Possible Closure on the Horizon for Fond du Luth Casino

By KBJR News 1

November 30, 2011 Updated Nov 30, 2011 at 10:08 AM CDT

Last week's ruling from a Federal judge, that stopped payments to the city from the Fond du Luth Casino, could have serious consequences for the future of gambling in downtown Duluth.

Lawyers are going over the contract with a fine tooth comb and the result could be the closure of the Fond du Luth casino.

Over the past 25 years the city of Duluth has received about $80 million in shared revenue from the Fond du Luth casino in downtown Duluth.

Last week federal judge Susan Richard Nelson ruled the band will not be required to re-negotiate a second 25 year agreement with the city ending all future payments to the city.

Duluth mayor Don Ness says that decision could invalidate the entire 1986 contract between Duluth and the Fond du Lac reservation. If that's the case Mayor Ness said the casino would have to be shut down.

"There is a provision that says, in the '86 contract, that if the thing implodes, if the contract implodes, the city becomes the lease holder of the building until, 2036," says Ness.

While the land on which the Fond du Luth Casino sits is held in Federal trust for the Fond du Lac band, the mayor says under the terms of the original contract, the building itself would belong to the city, and that's where concerns about the future of the casino arise.

"If the city is the lease holder of the structure there obviously can't be any gaming because the city can't game."

Tribal chair Karen Diver in Washington D.C. for a meeting, responded by phone, saying Judge Nelson's ruling doesn't invalidate the entire 1986 contract, only the provisions that were found to be out of compliance with the National Indian Gaming Commission regulations.

Those provisions include the payments to the city, control of casino operations, the length of the 50 year contract and the city's access to casino records.

Chairwoman Diver went on to say she feels Mayor Ness is being vindictive in his reaction and she's concerned that should the city shut down the casino, some 300 people, who work in downtown Duluth, would be out of a job.

Mayor Ness says he doesn't want to see the casino shut down but if the contract is invalidated by the Judge's ruling, the city wouldn't have a choice because Minnesota cities cannot have gambling.
However if there is no contract in place and the Minnesota legislature legalizes gambling as some lawmakers are fighting for...the Mayor says the city would welcome a state run casino.

"What we would like to see is a continuation of the agreement and the partnership that we've had in place for the last 25 years, but the band has succeeded in voiding out those protections and now the city, because of our financial situation, and losing those revenues, we have to look out for the best interest of the taxpayers," says Ness.

Both the mayor and the tribal chair acknowledge that the contract is complicated and that they're still working to fully understand its implications.

The Minnesota legislature is expected to take up the issue of expanding gaming to include off reservation casinos in January.