Settlement clears way for permanent casinos

David Runk

Wednesday, Nov. 26, 2003 | 8:53 a.m.

DETROIT -- The Lac Vieux Desert Band of Lake Superior Chippewa Indians has agreed to settle a lawsuit against two Detroit casinos for $79 million, paving the way for the construction of permanent casino-hotels in the city in time for the 2006 Super Bowl.

But the tribe still remains at odds with the city's third casino, MGM Grand Detroit, and will continue efforts to block MGM's permanent gaming complex.

The tribe, which has 430 members and a casino in Watersmeet in the Upper Peninsula, filed suit in 1997, saying its constitutional rights were violated when the city gave license preferences to MotorCity and Greektown casino ownership groups.

Mayor Kwame Kilpatrick announced the settlement at a Tuesday evening news conference. Greektown Casino and Detroit Entertainment LLC, the owner of MotorCity Casino, will each pay $39.5 million to the tribe over the next 25 years under a deal hammered out with help from Kilpatrick in Las Vegas in September.

"We finally moved past this long, six-year debate. It's finally time to put some shovels in the ground," said Kilpatrick, who hopes groundbreaking for the facilities with at least 800 hotel rooms could take place around year's end.

Kilpatrick, standing before renderings of the permanent Greektown and MotorCity facilities, said no payment will be made by the city. In exchange for the payments, the tribe will drop all claims against the two casinos, the mayor said.

In a separate agreement, the tribe said two former investors in Greektown Casino, Ted Gatzaros and Jim Papas, also agreed to pay $15 million to the tribe. Papas and Gatzaros were forced out of the Greektown Casino group shortly before its opening.

No one at a business office for Gatzaros and Papas was available Tuesday night to comment on the agreement.

The Lac Vieux tribe claimed in its lawsuit that Detroit had stacked the deck with its licensing ordinance. Allowing three casinos, the ordinance gave preference to two companies that helped support the successful 1996 statewide referendum that allowed off-reservation gambling in Detroit.

Greektown Casino and the operator of MotorCity Casino received licenses. Mandalay Resort Group of Las Vegas is a partner in the MotorCity. The third casino given a license, MGM Grand Detroit, is operated by Las Vegas-based MGM MIRAGE, which did not receive preferential treatment.

"The agreement partially compensates the tribe for the violation of its Constitutional rights," tribe lawyer Conly Schulte said in a statement. "We are moving forward with our claims against MGM Grand Detroit to obtain an order requiring that its development be subject to a new bidding process."

MGM spokesman Bob Berg said he couldn't comment on the Lac Vieux tribe's claims. Reading from a statement, Berg said: "MGM Grand Detroit did not receive any preference in the city of Detroit's casino developer selection process."

Plans for all three casino owners to develop permanent facilities have been on hold since September 2002. An injunction from a three-judge panel of the 6th U.S. Circuit Court of Appeals has blocked the city from issuing building permits for the permanent halls and prevents the developers from starting construction.

The settlement was expected to be filed Wednesday in federal court in Grand Rapids. Kilpatrick said the tribe will ask the court to lift the injunction for Greektown Casino and MotorCity Casino, allowing construction to start after approval from city council.

A MotorCity Casino spokeswoman said Detroit Entertainment didn't have immediate comment on the settlement. A representative of Greektown Casino wasn't available Tuesday night to comment.

Kilpatrick said it is unknown what will happen to the temporary casinos once permanent facilities are built.

The city has been working to encourage hotel deals ahead of the Super Bowl. Officials have said the area would be able to accommodate Super Bowl crowds without hotel facilities at the permanent casinos, but the city still wanted the projects to move forward.

"This settlement deal is a giant step forward in our preparations for the Super Bowl in 2006," Kilpatrick said. "Barring some catastrophic problem, the permanent Greektown and MotorCity casinos and hotels will be ready."