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JUNE 1, 2000

New Mexico state Attorney General Patricia Madrid made good on her promise and this week announced that she will take some or perhaps all of New Mexico's 12 gaming tribes to court over refusal to share profits with the state. The move comes after three years of constant battles between the tribes and the state.

Most of the tribes have been withholding their payments to the state, citing an abnormally high and potentially illegal 16 percent revenue sharing rate. The rate was instituted under compacts signed in 1997, which the tribes agreed to but immediately called unfair.

In April of this year, the last of the three New Mexico tribes who had continued to make payments suspended them. The Pueblos of Sandia, San Felipe, and Santa Ana formally announced their decision and were joined by Laguna Pueblo, whose casino opened in February but had yet to make a payment.

The tribes had hoped a new compact that reduced the rate to 7.75 percent would resolve the problem, but the state legislature rejected the proposal at the end of March. In January, the Department of the Interior sided with the tribes, saying the new proposal was more than fair. Back in 1997, Interior Secretary Bruce Babbitt did not approve the compacts, sharing the tribes' concerns about the high rate.

The Interior also said they would not support any agreement that would force the tribes to make back payments, which lawmakers and Madrid have wanted. Madrid hopes her lawsuit will determine once and for all if revenue sharing is legal under the Indian Gaming Regulatory Act (IGRA). In the meantime, she wants all casinos shut down.

Despite Madrid's goals, the state's lawsuit is risky, according to former US Attorney John Kelly. In December of 1999, he told lawmakers that the state would face a difficult battle in challenging the tribes' refusal to pay. If the state loses, the tribes would still continue to operate their casinos under the 1997 agreement; only the revenue sharing provision would be invalidated.

Just how much is at stake? The New Mexico Department of Finance and Administration estimates that the state has missed out on $67 million due to the tribes refusal to pay. According to the state Taxation and Revenue Department, the tribes' casinos pull in $300 to $400 million a year in net revenues, which represents only a small portion of the state's $40 billion economy.

But for tribes, the casinos are their livelihood and their future. Frank Chaves, the chairman of the New Mexico Indian Gaming Association, said the tribes are ready to go to court.