, when hurricanes Katrina and Rita roared across the Gulf Coast about a month apart and inflicted billions of dollars in damages. More than a dozen casinos were closed after the storms, with some of the gambling halls knocked out of commission for more than year. Gaming companies lost revenues and spent millions to rebuild their hotels and casinos. The states lost tax revenues associated with the casinos.

Beau Rivage, Mississippi’s largest casino, was closed for a year following Katrina. Others, such as Pinnacle’s Casino Magic in Biloxi, never reopened. The casino site was eventually sold to Harrah’s Entertainment.

On Tuesday, Gregory said the casinos can reopen when cleanup is completed and they are adequately staffed.

The storm disrupted business on what might have been a busy three-day holiday weekend. Casinos in Louisiana and Mississippi closed Saturday and Sunday, allowing guests and employees to evacuate north.

Wall Street analysts said damage to casinos from Gustav did not reach levels where gaming companies could invoke business interruption insurance.

“The impact from the hurricane was not nearly as severe as anticipated,” Deutsche Bank gaming analyst Bill Lerner said in a note to investors. “Early reports indicate that most casinos emerged intact and should reopen.”

Wachovia Capital gaming analyst Brian McGill said it would be a while before any lingering damage from Gustav could be determined. He said Pinnacle faces the most exposure because of the hurricane; L’Auberge contributes an estimated 42 percent of the company’s annual cash flow, while Boomtown New Orleans is responsible for roughly 27 percent of the annual cash flow.

“It is likely that third-quarter cash flow estimates will eventually be lowered,” McGill said.

Boyd Gaming Corp. had three Louisiana casinos affected by the storm, the Treasure Chest in New Orleans, the Delta Downs racino near Lake Charles and Sam’s Town in Shreveport. Company spokesman Rob Stillwell said Tuesday said that the Treasure Chest, which is in the New Orleans suburb of Kenner on Lake Pontchartrain, could reopen once city officials allow residents and visitors to return.

Harrah’s New Orleans, the state’s only land-based casino which is located downtown near the French Quarter, is also affected by travel restrictions.

On the Harrah’s New Orleans Web site, the company posted a message saying guests who were scheduled to stay at the resort’s 450-room hotel through Thursday had their reservations automatically canceled.

Las Vegas Review Journal 

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GRANJENO, Texas – Fresh off his electoral victory in May, Mayor Vicente Garza Jr. has embarked on a quixotic project, betting against long odds that a casino could secure the future of this indebted town of 485 residents.

Founded in 1767 but not incorporated until 1993, Granjeno clings to a sharp curve in the road a mile from the Rio Grande. It has a single city employee, a beer joint is its only business, and most residents are kin. Its annual budget is about $77,000.

The border fence that put Granjeno in the spotlight last year – when plans had it running through yards and homes – is taking shape instead just behind property lines on the south side of town. A new international bridge to Reynosa, Mexico, is under way to the west.

“We’re surrounded; we have no economic development,” said Mr. Garza, 24, a county corrections officer.

But, he’s enthusiastic about the casino idea.

“It’s something out of the box,” he said.

The idea comes from a brainstorming session on how the city might capitalize on the traffic generated by the international bridge.

The only hitch is that the sort of gambling he envisions, with slots and poker tournaments, is illegal in Texas.

Mr. Garza signed a letter last month requesting an opinion from Attorney General Greg Abbott, who has taken a narrow view of Texas’ gambling laws, and hopes state Rep. Kino Flores, D-Palmview, whose district includes Granjeno, will pass it on.

“If it’s something that they need, I’m going to help all I can,” Mr. Flores said. But knowing the state’s gambling laws and Mr. Abbott’s earlier opinions, Mr. Flores said the odds would be against them.

Mr. Garza said that while there are skeptics in Granjeno, he had not heard any outright opposition to his plan.

Christopher Sherman,

The Associated Press

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Massachussetts - The Mashpee Wampanoag tribe is planning to formally ask Governor Deval Patrick today to negotiate a compact for a $1 billion resort casino in Middleborough, an overture that could reignite the gambling debate and eventually clear the way for the state’s first casino.

The tribe has already been pursuing a casino through a federal Department of the Interior application. But striking a deal with the state would probably speed approval and allow the tribe to offer bigger jackpots and more games, including blackjack and craps, while giving the state a share of casino revenues.

