One Pueblo’s Fight Against Renewed Gaming Compact ‘Unfair Advantage’?

The Pueblo of Pojoaque has been thwarted in a request to hold state of New Mexico in contempt of court over on ongoing fight about gaming.
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The Pueblo of Pojoaque has been thwarted in a request to hold state of New Mexico in contempt of court over on ongoing fight about gaming.

Meanwhile, other nearby Pueblos who have signed New Mexico’s latest compact – agreeing to the same terms found objectionable by Pojoaque – are quietly rebuking Pojoaque for taking an unfair competitive advantage.

The Pueblo of Pojoaque declined last year to sign on to the state’s compact, which raises the revenue sharing percentage for gaming tribes from 8 to 10 percent. The Pueblo’s former compact expired on June 30, 2015. The tribe has continued to operate its two casinos, Cities of Gold and Buffalo Thunder, illegally since then. The U.S. Department of Justice agreed not to prosecute pending the outcome of ongoing litigation, and the Pueblo has been putting the 8 percent tax into an escrow account.

The arrangement is not going over well with neighboring gaming tribes.

“Pojoaque’s claim is that for the state to insist on compact terms that are the same terms that nearly every other gaming tribe in the state has agreed to constitutes bad faith,” said Richard Hughes, a Santa Fe attorney representing the Santa Clara Pueblo, which operates a casino less than 15 miles from Pojoaque. “If there were to ever be a ruling that supported that, it would leave the other gaming tribes in a peculiar situation, having to wonder whether their compacts are indeed valid.”

Santa Clara’s governor, J. Michael Chavarria, expressed a similar sentiment in a July 5, 2015 letter to the Department of Interior.

Joseph Talachy, the Pojoaque Pueblo governor, declined to comment on the ongoing litigation. Under the 8 percent revenue sharing provision the Pueblo has observed since its 2001 compact, it has paid the state between $5 and $6 million a year. The jump to 10 percent would mean an annual increase of just over $1 million. Talachy has said that at 10 percent, he would have to fire employees and cut social programs.

Part of the problem at Pojoaque is one of unfortunate timing. Pojoaque completed the 587-acre, $250 million-plus Buffalo Thunder Resort and Casino in 2008, just before the recession. The Pueblo had to restructure enormous debt several years later, and it is still recovering.

RELATED: Pojoaque Tribe Says New Mexico Is Bullying Them Into Higher Revenue Sharing Rate

The state of New Mexico has consistently taken a hard line against Pojoaque.

“The State has taken great care to protect the interests of its communities and industry in good faith,” wrote Michael Lonergan, Press Secretary for New Mexico Governor Susana Martinez, in an emailed statement to ICTMN. “The fact is, Pojoaque Pueblo is operating its casinos in violation of federal law and taking advantage of the smaller gaming tribes that have negotiated in good faith and managed their facilities responsibly.”

Bad faith

There are two court battles afoot. In the first, Pojoaque is suing the state in federal district court in New Mexico, over the state’s alleged failure to negotiate in good faith. That is the case in which, the Pueblo, recently, lost a motion to have the state found in contempt for declining to renew the operating licenses of vendors that deal with the Pueblo.

Pojoaque’s claim stemmed from a 2015 court order stopping the state from “taking any action that threatens, revokes, conditions, modifies, fines, or otherwise punishes or takes enforcement against any licensee in good standing with the New Mexico Gaming Control Board based wholly or in part on grounds that such licensee is conducting business with the Pueblo.”

The state technically has not done any of those things – but it has been delaying action on license renewals for vendors working with the Pueblo, while delivering timely approvals on almost all others.

In a December hearing, federal District Judge James O. Browning cautioned the state’s Gaming Board that it was “playing a little bit with fire” and that, “if you continue down this path, the pueblo may be able to show that your deferrals have become threat[s].”

In his April 21 order, the judge decided not to find the state in contempt: “[t]hese gaming vendors are a salty bunch, and not easily scared off from doing business. Moreover, the State of New Mexico has little economic self-interest in ruining the business of all vendors by eventually penalizing them down the road, so the threat, if any, appears not to exist now or in the future.”

State sovereignty

The second case came about after Pojoaque tried to go around failing negotiations with New Mexico by asking the Secretary of Interior to approve a compact. Congress allowed for such a path in the Indian Gaming Regulatory Act (IGRA), when a state has been failing to negotiate in good faith. But New Mexico has challenged the IGRA provision, arguing that it’s an illegal affront to state sovereignty. The state won that battle last fall in federal district court in New Mexico, when federal district court Judge James A. Parker, said, somewhat regretfully, that the IGRA provision was illegal.

“This Court sympathizes with the Pueblo of Pojoaque’s situation,” Parker wrote, in his October 2014 opinion. “New Mexico’s ability to prevent federal court oversight of its behavior during negotiations has essentially left New Mexico in an unassailable position in a process that Congress clearly intended to take place between ‘equal’ sovereigns.”

Pojoaque has appealed that decision, and the appeal is pending in the 10th Circuit Court of Appeals.

Hughes says the deal that Pojoaque took to the Secretary of Interior, before it was stopped by the state, would have been unfair to neighboring Pueblos. Besides Santa Clara, two other nearby Pueblos – Ohkay Owingeh and Tesuque – also operate casinos in the area.

“The version of a compact they proposed to the Secretary would give Pojoaque an enormous competitive advantage over every other gaming tribe,” Hughes said. “It eliminates all revenue sharing, eliminates any state oversight, and ... eliminates virtually every restriction on the gaming operation that this current compact contains, including no alcohol on the floor and other provisions like that, that everyone else has learned to live with.”