Vanderbilt Casino: Two Competing Interests With Statewide Implications

Mar 30, 2011

A small casino in Vanderbilt was ordered closed Tuesday. A federal judge says the casino, north of Gaylord, is probably not legal. He says keeping it open while the courts decide for sure would do irreparable harm to a competing casino in Petoskey.

Winners & Losers
With most every court battle, there are winners and losers. Today, Vanderbilt Village President Ed Posgate feels like his town of about 500 people is on the losing end.

"We're trying to make some progress. But I think we just got kicked," he says. The casino's 15-or-so workers are now out of a job.

"I hope they can find employment someplace else, but northern Michigan employment does not look any good right now. So it was a great thing for those people."

Posgate says the casino also brought people to town who wouldn't have come otherwise, people who came in and spent money in Vanderbilt.

Ken Harrington would agree the Vanderbilt Casino has been a draw. He says it's taken away some of his customers at the Odawa Casino Resort in Petoskey.

"Yes, we can feel the pain. We can feel it. It's not huge, but it's significant." Harrington chairs the Little Traverse Bay Bands of Odawa Indians, based in Harbor Springs. The tribe and the state are both suing to have the Vanderbilt Casino closed.

In 2007 Harrington's tribe built a $140 million dollar casino. It refinanced its debt late last year. Revenue has not lived up to expectations.

"The economy is bad. In Michigan, it's probably the worst nationwide. It's affecting gaming, and Indian gaming, across the nation. And to have an illegal operation come into your backyard and cut into it deeper is painful," he says.

Financial losses to the Odawa Casino factored heavily into U.S. District Court Judge Paul Maloney's decision to shut down the Bay Mills Casino in Vanderbilt. He noted Bay Mills even offered a special deal for people with an Odawa Casino rewards card.

Maloney's decision was issued at about 9:30 Tuesday morning. He ordered the casino closed by noon. It's a preliminary injunction, meaning that the casino must close, even though a final ruling over whether or not it's legal may be some time in coming.

Statewide Implications 
The question of legality for this casino is about more than the two communities, or the interests of two competing casinos and two competing tribes. Bay Mills Indian Community is interested in building in Port Huron, and possibly in Flint and the Vanderbilt Casino is widely viewed as a test case for the tribe. If the tribe wins, it could mean the state and federal governments have little-if-any control over where Bay Mills builds future casinos.

The Vanderbilt Casino opened quietly, quickly last November - with just a few dozen slot machines. A recent expansion brought the number of games to 84. It's not on the Bay Mills Upper Peninsula reservation.

Other tribes that have built gaming operations off the reservation have gone through a cumbersome approval process with the state and federal governments.

Bay Mills did not use the same process. Instead the tribe claims it can buy land and build a casino where it wants as long as it uses a specific pool of funds to buy the land. They're funds that, according to federal law, can only be used for "improvements on tribal land or the consolidation and enhancement of tribal landholdings."

The tribe says the 40 acres it bought in Vanderbilt, about 100 miles south of its main reservation in Brimley, is an enhancement of its land holdings.

Not Likely To Succeed
But the ruling Tuesday also shows Judge Paul Maloney doesn't think Bay Mills has much of a case. He writes: "Bay Mills may use the earnings from the land trust to acquire additional land next to, or at least near, its existing tribal landholdings. The statute does not allow Bay Mills to create a patchwork of tribal landholdings across Michigan."

A spokeswoman for the Bay Mills tribe did not reply to a message seeking comment Tuesday. The tribe has been reticent to talk with media, as the legality of the Vanderbilt Casino has been in question. But it released a statement just last week affirming its belief that the casino is legal.

Back in Vanderbilt, by Tuesday afternoon Village President Ed Posgate says he'd already been on the phone with Tribal Chairman Jeff Parker. Parker told Posgate the tribe is complying with the federal court order, but that all is not lost.

"I don't think this is over," Posgate says. "I think they'll fight this in court."