Michigan agency plans cuts after tribe halts casino payments

LANSING, Mich. (AP) – Michigan's economic development agency said Monday it plans staff cuts in part because a tribal casino stopped paying a portion of its gambling profits after the state began selling lottery tickets and offering games online.

The Match-e-be-nash-she-wish Band of Pottawatomi Indians, which in 2011 opened the Gun Lake Casino south of Grand Rapids, did not make a $7 million payment in June. It is a semi-annual payment, which means the tribe accounts for nearly a quarter of the $60 million a year the Michigan Economic Development Corp. receives from American Indian casinos.

MEDC CEO Steve Arwood said the “steep reduction” in casino revenue will impact an unspecified number of the agency's approximate 300-member workforce.

“While staff details are currently being evaluated, it should be understood by everyone that MEDC could be losing some truly great, hard-working and talented people, who are committed to the citizens of Michigan,” he said in a statement, which also noted a separate $15 million reduction in business and community development incentives in the budget starting Oct. 1. The pot of cash is used for grants and loans.

With the Gun Lake tribe's decision, Michigan now has agreements under which five of a dozen tribes are sharing casino proceeds with the state. A year ago, the state launched an “iLottery,” which Lottery spokesman Jeff Holyfied said is expected to generate an additional $480 million over eight years for public education.

“Clearly, when the tribe and the state negotiated our gaming compact we discussed Internet lottery,” the tribal council said in a statement Monday. “Both parties agreed that if the state introduced Internet lottery sales or expanded other forms of electronic gaming to social clubs within the tribe's market area that the tribe would not have to make state revenue sharing payments.”

The council said it is hopeful the dispute can be resolved, “which is why it made a state revenue-sharing payment in December 2014 even though it was not required to do so.”

In the past, other tribes have withheld payments by contending lottery games or Detroit's non-tribal casinos violated exclusivity rights in their deals.

Gov. Rick Snyder recently had a “productive” meeting with Gun Lake tribal officials, spokesman Dave Murray said.

“Since entering into the compact with the tribe in 2007, the state has and will continue to uphold its obligations under the compact and remains committed to good faith discussions with the tribe to restore its obligations,” he said.

In 2008, then-Gov. Jennifer Granholm and two other tribes settled a long-running dispute over the Lottery's Club Keno game, after which the tribes began paying a smaller percentage of their electronic gambling profits to the state. The tribes had built up $52 million in escrow accounts while the conflict was stalled in court. Half of that money went to the state and half to the tribes.

–––

Follow David Eggert at http://twitter.com/DavidEggert00