Michigan tribe objects to online lottery, withholds state’s share of casino revenue

michigan-lottery-gun-lake-casino-revenue-sharingA native group in Michigan is refusing to share its casino revenue with the state because the Michigan Lottery decided to take its action online.

The Gun Lake Tribe, more formally known as the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, was due to make a $7m semi-annual revenue sharing payment to the state on June 1. But the tribe, which operates the Station Casinos-managed Gun Lake Casino in Allegan County, withheld the payment based on its belief that the Lottery’s online site violates the gaming compact the tribe negotiated with the state in 2007.

The Michigan Lottery launched its online site in November 2014, offering not only traditional draw ticket sales but also online scratch tickets, which critics have likened to online slot machines. The Lottery has estimated the online sales will total $480m over the site’s first eight years of operation.

The tribe’s withheld payment became public knowledge after the Michigan Economic Development Corp issued a statement warning that it was preparing to lay off an unidentified number of its 300 staff members as a result of its funding shortfall.

In response, the Gun Lake tribal council issued a statement saying the subject of online lotteries had been discussed during its gaming compact negotiations with the state. The council said both parties had agreed that the tribe’s commitment to share its casino revenue with the state would be nullified if the state “introduced internet lottery sales or expanded other forms of electronic gaming to social clubs within the tribe’s market area.”

Section 15(c)(1) of the compact stipulates that, in the event the state authorizes the Lottery to operate Electronic Games of Chance, the tribe can reduce its revenue sharing payments by 50%. The other 50% is supposed to still be paid in order to prevent the state from going whole-hog and permitting non-tribal casinos within the tribe’s designated competitive area.

The tribe said that since the Lottery site launched last November, the tribe technically wasn’t required to make its December 2014 revenue sharing payment. The tribe said it had chosen to do so in the hope that the two parties could find a way to resolve the dispute.

Gov. Rick Snyder’s spokesman told the Associated Press that his boss and the tribe had recently held a “productive” meeting in a bid to resolve their differences. But the spokesman insisted the state “has and will continue to uphold its obligations under the compact” while suggesting the talks were more about convincing the tribe “to restore its obligations.”

State lotteries offering services over the internet have caused no shortage of disputes in their brief history. The Minnesota Lottery’s site is scheduled to go offline at the end of this month after backward politicians objected to the fact that the times, they are a-changing. A few other bold states like Illinois and Georgia have ventured onto the interwebz and Kentucky has promised to do so before the year is through, although all of these sites will go dark if the Restoration of America’s Wire Act passes.