A Mashpee Wampanoag tribal casino would pay 21.5 percent of its gambling revenue to the state, slightly less than the tax rate oncommercial casino operators, under a negotiated agreement announced today between the Native American tribe and Governor Deval Patrick.
The agreement, which outlines the terms under which the tribe could operate, is a key milestone in the Mashpee’s long effort to win federal approval to host tribal gambling. But the agreement, known under federal law as a compact, does not in itself guarantee there will ever be a casino at the tribe’s chosen site in Taunton. Stubborn legal obstacles remain that could delay final approval for years, if not forever.
In the short term, however, finalizing the agreement—which must now be approved by the Legislature—is critical to the tribe because it effectively extends a prohibition on commercial casinos in Southeastern Massachusetts.
The delay on commercial projects provides the tribe valuable time to make progress toward winning federal approval without fear of a commercial competitor establishing a foothold in the market.
The compact negotiations have been ongoing for several months under extreme deadline pressure. Under the state’s casino law, if the compact is not finished and approved by the legislature by the end of this month, the state gambling commission is required to solicit bids for a commercial casino license in the southeast.
“This is a good deal for everyone,” said Patrick, in a statement. “If this compact is approved, it will allow the Mashpee Wampanoag to open a unique facility that is governed and regulated by the tribe itself, in partnership with the state.”
Patrick will submit the agreement to the legislature Thursday morning.
The Mashpee Wampanoag tribal council is meeting today to discuss the tentative pact. The council may vote on it tonight.
The document, reportedly 60 pages long, has not been publicly released, though the governor’s office has divulged some of the key points of the agreement.
The financial terms of the compact are less favorable to the state than what it will receive from commercial casino operators. Under the 2011 state casino law, commercial gambling resorts will pay 25 percent of gambling revenue in state taxes, as well as a minimum $85 million licensing fee — a huge, one-time cost the tribe will not have to pay.
But the state cannot apply its casino law to the Mashpee, a sovereign tribal nation that has the right to pursue a casino under a federal law, the Indian Gaming Regulatory Act of 1988. Hundreds of tribal casinos have been built in the US under the act, including Foxwoods and Mohegan Sun in Connecticut. Tribal casinos are approved by the federal government under a process that is mostly outside of state control.
A tribal casino does not need a state license.
Tribal-state compacts also need to be approved by the US Department of Interior, which will scrutinize the agreement to ensure that tribe is not giving up too much, said Steven Light, co-director of the Institute for the Study of Tribal Gaming Law at the University of North Dakota.
Tribes are permitted to trade revenue in exchange for considerations from the state, said Light, “but this can’t be a fee that is tantamount to a tax.” He said that among recent tribal-state compacts, a revenue sharing rate of 21.5 percent would be high.
“The question will be, is 21.5 too high?” he said.
Even if the federal government approves the compact, the Mashpee still face an enormous obstacle to building a tribal casino — land.
Tribal gambling can only occur on Indian land, and the Mashpee do not have any land that qualifies. The tribe has asked the federal government to take the proposed Taunton casino site into trust on the tribe’s behalf, which would make the land eligible for tribal gambling. But the land-in-trust process could take years and require an act of Congress.
Critics of the tribal casino plan say the southeast region could suffer if the tribe cannot solve its land problems for many years.
“Approving a compact with a landless tribe makes no sense,” said Andrew Stern, managing director of KG Urban Enterprises, a developer that wants to build a casino in New Bedford. “The best solution is the simplest and most obvious one: the southeast region deserves the same fair and competitive commercial licensing process that the governor and legislature themselves decided was best for the rest of the state.”
KG has sued the state in an attempt to open the southeast region to bidding by commercial casino developers.