Judge: Detroit need not rebid casino licenses

John Flesher

Wednesday, July 10, 2002 | 9:27 a.m.

DETROIT -- The city of Detroit does not have to reopen bidding for operators of its three casinos despite a flawed selection process, a federal judge ruled Tuesday.

U.S. District Judge Robert Holmes Bell said there was no evidence the Lac Vieux Desert Band of Lake Superior Chippewa Indians had been badly harmed by the Detroit licensing procedure, which a federal appeals court found unconstitutional.

Granting the tribe's request to reopen bidding and temporarily put the casinos under control of a court-appointed conservator would be an economic blow to the casinos, their workers, the city and others, Bell said.

"Simply put, the egg cannot be unscrambled at this late date," the Grand Rapids-based judge wrote in a 31-page opinion.

He said he could offer no compensation to the tribe but would consider a request for reimbursement of attorneys' fees.

Conly Schulte, attorney for the Lac Vieux Desert tribe, said Bell had concluded "that we have no remedy for the injustice perpetrated by the city of Detroit. We are confident that the Court of Appeals will see things differently."

Bernard Bouschor, chief executive officer of Greektown Casino and chairman of its primary owner, the Sault Ste. Marie Tribe of Chippewa Indians, said Bell's ruling "brings certainty and stability to Detroit's gaming industry" while protecting "thousands of good jobs."

The Lac Vieux Desert tribe, based in the western Upper Peninsula village of Watersmeet, filed suit in 1997 -- before the casinos opened -- claiming Detroit had stacked the deck with its licensing ordinance.

The ordinance gave preference to two companies that helped support a 1996 statewide ballot measure approved by voters that allowed off-reservation gambling in the city. The measure said only three casinos could be built.

Both companies -- Greektown Casino LLC and Atwater Entertainment Associates LLC -- received licenses.

Greektown Casino is owned 90 percent by the Sault tribe and 10 percent by local investors. Atwater is part owner of MotorCity Casino, which also is owned by Mandalay Resort Group of Las Vegas.

The third casino, the MGM Grand Detroit, is operated by Las Vegas-based MGM MIRAGE, which did not receive preferential treatment.

The Lac Vieux Desert tribe said the ordinance violated the First Amendment by punishing those who didn't take the favored position in the debate over whether to legalize off-reservation gambling. It also denied the tribe its right to equal protection under the law, the suit contended.

Bell upheld the ordinance but was overruled in January by the 6th U.S. Circuit Court of Appeals in Cincinnati, which found the measure unconstitutional. The court returned the case to Bell but offered no guidance on what to do next.

The judge said even though the Lac Vieux Desert tribe had a valid complaint, it wasn't automatically entitled to compensation.

"A finding that a statute is unconstitutional does not render everything that was done pursuant to that statute void," Bell said, adding that any remedy must be practical and fair to all concerned. "The current casino operators are all innocent parties," he said.

The Lac Vieux Desert tribe never submitted a realistic plan for developing and running a casino in Detroit and would have been a long shot to secure a license even if the process had been flawless, the judge said.