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Tribe retains casino advantage

Ruling is setback for developer

A provision in state law that gives a Native American tribe an advantage in pursuing a casino in Southeastern Massachusetts is constitutional and will be allowed to stand, a federal judge ruled yesterday.

The ruling was issued by US District Judge Nathaniel Gorton as he dismissed a challenge to the state’s gambling law, filed by a developer seeking to build a casino in New Bedford.

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The suit, filed by KG Urban Enterprises just hours after Governor Deval Patrick signed the legislation in November, challenged a provision that delays open bidding on a commercial casino license in the southeastern part of the state until at least August.

The delay is intended to give a federally recognized Indian tribe, presumably the Mashpee Wampanoag, time to make progress toward winning federal approval for a tribal casino under the Indian Gaming Regulatory Act.

The ruling is a setback for KG Urban and for any other casino developer who might have eyes on Southeastern Massachusetts. But it does not close the door on casino competition in the region.

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If the Mashpees cannot make significant progress over the next five months, the state Gaming Commission must open the southeast for bids for a commercial casino.

KG Urban pledged to appeal the ruling to the US Court of Appeals for the First Circuit.

‘This is only the end of the beginning. We are not leaving.’

Andrew M. Stern which seeks to build a casino in New Bedford
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The tribal preference has been one of the most controversial sections of the state’s expanded gambling law. The law divides the state into three regions, and authorizes up to one resort-style casino in each, with development rights awarded through competitive bidding.

However, if the Gaming Commission concludes that the Mashpee Wampanoag probably will win federal approval for a tribal casino in the southeast, the commission would not seek bids for a commercial license in that region.

KG Urban had argued that the casino law gives a federally recognized Indian tribe “explicit, race-based’’ advantages in the southeast, which probably will deny the developer the opportunity to bid on casino development rights. KG has invested more than $4 million on casino plans at a former power plant in New Bedford known as the Cannon Street Station.

It has been a misconception that the law gives the Mashpee Wampanoag first shot at a state license for a casino in the southeastern region, but, as Gorton’s ruling explained, any Indian casino in the region would have to be approved under the federal Indian Gaming Regulatory Act.

The tribe’s real advantage in the state law is the built-in delay for the bidding of a commercial license in the southeast. To maintain the advantage the tribe must acquire land and negotiate the operating terms of a tribal casino in a compact with Governor Patrick, as required under the Indian Gaming Act, by July 31. The tribe must also win approval for the compact in the Legislature and schedule a referendum to get the endorsement of the host community.

“Far from conflicting with’’ the Indian Gaming Act, the state casino law “advances the congressional directive that tribes and states negotiate compacts to govern gaming on tribal lands,’’ Gorton wrote in his ruling.

The state casino law “simply establishes the procedure with which both parties must comply for a tribal-state compact to be recognized as valid under state law and provides an incentive for tribes to exercise their rights [under the the Indian Gaming Act] on an expedited timetable,’’ wrote Gorton.

If the tribe does not meet the deadline, the Gaming Commission must open the southeast to bids for a commercial casino.

Cedric Cromwell, tribal chairman of the Mashpee Wampanoag, praised the court ruling, saying the lawsuit had threatened to delay the tribe’s plans.

“When the Legislature and governor created this law, they took great care to understand and acknowledge the unique rights of the Mashpee Wampanoag tribe and the longstanding legal recognition of federally recognized tribes as political entities, not racial groups,’’ Cromwell said in a statement.

The Patrick administration was equally pleased. “The decision confirms this was well-crafted legislation that properly addresses the issue of tribal gaming,’’ said Jason Lefferts, spokesman for the Executive Office of Housing and Economic Development.

But even if the tribe meets the benchmarks in time, KG Urban and other developers may still get a chance to bid for a casino license in the southeast.

The tribe has immense obstacles to overcome to win federal approval for a tribal casino. Once the tribe buys land, it must apply to the US Department of the Interior to take the land into trust, so it may qualify as tribal land under the Indian Gaming Act. Even under the best conditions, that process has historically taken a long time. But the process became more difficult in 2009, when the US Supreme Court stripped the federal government of much of its power to take land into trust. Legislation to amend the law is stuck in the US Congress, and a court case that could clarify the process may be years from a ruling.

If the Gaming Commission concludes that the tribe cannot overcome the land-in-trust problems, it must open the region to commercial bids.

Andrew M. Stern, managing director for KG Urban, said the ruling “underscores that the stakes for the southeast region are high.’’

“The process for getting suitable land approved by the federal government can take a decade or longer,’’ Stern said in a statement. “Accordingly, the court’s opinion makes clear that if the Commonwealth accepts a tribal application by July 31, the southeast could be without a casino for the indefinite future.’’

Stern told supporters in New Bedford: “This is only the end of the beginning. We are not leaving.’’ The company will continue payments on its option on the Cannon Street site, he said.

Gorton acknowledged it is possible that someday there could be two casinos in the southeast region, if the commission approves a commercial casino and the tribe, eventually, gets land into trust.

Mark Arsenault can be reached at marsenault@globe.com.
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