Federal appeals court lifts injunction on Detroit casinos

Sarah Karush

Friday, April 29, 2005 | 11:16 a.m.

DETROIT -- The three casinos in the city can proceed with plans to build permanent facilities, including hotels, a federal appeals court ruled Thursday.

The Sixth Circuit Court of Appeals in Cincinnati dismissed claims against MGM Grand Detroit Casino by the Lac Vieux Desert Band of Lake Superior Chippewa Indians. It also approved a settlement reached earlier between the tribe and Greektown and MotorCity casinos.

The construction of permanent casinos -- a major platform in Detroit's economic development plans -- had been blocked by an injunction since 2002 in connection to the lawsuit, which claimed Detroit's 1997 casino selection process was unfair.

Mayor Kwame Kilpatrick hailed the ruling at a hastily organized news conference and pledged the city would work with the casinos to gain the necessary engineering and zoning approval quickly so that construction can begin.

"We know that competition in the casino industry is fierce, and we want them to compete here in the city of Detroit. We want it to be a race as to who gets in the ground first," he said. "The people that build first also have the best opportunity to capture this casino market, which is one of the best in the nation."

MotorCity Casino and MGM Grand's owner both issued statements welcoming the court's decision.

But Roger Martin, a spokesman for Greektown, said company officials will examine their options for investing in Greektown in the wake of the ruling and a gaming tax increase approved by the state Legislature last year.

"We have property and plans to create a world-class gaming resort destination and all options will be considered," he said in a statement.

Under the settlement, Greektown and MotorCity casinos will pay $39.5 million each to the Lac Vieux Desert Band of Lake Superior Chippewa Indians. A separate out-of-court deal with two former Greektown investors will bring the tribe an additional $15 million for a total of $94 million.

The Lac Vieux tribe's main claim was that the city's selection rules gave unfair advantage to Greektown and MotorCity because their owners backed a 1996 ballot proposal to legalize casino gambling in the city.

But the Lac Vieux tribe also sued MGM Grand, which did not get special consideration in the process of awarding the three casino franchises.

Conly Schulte, a lawyer for the tribe with the Omaha, Neb. firm Monteau & Peebles, said the tribe is pleased that the settlement was approved, but disappointed that its claims against MGM were dismissed.

"It's always been our position and continues to be our position that MGM parlayed these illegal preferences for its own benefit and essentially got a billion-dollar windfall on the back of a violation of our constitutional rights," he said.

Today Schulte said that at this point, "the tribe has indicated that it does not intend to appeal." Schulte declined to discuss details of the tribe's decision, which he said was made this morning.

The tribe sued the three casinos and the city in 1997. The tribe operates its own casino in the Upper Peninsula village of Watersmeet.