“We’d like to start the negotiations and get the ball rolling,” tribal chairman Shawn W. Hendricks Sr. said yesterday in an interview. “I see no reason why the state wouldn’t sit and talk with us.”

Tribal officials are hoping to negotiate a deal with the state over the next several months that, if the necessary approvals from the federal government come through, could allow the tribe to start construction on a massive casino as early as spring. It would be similar to the deals struck by Connecticut for the Foxwoods and Mohegan Sun casinos. The billions earned by those casinos have proved to be alluring for the Mashpee Wampanoag tribe, as well as Patrick and some other Massachusetts officials who see legalized gam bling as a way to help pay for state needs such as road repairs.

The tribe will deliver a seven-page letter, which has been expected for several months and was obtained yesterday by the Globe, to the governor today with the request that negotiations begin “at the earliest mutually convenient date.”

The move could give Patrick fresh ammunition if he decides to revive his effort to persuade the Legislature to license three casinos in Massachusetts. Patrick has contended that since the federal government might approve the tribe’s casino regardless of the state’s position, Massachusetts might as well embrace gambling, control the business, and reap a share for state coffers.

Administration officials declined to comment yesterday before seeing the letter.

Under the terms of the federal Indian Gaming Act, the tribe cannot force the state to begin negotiations because it does not have its federal lands taken into trust. The governor was hesitant in June about beginning negotiations until the tribe won placement of its land in federal trust.

“It doesn’t start until they say it starts,” Patrick said. “And there’s not a lot of point in starting until the land-in-trust process is finished. . . . They have expressed an interest in working with us when the time comes.”

Any deal between the tribe and the governor would probably also need the approval of the Legislature, so the tribe is also sending the letter to Senate President Therese Murray and House Speaker Salvatore F. DiMasi.

The tribe won federal recognition last year, which set it on course to build a resort casino with 4,000 slot machines, game tables, a 1,500-room hotel, and a host of amenities including a golf course.

Achieving the next step, getting federal approval to place its land in trust, can take several years, but tribal officials think it is on course for approval in the first or second quarter of 2009, according to the letter.

Compact negotiations can become complex and include discussions over who has jurisdiction over police and fire services on the property and how traffic would be handled. If a compact is signed, the tribe said it would upgrade Route 44, a $170 million expense.

Most significantly, the negotiations would determine what percentage of slot revenues the state would receive. When Connecticut negotiated with its tribes in the early 1990s, the Indians agreed to pay the state 25 percent of slot machine revenue.

For Patrick and the Legislature, choosing not to negotiate with the tribe could carry risks.

The Mashpees say in the letter that, even if the state does not approve a deal, it plans to pursue its federal rights under the Indian Gaming Act to develop a casino with bingo-style slots. Those slots, called lass two machines, look similar to regular slot machines but are not as popular with gamblers and not as lucrative for casino operators. Upgrading to better machines would require state approval.

“No matter what ultimately happens with the negotiations, please know that it is the tribe’s intent to operate America’s most successful casino resort in Middleborough,” Hendricks wrote in the letter. “We hope that we can do so in a manner which benefits all of us to the fullest extent possible.”

Patrick filed legislation last year that would have licensed three casinos in Massachusetts, creating jobs and bringing in state revenue. His legislation was voted down by the House in March, but the governor is expected to file new legislation when the Legislature reconvenes in January.

Still, there are multiple variables that could spell trouble for the tribe.

The Globe reported last week that slot revenues at the two Connecticut casinos and two Rhode Island slot parlors are down over last year, despite adding 1,300 slot machines in the last year. Slot revenues are also down nationally, according to a recent report from the American Gaming Association.

Hendricks, the tribal chairman, said yesterday in an interview that he was not concerned about declining slot revenues and downplayed the argument that New England’s gambling market was saturated.

“It’s the economy,” he said. “We’re not going to stop building houses just because the real estate market is down.”

Another potential hitch is a US Supreme Court case that could prohibit further land-into-trust approvals. The case, which will be heard in November, stems from a dispute in Rhode Island over the Narragansett tribe’s claim of 31-acres in Charlestown, R.I.

In a case signed onto by Massachusetts Attorney General Martha Coakley, the state of Rhode Island contends that federal law prevents the US government from taking land into trust for tribes recognized after the 1934 Indian Re- organization Act. The Narragansett tribe was federally recognized in 1983.

The First US Circuit Court of Appeals in Boston rejected the state’s claim in July, but the US Supreme Court agreed to hear the case.

Boston Globe 

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