Kansas’ 12-year-old legal challenge to the 7th Street Casino in Kansas City, Kan., has been dismissed by a federal judge on a technicality – again.
This time, however, the case may finally be over, clearing the way for the tribal casino to upgrade its games and possibly expand.
“This case is moot,” U.S. District Judge Richard D. Rogers said in a 23-page decision made public Thursday. The ruling turned on the issue of the federal government’s sovereign immunity from lawsuits brought against it.
It remained unclear Thursday whether state officials and three of four competing tribes with Kansas casinos that joined in the state’s challenge will appeal.
If the case is finally clear of the federal courts, the Oklahoma-based Wyandotte Nation, which owns the casino, will seek a formal compact with the state under federal law to upgrade gambling at its Kansas casino. It now has 500 Class II bingo-based slot machines, which could be upgraded to full-scale Class III slot machines and table games.
“That’s always been the ultimate goal, just as the other four tribes have” in Kansas, said tribal second chief Billy Friend.
“We’ve stayed in touch with the governor’s office, and we’re ready to put the contentions of the past behind us and work toward a compact.”
Gov. Kathleen Sebelius in the past has publicly agreed to meet with the tribe once all litigation is settled. A spokesman Thursday said the governor would have no comment while a possible appeal was pending.
Friend added that the tribe probably would not seek to use its federal compact rights as a bargaining chip to develop a larger casino elsewhere in the county.
“Our goal right now is to stay right where we’re at,” he said, adding slot machines “and maybe a couple of table games and a craps table.” But he joked that maybe “we could go straight up” and expand the structure vertically.
The tribe spent USD 20 million remodeling an old Masonic temple across the street from City Hall. It opened in January. Tribal revenues are not publicly disclosed, but the facility has been estimated to gross between USD 15 million and USD 20 million a year.
The first time the tribe opened a gambling parlor on the site – in 2004 inside mobile building units – state and local law enforcement officials raided the place and shut it down. A Kansas City Municipal Court judge who later resigned after admitting a gambling problem was among players rousted from the property during that early morning raid.
The tribe sued and later won a ruling that the raid breached its tribal sovereignty.
The state has unsuccessfully fought the tribe since its first legal action was filed in 1996. But the state has never had a definitive ruling on its key issue in the case.
The state claims the tribe improperly purchased the old Masonic lodge and half-acre tract in downtown Kansas City, Kan., with federal funds that were not allowed for such purposes.
If the state was correct, the land would be disqualified for federally approved gambling on the site. But Rogers’ ruling never got that far.
“Equitable concerns cannot trump settled principals of sovereign immunity,” the judge said.
State officials were disappointed in the ruling.
“The court has still not ruled on the merits of our claim,” Mike Leitch, civil litigation chief for Kansas Attorney General Steve Six, said Thursday. “We’re obviously disappointed by that.”
He would not discuss specifics and said the state is considering an appeal.
A federal appellate court panel last fall also dismissed the state’s case on technical grounds. In a concurring opinion at the time, however, two of that panel’s three judges agreed judicial mistakes had been made over the years that hobbled the state’s legal position. They urged the case to be restarted and decided on its merits.
In April, Rogers agreed and reopened the case. But the main issue — the money — was never resolved, and when the U.S. Department of the Interior claimed the government’s sovereign immunity in the matter, Rogers concurred and tossed the case out of court.
The state’s argument turns on an obscure but crucial financial issue.
In 1984, the federal government paid the tribe USD 100,000 in long-delayed compensation for lands in Ohio it had ceded to the United States in the 1800s.
Under federal law, if that money was used to buy other land – and if no other tribal funds were used for that purchase – then the secretary of the interior would be obliged to take the land into trust for the tribe. Since 1988, such trust status has qualified Indian lands for federally chartered casinos.
However, if other tribal funds were used for such a purchase, trust status was not automatic and would be subject to other challenges by the state.
The state contends that Interior Department records show clearly that USD 25,000 of the USD 100,000 was spent by the tribe years ago to buy land near Wichita. Besides that, other federal records show that the tribe spent either USD 180,000 or USD 325,000 for the Kansas City, Kan., land and building.
Either way, automatic trust status was improperly granted, since the tribe “obviously” used unqualified funds for the land purchase, the state said.
Interior’s 2002 decision to place the land in trust acknowledged the USD 100,000 had been partially drawn down and commingled with other tribal funds, with the account at one time growing as large as USD 212,170.
But U.S. District Court Judge Julie Robinson later ruled that federal law regarding tribal land purchases was sufficiently ambiguous to trigger application of another federal law that she said “required a resolution of any ambiguity … in favor of the tribe.”
After that 2006 ruling by Robinson, the state’s case lost legal traction.