South Dakota sued overgaming compact

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PIERRE, S.D. - The Flandreau Santee Sioux Tribe filed a lawsuit in federal court accusing South Dakota Gov. Mike Rounds of not negotiating gaming compacts in good faith.

The Flandreau, owners of Royal River Casino and Hotel, have tried to negotiate a new compact that would allow for additional gaming devices, but Rounds has not moved off his commitment to no additional slot machines for the tribal gaming operations.

Flandreau asked the court to order the state to negotiate a conclusion within 60 days or be subjected to mediation, which is in accordance with the Indian Gaming Regulatory Act.

According to the complaint, the Flandreau asked for one slot machine for each $34,000 invested in the complex, but the state rejected that bid.

Rounds did not comment on the lawsuit, but past statements from him would indicate he was negotiating in good faith. Many tribes have complained that the governor would not meet with them to discuss the gaming compacts.

The state has been involved in a good faith/bad faith lawsuit over a gaming compact in the past with the Cheyenne River Sioux Tribe. The state won that contest, according to South Dakota Attorney General Larry Long.

''I think it will be different. I don't know how it will play out here when the Flandreau Tribe has an existing operation that they agreed to once previously,'' Long said.

Long said the governor has a responsibility under law to make sure there is a balance with competing gaming interests.

''So what does that mean? Does it mean that each entity that's in the gaming business gets to decide themselves or does it mean that somebody has the obligation to make sure there is a fair shot at the gaming dollar?'' Long asked. ''I guess that is what the litigation will sort out.''

Eight tribes in the state have casinos. The Cheyenne River Sioux Tribe does not operate a casino. Some of the tribes formed an organization that discussed strategy on compact negotiation and most of the tribes are now waiting on the sidelines and watching what happens with this lawsuit.

A 1989 amendment to the state constitution allowed open gaming in Deadwood. After that date, the tribes negotiated compacts in accordance with the Indian Gaming Regulatory Act.

Deadwood has a different contract with the state since some of that gaming revenue goes into the state coffers.

More than 3,000 slot machines are in Deadwood; and among the eight tribes in the state at large, there are 2,000 gaming devices.

The state allows video lottery and there are more than 8,000 video lottery machines in small casinos across the state.

Long said the state negotiated compacts with tribes to install video lottery machines, but no tribal casino has.

From reported accounts of a Western governors' conference held two years ago, Rounds allegedly told the other governors that as long as the state had video lottery with millions of dollars in revenue, the tribes would not be allowed to have more slot machines.

''If you look at it in terms of machines, that's obviously one way Flandreau wants to look at it; but there are other ways that are fair to look at it.

''There are interesting discussions about what the proper measure is. The gaming dollar - if there was one dollar to be generated and then split between the state and each of the nine tribes, how would you split it, what would be appropriate?'' Long asked.

The tribes are limited to 250 slot machines each. Flandreau, in the complaint, stated that many times people leave their casino because they don't want to wait in line to get to a slot machine. Flandreau is located 50 miles north of Sioux Falls, the state's largest populated area.

Flandreau, according to the court complaint, wants to build a hotel, resort, water park and family recreation area in order to attract more tourists. The tribe also wants to negotiate a 20-year compact to secure capital. The state offered a six-year compact.

The state's refusal to negotiate or compromise has left the Flandreau in a position where capital cannot be raised for expansion, and that position denies the tribe the right to economic benefits allowed to other citizens in the state, the court documents state.