Wall Street analysts say a U.S. Supreme Court ruling could stall development of some Indian casinos around the country — a situation that casino opponents are already seizing upon.
The court on Monday allowed a lawsuit to proceed in which a foe of the Gun Lake Casino in Michigan, David Patchak, is challenging the federal government’s decision to take land into trust on behalf of the Gun Lake tribe — a key step in establishment of Indian reservations and casinos.
The Gun Lake casino was developed in partnership with Station Casinos LLC of Las Vegas, which has a 50 percent interest in the casino management company. It opened in February 2011. Gun Lake won’t be affected anytime soon — if at all — by the court ruling since the court didn’t rule on the merits of the casino foe’s lawsuit. It simply allowed his suit to proceed.
Nevertheless, analysts at Fitch Ratings on Tuesday said the ruling could have ''several key credit implications for the gaming sector.''
The ruling is likely to increase challenges from Indian casino foes to land-into-trust decisions for tribes, Fitch said.
That’s partly because it lengthens the statute of limitations for court review of such decisions from 30 days to six years, the Fitch analysts said in a report.
''Raising capital for Native American casino projects could become more difficult/expensive, as investors are likely to have heightened concern about potential challenges regarding land-into-trust decisions,'' Fitch said.
But in a bit of good news for established Indian gaming operations, the decision may benefit them by delaying competing projects, Fitch said.
Some of the tribes that could be affected are the Graton Rancheria and North Fork Rancheria in California, Fitch said.
Station Casinos is working with both tribes on casino projects. North Fork hasn’t advanced to the construction stage, but Station said the Graton Rancheria project broke ground Monday in Rohnert Park in Sonoma County. The location is seen as potentially lucrative being 43 miles from downtown San Francisco.
A group that’s been suing to stop the Graton project — unsuccessfully to date — said Monday it’s encouraged by the Supreme Court decision in the Michigan case.
The group is called the Stop the Casino 101 Coalition.
A Station Casinos spokeswoman said Tuesday the company had no immediate comment on the court ruling.
Station’s partner in Michigan, the Gun Lake tribe, said in a statement it’s ''ready to continue fighting the lawsuit and is confident that it will ultimately prove that (casino foe Patchak’s) claims are completely without merit.''
Fitch said that tribes with notable potential projects or operating casinos that could be affected include the Cowlitz Tribe and the Snoqualmie Tribe with its Snoqualmie Casino, both in Washington state; the Shinnecock Tribe in New York, the Mashpee Wampanoag in Massachusetts and the Nottawaseppi Huron Band of Potawatomi, which has the Firekeepers Casino in Battle Creek, Mich.
Congress, in the meantime, is debating a bill that would block a controversial Indian casino proposed for Glendale, Ariz., near Phoenix.