Pojoaque gives up fight, will sign new gambling compact
After losing court challenges, tribe agrees to give state bigger share of casino revenue
Pueblo of Pojoaque leaders folded Thursday in their yearslong legal battle with the state of New Mexico, agreeing to sign a new gambling compact that will give the state a bigger share of revenue from the tribe’s casinos. The pueblo’s old gambling compact expired in June 2015, and it has been locked in a disagreement with Gov. Susana Martinez’s administration on new terms for its casinos north of Santa Fe.
The capitulation signals the end of a fight in which millions of dollars were at stake as Pojoaque Pueblo tried to assert tribal sovereignty issues, claiming that even though other tribes were willing to share slot machine winnings in exchange for the state keeping casino gambling an exclusively Indian-owned enterprise, it shouldn’t be forced to accede to the state’s demands.
Pojoaque Pueblo effectively rejected terms that the Martinez
administration negotiated with several other tribes in 2015, accusing state officials of seeking an unreasonably large share of its gambling revenue and of negotiating in bad faith.
But the Martinez administration has said it merely wants Pojoaque Pueblo to accept the same arrangement that other tribes have adopted.
The fight landed in front of federal judges, but after an appeals court ruled against the tribe earlier this year, Pojoaque Pueblo was left with few options.
The tribe’s lawyers had suggested in recent filings they might take the case to the U.S. Supreme Court. But Pojoaque Pueblo Gov. Joseph Talachy said Thursday that would be a strain on the tribe’s resources. And he noted that state officials have threatened regulatory action against vendors who work with Pojoaque Pueblo, leading some to stop servicing games at its casinos and dealing a hit to the tribe’s business. Also, the U.S. attorney for New Mexico had set a deadline, raising the prospect that he would take action if the tribe failed to reach a deal with the state before September.
With the pueblo’s odds worsening, Talachy said Thursday he had signed off on the same compact terms the Martinez administration had negotiated with several other tribes.
“It’s kind of a terrible game the state played,” Talachy said, “and it was done intentionally to squeeze us exactly into where we are now.”
Joseph Cueto, a spokesman for Martinez, signaled Thursday that the administration will accept the compact.
“We expect this to bring the issue to a close,” Cueto said. “As we’ve said all along, we’re simply asking that the Pueblo of Pojoaque play by the same rules as other New Mexico gaming tribes.”
Gambling compacts specify the games that a tribe can offer at its casinos as well as the share of revenue a tribe must share with the state government.
Under the old compact, Pojoaque Pueblo paid to the state 8 percent of what is known as “net win” — revenue from gambling as calculated through a specific formula in the compacts. The new agreement would require the tribe to share 10.75 percent.
The amount of money can be significant. During a threemonth period in 2014, for example, Pojoaque Pueblo reported a net win of about $16 million.
Talachy said it will be difficult for the tribe to recoup the revenue lost through what amounts to a higher tax on its casinos, pointing to the changing nature of the industry.
“Gaming has flattened out in New Mexico. It’s not increasing,” he said. “How do you justify increasing taxes?”
Talachy argued that by making few concessions, the state also left casinos with few ways to adapt to a changing market.
Seven pueblos, the Navajo Nation as well as the Jicarilla and Mescalero Apache have signed on to the same agreement. Pojoaque Pueblo initially participated in the negotiations that led to that compact. But the tribe’s representatives walked out of the discussions, with revenue sharing a central point of contention.
The pueblo, which operates the Buffalo Thunder and Cities of Gold casinos, sought to negotiate a compact directly with the federal government, but a judge struck down that idea after the Martinez administration sued.
When Pojoaque Pueblo’s old compact was about to expire, however, U.S. Attorney Damon Martinez agreed to hold off on enforcement action while the tribe’s lawyers appealed.
The tribe agreed to keep the money it would pay to the state under its revenue sharing agreement in an escrow account and abide by certain auditing requirements.
As long as Pojoaque Pueblo complied with those conditions, the U.S. attorney, no relation to the governor, said he would not take enforcement action until at least 30 days after an appeals court had ruled on the case and issued what is known as a mandate — an order effectively ending litigation.
The 10th Circuit Court of Appeals in Denver ruled against Pojoaque Pueblo earlier this year and issued a mandate in the case on Wednesday, rejecting a request by the tribe’s lawyers to hold off until they had a chance to press their case with the U.S. Supreme Court.
Damon Martinez was forced to resign earlier this year after President Donald Trump took office. But his successor, acting U.S. Attorney James Tierney, said he would uphold the 30-day deadline.
“The court’s issuance of the mandate today starts the 30 day clock running, with an expiration date of September 1, 2017,” Tierney said in a statement on Wednesday. “I urge the Pueblo of Pojoaque and the State of New Mexico to reach a mutually acceptable agreement on the status of the Pueblo’s gaming operations before September first.”
A spokeswoman declined as a matter of policy to comment on exactly what action he might take.
Forcing a tribe to close its casino altogether would be a highly unusual step for the federal government but not without precedent.
Then-U.S. Attorney John Kelly won court orders in the mid-1990s to seize slot machines and freeze the bank accounts of casinos operated by the Mescalero and Jicarilla Apache during a dispute over gambling compacts around the state.
Left unresolved is the state’s dispute with several other tribes over revenue from what are known as free play credits that casinos give to gamblers to entice them to play. The state is demanding several tribes pay for those credits as if it were part of the casino revenue, which would amount to millions of dollars. But several tribes are taking the state to court to block the state from collecting. Unclear is whether state regulators will seek the same back payments from Pojoaque Pueblo.
Like tribal leaders in that case, Talachy argued the New Mexico government is trying to use tribal casinos to pay for the state’s recent financial woes and sluggish economic recovery.
“It’s sad they’re trying to subsidize their faults on the backs of the tribes,” Talachy said.