- Associated Press - Wednesday, January 21, 2015

MADISON, Wis. (AP) - The Menominee Nation’s new gambling compact doesn’t protect the state from potentially losing hundreds of millions of dollars if Gov. Scott Walker approves the tribe’s plans for a new Kenosha casino, according to the governor’s top aide.

The new compact calls for the Menominee to pay the state 7.5 percent of its winnings from the new casino for 25 years. If the rival Ho-Chunk Nation and Forest County Potawatomi’s casino payments dip below $37.5 million in a fiscal year, the Menominee would cover the difference.

The Menominee insist the deal gives Walker the cover he needs to approve the $800 million project. But state Department of Administration Secretary Mike Huebsch wrote in a memo to Walker on Tuesday that the compact won’t protect the state if the Potawatomi decide to challenge the new casino in court.

A judge could find that the state is responsible for reimbursing the Potawatomi for losses linked to the Kenosha casino, he said. A judge also might rule that approving the Kenosha facility violates provisions in the Potawatomi’s compact that guarantee the tribe the exclusive right to offer gambling within a 50-mile radius of its Milwaukee casino, Huebsch wrote. In that case, the Potawatomi would likely stop making payments to the state and Wisconsin might have to refund payments to the tribe, he warned.

“Overall, in each of the scenarios … the potential exists for the State to lose hundreds of millions of dollars if the Potawatomi successfully challenges approval of the proposed Kenosha casino,” Huebsch wrote.

The Menominee have been pushing for years to establish an off-reservation casino in Kenosha, hoping a facility between Milwaukee and Chicago would help pull the tribe out of poverty. The federal government gave the OK in 2013 but final approval rests with Walker. He has until Feb. 19 to make a decision.

Complicating matters are the Ho-Chunk and the Potawatomi. Both tribes oppose the project, fearing it would cut into their own casino profits.

The Ho-Chunk’s compact allows it to reduce its payments to the state to offset losses to Kenosha. More problematic for Walker is the Potawatomi’s compact, which requires the state to reimburse it for Kenosha-related losses.

The federal Bureau of Indian Affairs earlier this month rejected language that would have formally established the state was responsible for reimbursing the Potawatomi, raising questions about whether the state remains on the hook.

The Potawatomi also contend its compact requires the state to refund hundreds of millions in back payments if the new casino goes through. The tribe already has withheld $25 million from the state out of concern Wisconsin could end up owing them.

“It’s clear that (the Menominee compact) … does not remove the risk that a Kenosha casino could put a substantial hole in Wisconsin’s budget,” Potawatomi spokesman George Ermert said in a statement.

Gary Besaw, chairman of the Menominee Kenosha Gaming Authority, the entity working to bring the casino to Kenosha, called Huebsch’s legal scenarios unlikely.

“We believe the governor is in a much better spot to approve this knowing what the Menominee has committed to,” Besaw said. “This is how we help the governor get to that win-win-win.”

The BIA has 45 days to approve or reject the new compact. Walker and the Menominee have asked the agency to make a call before the Feb. 19 deadline. A BIA spokeswoman didn’t immediately return an email message Wednesday.

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