A federal judge says the Potawatomi Indian Tribe, which operates two Wisconsin casinos, including one in Milwaukee, cannot sue the city of Waukegan for allegedly discriminating against the tribe in administering an allegedly "rigged" bid process that ultimately led the city to certify a different company to claim a gaming license to develop and operate Waukegan's new casino.
In the ruling, issued March 29, U.S. District Judge John F. Kness said the tribe stands as a sovereign entity, similar to a U.S. state. He said that treatment, as a sovereign, extends also to its affiliated company, Waukegan Potawatomi Casino LLC (WPC).
So, the judge said, the tribe and WPC cannot be considered a "person" under the U.S. Constitution and federal law against which discriminatory actions can be taken.
U.S. District Judge John Kness
| Kness
"Plaintiff WPC is 100% owned by the Potawatomi Tribe and was formed in October 2019 by the Potawatomi Tribe, doing business as the Potawatomi Hotel & Casino," Kness wrote. "It is undisputed that Plaintiff is an arm of a sovereign government, seeks to enjoy the privileges associated with its sovereign status in operating a Waukegan casino tax-free, views its sovereignty as 'inextricably linked' with the City of Waukegan, and believes that operating a casino would be 'consistent with the Tribal goal of reclaiming land and commerce in treaty territory.'
"Based on the foregoing, it is a Gordian knot to untangle Plaintiff's sovereign status and conspicuously sovereign interests in getting certified for a casino license from its putative 'non-sovereign' interests."
The tribe filed suit against Waukegan in 2020, claiming the city had violated its rights and the law when it ranked the Potawatomi company last among four competitors for the right to claim an Illinois gaming license and build a casino in Waukegan.
Under Illinois law, casino applicants needed to win certification from the city to secure that license from the Illinois Gaming Board.
After evaluating presentations from the tribe's company and three other applicants, the city in 2019 granted certification to Las Vegas-based Full House Resorts.
According to court documents, Full House's proposed to lease the site, known as Fountain Square, for 99 years, with an option to buy the site from the city for at least $30 million at any point during the lease. Full House further proposed to pay the city 2.5% of gaming revenues, with a guarantee of at least $3 million a year.
According to court documents, WPC ultimately proposed to purchase the site for $15 million, and put forward a plan that would create the largest proposed casino, generate the second highest gaming and admission tax revenue and the most gaming revenue of all the competing proposals.
However, the city said it opted to go with Full House, in large part, because Full House's pitch included plans to develop the area around the proposed casino, too, while Potawatomi's did not.
Further, court documents noted that Potawatomi indicated it wished to acquire the Waukegan license to both reduce revenue losses expected at its Milwaukee casino, as a result of the new Waukegan casino, and to "reclaim" ancestral home territory the tribe says was taken by the U.S. government.
After the city refused to reconsider its decision, the Potawatomi Tribe, through WPC, filed suit in federal court against Waukegan, seeking a court order overturning the city's decision.
After four years of proceedings, Judge Kness agreed with the city that the tribe lacked standing to bring their claims in federal court.
The judge noted the tribe "enjoys a government-to-government relationship with the federal government," and therefore its affiliate, WPC, cannot be treated legally like the other businesses bidding on the Waukegan gaming license.
The judge further noted the tribe, as a sovereign, is immune from lawsuits, such as the claims it has filed against Waukegan over the award of a casino. With this in mind, the judge said the tribe cannot also now seek to use federal anti-discrimination law "into an offensive sword."
While granting judgment to Waukegan on those grounds, the judge further determined that the tribe's legal claims against the city also fall short, as he said the tribe has not demonstrated that the city acted "irrationally" in determining that Full House's bid was superior, and that the Potawatomi bid did not compare to the others.
In a statement published in the Waukegan Sun, the Potawatomi Tribe said they disagreed with Judge Kness' decision and legal reasoning, and may choose to appeal.
Waukegan has been represented by attorneys Glenn E. Davis and Charles N. Insler, of the firm of Hepler Broom, of St. Louis.
WPC and the Potawatomi Tribe have been represented by attorneys Dylan Smith and Martin Syvertsen, of Smith Gambrell & Russell, of Chicago.