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The Mashpee Wampanoag Tribe on Thursday was dealt another major setback in its effort to build a casino in Taunton, losing a federal appeals court case it hoped would remove a crucial barrier to the long-stalled project.

The tribe had asked the US Court of Appeals for the First Circuit to overturn a lower court decision that said the federal government had improperly allowed the Mashpee to hold land in trust. That designation is required in order to build a tribal casino.

But less than a month after a three-judge panel heard oral arguments in the case, the court ruled in favor of a group of nearby residents that has been opposing the casino with the help of a company trying to build a state-licensed casino in nearby Brockton.

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The decision means the tribe now faces even longer odds in its quest to get the project approved, though the Mashpee could ask the full appeals court to review the case, or it could ask the US Supreme Court to weigh in.

The tribe also has another case ongoing in federal court in Washington, D.C., where it is pursuing a different legal approach to acquiring the tribal land. And it has asked for Congress to intervene, though that effort has stalled.

"There’s no question that this is a grave injustice,” tribal chairman Cedric Cromwell said in a statement. “We will continue to fight, as our ancestors did, to preserve our land base, our culture and our spiritual connection to our homelands.”

The project’s legal limbo has been a persistent source of uncertainty over the gambling industry in Massachusetts, where the state’s three casinos have been generating lackluster revenues amid increasing concerns that the market is overcrowded.

The Massachusetts Gaming Commission has the authority to license one more casino, in Southeastern Massachusetts, but it has been proceeding slowly ― in part because of the prospect of a tribal casino that would not be subject to the same state regulations.

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In 2016, the regulatory body declined to license a proposed project in Brockton, citing the potential Mashpee casino as one of its concerns about the development. Mass Gaming and Entertainment, backed by Chicago casino magnate Neil Bluhm, has helped finance the litigation against the tribal casino.

Joe Baerlein, a spokesman for that company, said in a statement that Thursday’s ruling “clears the way for a commercial resort casino" in the region.

The Taunton residents in the appeals court case, led by David and Michelle Littlefield, feel “vindicated” by the decision, according to their attorney David Tennant.

He said both the circuit court and the lower court did “what courts are supposed to do, which is to apply statutes as written and to do it without favor or bias.”


Andy Rosen can be reached at andrew.rosen@globe.com. Follow him on Twitter @andyrosen.