Hatch: Indian-state casino unconstitutional

03/30/2005

Patricia Lopez and Dane Smith, Star Tribune
March 31, 2005


Gov. Tim Pawlenty’s proposal to have three northern Indian bands operate a metro casino jointly with the state would likely be found unconstitutional and should go to voters first, according to an opinion released this morning by Minnesota Attorney General Mike Hatch.

The earliest that a constitutional amendment could go on the ballot is 2006 _ a major delay that also would rob Pawlenty of the gambling funds he is counting on to make his budget proposal balance.

The opinion comes one day after the state-tribal casino plan cleared the Republican-controlled House Regulated Industries Committee on a narrow party-line vote and is sure to give casino opponents fodder in their quest to stop the plan in the DFL-led Senate.

Pawlenty’s chief-of-staff, Dan McElroy, said he was “surprised” and “disappointed” at the opinion and he challenged it on various fronts.

The opinion addresses three elements of the casino proposal: whether the state can operate a lottery in conjunction with the Red Lake, Leech Lake and White Earth tribes; whether it can offer new games such as keno, craps and roulette; and whether it can split the profits among the tribes and the state’s general fund.

Each of those elements probably would be found unconstitutional, the opinion states.

Of the three, the clearest violation appears to be the division of profits, according to the opinion. Pawlenty’s proposal would give 64 percent of net proceeds to the tribes. The bulk of the state’s share would go to its general fund, with 10 percent allocated to a “community assets account” that could finance stadiums, a planetarium, theaters and other civic projects.

But the Minnesota Constitution explicitly states that “not less than 40 percent of the net proceeds from any state-operated lottery must be credited to (the state’s environment and natural resources) fund until the year 2025.” That makes the proposed distribution of proceeds from the state-tribal casino “clearly unconstitutional,” the opinion said.

Hatch’s opinion also states the proposal would fail to meet the constitutional requirement that any lottery be “operated by the state.” So much of the day-to-day operations of the casino and games would be handled by the tribes, the opinion states, that “there is little left for the state to ‘operate’ ... It is unlikely that this level of activity rises to the level of operation contemplated” by the constitution.

The opinion relies on an interpretation of legislative intent to determine whether new games would be allowed and concludes that during the original legislative debate on the Minnesota Lottery, “at no time ... was there any discussion that slot machines, roulette wheels or craps would be permitted.” In addition, the opinion said, the language of the amendment itself “was intended and believed to authorize a traditional, ticket-generating lottery.”

McElroy questioned the opinion’s timing, process and reasoning. Hatch often has declined to issue opinions on the constitutionality of proposed legislation, McElroy said, on the grounds that as the state’s top lawyer he might have to defend state government in the matter.

He added that Hatch has not intervened with an opinion on the constitutionality of putting casino games into the Canterbury Downs racetrack, even though the principles of the Indian gaming and “racino” legislation are the same and racino proposals have been in play since 1997.

McElroy said he was “extra disappointed” that Hatch apparently declined a request from northern tribal leaders to to meet with him to talk about the legality of the proposal.

Finally, McElroy said precedents in other states such as Rhode Island augur well for the Pawlenty proposal. Nothing in the constitution defines slot machines and other forms of casino gambling as a lottery, and nothing in the constitution specifically prohibts the state from getting proceeds from other gambling operations, McElroy contends.

Hatch is considered a top prospect for the DFL gubernatorial nomination for governor in 2006 and he and Pawlenty have clashed frequently over numerous legal, policy and ethical issues.

Asked whether he thought Hatch’s opinion was politically motivated, McElroy said: “I’m concerned that it may be, but I don’t want to jump to that conclusion. Perhaps, we’ll leave that to the people.”

The casino proposal is headed next for the House Taxes Committee.