Detroit casino process ruled unconstitutional

John Flesher

Friday, Jan. 11, 2002 | 9:44 a.m.

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 ruled today.

In a 2-1 ruling, the Sixth Circuit U.S. 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 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 along with Mandalay Resort Group of Las Vegas.

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

Atwater and Greektown were leaders in the campaign to approve casino gambling in Detroit. They 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.

"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."

It was unclear how today's ruling would affect the existing casino operators and the unsuccessful applicants. 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.