Federal appeals panel strikes down casino ordinance

By The Associated Press

01.14.02

Printer-friendly page

TRAVERSE CITY, Mich. — The city of Detroit violated the U.S. Constitution by giving two companies preferential treatment when issuing licenses for casinos there, a federal appeals panel has ruled.

In a 2-1 ruling, the 6th U.S. Circuit Court of Appeals in Cincinnati overturned a federal judge who had upheld the Detroit ordinance and returned the case to the lower court for further consideration.

The Lac Vieux Desert Band of Lake Superior Chippewa Indians, based in the western Upper Peninsula, filed suit challenging a city ordinance that determined how casino operators would be chosen.

The ordinance followed statewide voter approval of a 1996 ballot measure allowing off-reservation gambling in Detroit. The measure specified that only three casinos could be built.

The ordinance contained a built-in preference for two of the groups that helped support the measure: Greektown Casino LLC and Atwater Entertainment Associates LLC, which owns part of MotorCity Casino.

The Greektown and Atwater groups were awarded licenses and are now operating casinos. A third casino is run by MGM Grand, which won its license without receiving preferential status.

Atwater and Greektown were leaders in the campaign to approve casino gambling in Detroit. The groups helped place initiatives on the city ballot, then organized support for the statewide referendum, known as Proposal E.

The city ordinance said that in awarding licenses to operate casinos, preference should be given to developers who "made significant contributions" to bringing gambling to Detroit "by actively promoting and significantly supporting" the ballot initiatives.

In its suit, the Lac Vieux Desert tribe argued that the ordinance discriminated against it for failing to take the correct position in the political debate over legalizing off-reservation gambling. The appeals court agreed in its Jan. 11 ruling.

"By employing the preference, Detroit basically sought to end the high-stakes competition for two of the three Detroit casino licenses before it really began," the majority opinion said.

"This we cannot allow. Barring governments from endorsing or punishing political activity, or the lack of it, is among the paramount functions of the First Amendment's Free Speech Clause."

The Lac Vieux Desert tribe runs the Lac View Desert Casino in Watersmeet. The casino has 621 slot machines and 21 table games, according to the Michigan Gaming Law Website. In contrast, the three Detroit casinos now operating each have around 2,500 slot machines and nearly 100 tables.

The majority opinion was written by Chief Judge Boyce F. Martin and supported by Judge Karen N. Moore. Judge Kathleen M. O'Malley dissented, arguing that the majority used an excessively strict legal standard for determining whether the ordinance violated the First Amendment.

Lac Vieux Desert tribal spokesman Bob Kolt said Jan. 11 that the court ruling means the three casinos are operating illegally. Lac Vieux Desert wants the Michigan Gaming Control Board to revoke their licenses, which would force them to close, he said.

The tribe is targeting all the casinos even though MGM Mirage received no preferential treatment, said Conly Schulte, attorney for Lac Vieux Desert.

"They were all licensed under the same ordinance," Schulte said. "Who's to say whether MGM would have gotten a license in a fair process?"

Nelson Westrin, executive director of the gaming board, said he had received the tribe's request and would confer with attorneys this week.

Millionaire businessman Don Barden also had challenged Detroit's selection process for casinos. A federal judge threw out that suit in 1999, saying Barden had signed away his right to sue when he applied for a casino license.

The appeals court upheld that ruling the next year and found that Barden had suffered no injury.

After his rejection, Barden proposed a colossal, $1 billion entertainment-and-casino complex, bankrolled in part by Michael Jackson. His efforts led to a 1998 ballot issue that would have required a license be given to a black majority enterprise, notably his. Voters rejected that proposal.

Update

High court won't hear challenge to 'must-carry' rules for satellite TV
Justices also refuse to consider Detroit's appeal of lower court ruling that city acted improperly when it preferentially granted casino licenses.  06.18.02