The Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians (Gun Lake Tribe) has announced a government-to-government, partial settlement agreement with the State of Michigan that provides a short-term resolution to a compact dispute that arose from expansion of online sales by the Michigan Lottery and establishment of video lottery terminals at social clubs.
The agreement will benefit the citizens of both the tribe and state by directing more money to economic development programs that create new jobs and grow the economy. The tribe also will create an endowment to provide financial assistance to tribal students and area high school graduates with a portion of the disputed funds in lieu of placing the funds in an escrow account.
“This agreement is a win for all stakeholders due to the substantial benefits provided to tribal citizens, area high school students planning to attend college, and the public at large through economic development programs,” said Tribal Chairwoman Leah Sprague-Fodor. “This creative solution to the revenue sharing impasse recognizes the legitimate position of both respective governments, and we applaud the state for negotiating with the Tribe to reach this agreement.”
The settlement allows the tribe and state to resolve the existing compact dispute partially and to resume the flow of revenue sharing funds pursuant to the compact. Both parties have agreed to continue to work together in good faith to reach a permanent settlement via an amendment to the compact, which requires ratification by the federal government.
“We appreciate the willingness of the Tribe to reach a partial solution on this issue,” said Steve Arwood, CEO of Michigan Economic Development Corporation. “Dedicating a funding source for state-wide economic development efforts benefits many communities that will see businesses and jobs grow because of these efforts.”
The agreement is unique in that it not only partially resolves the compact dispute, but also creates a mechanism to fund non-gaming economic development initiatives under a new business entity that will have both tribal and state oversight. The entity, GLIMI, is formed under tribal law as a subsidiary of the tribe’s investment arm; Gun Lake Investments.
The tribe and state reached a gaming compact agreement in 2007, establishing local and state revenue sharing procedures. Pursuant to the compact, the tribe is no longer obligated to share revenue with the state if certain state-sanctioned games of chance expand within the tribe’s nine-county zone of exclusivity, or the tribe’s state revenue sharing obligation is reduced by 50% if certain state-sanctioned games of chance expand anywhere within Michigan’s borders.
The tribe opened the Gun Lake Casino on Feb. 10, 2011.
The tribe began to withhold state revenue sharing payments after the state began offering Michigan Lottery games via the Internet, and authorized certain social clubs to operate electronic gaming devices. The Tribe, however, has continued to make local revenue sharing payments which to date total $17,317,691.36.
The tribe escrowed the withheld state revenue sharing payments which now total $21,739,350.52. Under the partial settlement agreement, this sum will be split equally between the tribe and state as follows: 50% to the State; 35% to the tribe; and 15% to GLIMI. The distribution formula will be maintained going forward until the parties reach a final settlement, but the 35% to the tribe remains disputed under the terms of the partial settlement agreement.
The state’s portion of the revenue sharing funds are directed to the Michigan Economic Development Corporation to support economic growth through investment in state-wide business initiatives.
Instead of placing disputed funds in escrow and to maximize the benefits of the Tribe’s 35% of the revenue sharing withhold, it has decided to fund a college scholarship program, titled the D.K. Sprague Education Endowment Fund that will provide financial assistance to both tribal citizens and high school students in the area.
