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A group of Taunton property owners filed a lawsuit in federal court Thursday challenging the designation of neighboring land as a Native American reservation, a legal move meant to block a $500 million casino planned for the location.

The lawsuit contends the federal Bureau of Indian Affairs erred last year when it ruled that a 150-acre tract owned by the Mashpee Wampanoag tribe qualified as reservation land. As a federally recognized tribe, the Mashpee are entitled to build a casino on reservation land without state oversight.

The lawsuit, filed in Boston, has the potential to delay — or even dash — the Mashpee’s long-held dreams for a casino. The tribe has worked for decades toward its goal, first to win recognition as a tribe in 2007, then to gain reservation status for its land.

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The legal challenge is being partially funded by a rival casino developer, Neil Bluhm, who is promoting plans for a casino in Brockton. Bluhm has argued that a Mashpee casino could be hung up in court for years, while his casino could open quickly and begin producing tax revenue and jobs.

The lawsuit also presents still another complication for the state’s fledgling casino industry. Five years after the state’s landmark casino law, which envisioned three resort casinos quickly providing thousands of new jobs and hundreds of millions in new tax revenue, none have opened. The ones planned for Everett and Springfield are slated to open no earlier than late 2018.

In a 30-page complaint, lawyers for 18 Taunton property owners described the tribe’s plans for a massive casino and hotel complex as “grossly out-of-character” for a quiet residential area.

They also argued that traffic, noise, and light from the casino would drive down property values.

The tribe’s planned casino, dubbed “First Light,” would include a hotel tower as tall as 17 stories and draw as many as 5 million visitors a year.

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“This is a desperate attempt by Neil Bluhm and his Chicago-based company to develop a casino in Brockton,” tribal chairman Cedric Cromwell said.

“Clearly, they are using this anti-tribe group to their own advantage,” he said, referring to the group that helped organize the property owners named in the lawsuit. “We are still very confident that the US Department of Justice is prepared to defend the Obama administration’s decision.”

The Mashpee’s lawyer, Arlinda Locklear, has said she is confident the Bureau of Indian Affairs decision will stand.

The state’s casino law sought to have the Mashpee become the operator of the resort casino slated for Southeastern Massachusetts, while requiring private developers to compete for licenses in Western Massachusetts and Greater Boston.

Under an agreement negotiated by then-governor Deval Patrick in 2013, the state promised the Mashpee a casino monopoly in the region. In exchange, the tribe agreed to give the state 17 percent of its gambling revenue.

But the Mashpee’s bid for reservation status languished for years, to the growing frustration of the Massachusetts Gaming Commission. With the unemployment rate in Southeastern Massachusetts among the highest in the state, the commission last year decided to invite private developers to submit plans for casinos that could open quickly.

But as Bluhm pressed his plan for a $677 million casino in Brockton, the Bureau of Indian Affairs said in September that the Mashpee had won reservation status for the Taunton land. The tribe chose that land specifically because of its proximity to two major highways.

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Yet the Mashpee’s new status did not stop the gambling commission from considering Bluhm’s Brockton proposal, and Bluhm and his lawyers repeatedly warned that legal challenges to the Mashpee reservation were likely.

Bluhm’s group, Mass Gaming & Entertainment, did not have the standing to file a lawsuit, but property owners directly affected by the Mashpee designation could. That group, called Preserving Taunton’s Future, is working with Bluhm.

“The federal government has grossly overstepped its authority” in designating the land a reservation, said Adam Bond, a lawyer for the group. “A plain reading of the law required the federal government to reject the Mashpee’s application.”

The suit says the law allows reservations only for tribes recognized by 1934, when the Indian Regulatory Act was passed.

Under that interpretation, the Mashpee clearly would be ineligible. The lawsuit also disputes the tribe’s historical connection to Taunton.


Sean Murphy can be reached at sean.murphy@globe.com.