You asked how the Indian-state slot machine payment agreements would be affected if a petitioning tribe gets federal recognition and negotiates to operate slot machines.

SUMMARY

There is no way to tell for sure. But, based on the resolution in the past, the most likely scenario would be for the Mashantucket Pequots and Mohegans to amend their slot machine payment agreements with the state (memorandum of understanding), to allow for an identical agreement between the state and the new tribe. This is the course that the Pequots followed when the Mohegans won federal recognition and sought to negotiate a gaming compact with the state. According to the Pequots, the negotiations could have relieved the tribe of its obligation to make the financial contribution under the memorandum and could have lead to renewed litigation. The amendment was negotiated to resolve the issue without litigation.

Assuming that the tribes amend their agreements to accommodate a new tribe, the rate and amount of the contribution may change. When the Pequots amended their memorandum, the contribution rate (25%) remained the same as in the original agreement, but the minimum annual amount was reduced from $100 million to $80 million.

HISTORY OF THE SLOT MACHINE AGREEMENTS

The original Pequot memorandum was negotiated and designed to suspend the moratorium on slot machines imposed by the federal procedures governing casino gaming at the Foxwoods Casino. Section 3 of the procedures authorizes slot machines. But Section 15(a) places a moratorium on them until:

1. it is determined by agreement between the Tribe and the State or by a court of competent jurisdiction, that by virtue of the existing laws and regulations of the State the operation of video facsimiles of games of chance would not be unlawful on the ground that the Tribe is not located in a State that permits such gaming..." or

2. the existing laws or regulations of the State are expressly amended to authorize the operation of any video games of chance for any puprose by any person, organization or entity (Mashantucket Pequot Gaming Procedures, p. 53).

The Pequots negotiated the first memorandum of understanding with the state on January 13, 1993 (Attachment 1). It gave them the exclusive right to operate slot machines in return for a monthly contribution to the state of 25% of gross slot machine revenue. If the tribe's contribution fell below $100 million in any year, the rate would increase to 30% in order to reach a minimum $100 million.

When the Mohegans won federal recognition and decided to open a casino, the Pequots renegotiated their agreement with the state (Attachment 2). The result is that both the Mohegans and Pequots have identical agreements with the state. Each tribe must contribute 25% of gross slot machine revenue to the state monthly. If either tribe's contribution falls below $80 million in any year, its rate increases to 30% in order to ensure a combined $160 million minimum annual contribution.

CIRCUMSTANCES UNDER WHICH TRIBES CAN STOP PAYMENTS

Each tribe agrees under its memorandum of understanding, to make slot machine payments to the state "so long as no change in State law is enacted to permit the operation of video facsimiles or other commercial casino games by any other person and no other person within the State lawfully operates video facsimiles or other commercial casino games...."

In the event that any change in State law is enacted to permit the operation of video facsimiles or other commercial casino games by any other person or any other person within the State lawfully operates video facsimile games or other commercial casino games, the Tribe shall not be bound by the provisions of the Memorandum of Understanding so long as it does not claim any right to operate video facsimile games by virtue of this Memorandum of Understanding, but the Tribe may thereupon assert any rights which it may otherwise have under the Procedures; provided, however, that in such event neither party shall be bound by any of the provisions hereof nor shall either party be barred from taking any position inconsistent with the Memorandum of Understanding (p. 3).

In light of the above, it appears that the tribes could terminate their payments to the state if the state negotiates a compact with a qualified requesting tribe and allows it to operate slot machines. Faced with this situation in 1994, the Pequots amended their memorandum to include the following language:

WHEREAS, the Mohegan Tribe is now federally recognized and the State may be required to negotiate a gaming compact with the Mohegan Tribe which could relieve the Mashantucket Pequot Tribe of its obligation to contribute to the state and lead to renewed litigation between the parties hereto regarding the effect of the moratorium set forth in section 15(a) of the Mashantucket Pequot Gaming Procedures; and whereas the parties desire to avoid renewed litigation and to amicably resolve the existing uncertainties in a manner consistent with the original intent of the Memorandum...the Mashantucket Pequot Tribe is prepared to maintain its obligation to contribute to the State so long as the Mohegan Tribe enters into a similar arrangement... (Second Amendment to Memorandum of Understanding p. 1).

POSSIBLE OUTCOMES OF REQUEST BY NEW TRIBE FOR SLOT MACHINES

The federal Indian Gaming Regulatory Act requires states to negotiate in good faith with any qualified tribe seeking to negotiate a compact. Since Seminole Tribe of Florida v. Florida, states can refuse to negotiate and can assert an 11^th Amendment defense to avoid being sued by tribes to compel negotiations. But in response to this decision, the U.S. Interior Department has adopted regulations to allow a tribe to conduct class III gaming (casino type games, including slot machine gaming) when a federal court dismisses a case to resolve a compact negotiation dispute because the state asserted immunity.

Assuming a Connecticut tribe wins federal recognition and negotiates a compact, it appears likely that the provisions governing slot machines would be the same as those in the Mohegan compact and the Mashantucket Pequot Gaming. Procedures it appears likely that the tribe would also seek an agreement with the state similar to the Pequot and Mohegan agreements. But there is no requirement for either tribe to amend its agreement with the state to accommodate newly recognized tribes. Assuming they both agree to do so, the outcome is in no way predetermined. Both the rate and minimum annual contribution could be modified.

In commenting on the circumstances under which the Mashantucket Pequots could terminate payments, the attorney general said in 1994 that the tribe is obliged to make the payments as long as it operates slot machines on the basis of the memorandum of understanding. But if the legislature authorized slot machines, the tribe could claim that its right to operate slot machines derived from the gaming procedures. If "the operation of the machines derives from the procedures then the obligation is extinguished." It appears that a similar situation could arise if a tribe that wins federal recognition in the future and negotiates to operate slot machines. The Pequots and Mohegans could claim that their right to operate slot machines derived from the procedures and the Indian-state compact, respectively. This situation would likely result in litigation. Given an existing mechanism for a peaceful resolution, the tribes may choose to use it. Should they choose litigation, it is difficult to predict the outcome.

VR:eh