State seeks tighter oversight of Indian casinos’ local revenue sharing

Since Indian casino gambling in Michigan began in 1994, seven tribes have doled out more than $200 million in communities surrounding their casinos.  It was widely presumed, under a federal decree governing these payouts, that 2 percent of slot machine and video gaming profits would go to local government to compensate for economic costs of casino operations.

Most of it has. But over the years, some of the money has funded everything from tribal members' property taxes to a tribal documentary to a ski hall of fame.

A 2006 investigation by the Detroit Free Press found the local distribution included more than $100,000 that went to Central Michigan University for a documentary about the Grand Traverse Band of Ottawa and Chippewa Indians and nearly $700,000 over a period of years to pay property taxes for members of the Keewenaw Bay Indian Community.

More recently, a 2012 annual report by the Michigan Gaming Control Board noted that tribes were directing payments to “circumvent the requirements” of their compacts and “remitting payments that appear to have no clear connection as reimbursement for government services” related to the operation of a tribal casino.

David Hicks, Indian gaming audit manager for the Michigan Gaming Control Board, has jousted a few times with the Grand Traverse Band over its disbursement of casino revenues.

In 2012, he told the Leelanau Enterprise that state officials had to “come up to Leelanau County a few times over the years to speak with tribal officials and let them know we didn’t think they were complying with the agreement.

“They’d make some adjustments, but they’re a sovereign nation, and there’s only so much we can do to make them comply without taking them to federal court.”

While that may be, language in the 1993 consent decree doesn't seem to leave much wiggle room. It spells out 2 percent payments of casino profits shall go “to any local units of state government in the immediate vicinity” of the casino and adds that tribes shall determine which “local unit or units of government shall receive payments.”

The payments are to compensate “for impacts associated with the existence” of the casinos.

According to tribal officials, the state is seeking in compact negotiations the kind of strict oversight that was approved in five compacts negotiated since 1993. Under the agreements, distribution of the 2 percent local share is determined by a revenue sharing board, comprised of representatives of local government or schools and tribal members. Payouts are to go only to local schools or units of government.

For the Gun Lake Casino in Allegan County, the local revenue sharing formula is concrete and specific.

The local share first pays local units of governments for direct costs associated with the casino, such as the hiring of extra sheriff's deputies. Though the casino is not subject to taxation, it pays designated local units the equivalent of those taxes, an amount capped at 65 percent of payments. Of the remainder, 50 percent goes to Wayland Township, 25 percent to Allegan County, 8 percent to Wayland Union Schools with 3 percent split among several local units.

In 2012, it distributed more than $3.2 million.

“It has been very positive for everybody,” said Linden Anderson, a former Wayland Union assistant principal and member of the six-member revenue sharing board. It is split between three community representatives and three members representing the tribe.

Anderson said he believes it only right to spell out precisely where payouts go.

Otherwise, he said, “Everybody would want a piece of the pie.”

Gaming consultant Jake Miklojcik, president of Lansing-based Michigan Consultants, believes better oversight of the 2-percent payout would mark a reasonable change in new compacts.

“It makes sense. I never liked having the tribes having that much say in that.”

Ted Roelofs worked for the Grand Rapids Press for 30 years, where he covered everything from politics to social services to military affairs. He has earned numerous awards, including for work in Albania during the 1999 Kosovo refugee crisis.