Patrick Marley

Milwaukee Journal Sentinel

MADISON - Outgoing Gov. Scott Walker has reached a deal that would allow the Forest County Potawatomi to reduce its payments to the state by up to $250 million if a new casino cut into the tribe's revenue.

Aides to the Republican governor said the deal would end 15 years of legal uncertainty and limit the state's potential exposure, which Walker officials believe could have been as high as $500 million.

At issue is how much the Potawatomi could withhold from the state if another tribe were to establish a casino 30 to 50 miles from the Potawatomi operation in Milwaukee. The Potawatomi have contended another gaming hall — such as ones proposed for Kenosha over the years by the Menominee tribe — would cut into its customer base and profit.

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Walker and Potawatomi Chairman Ned Daniels Jr. signed the agreement Friday and it was released to the public Tuesday. The deal must now be approved by the federal Bureau of Indian Affairs.

Tribes in Wisconsin pay the state millions of dollars a year for the exclusive right to operate casinos. The amounts are based on a percentage of their revenue known as net win.

The state typically does not reveal how much individual tribes pay, but calculations in 2014 showed the Potawatomi were expected to owe the state $25 million to $30 million that year.

In 2003, the Potawatomi and then-Gov. Jim Doyle reached an agreement that barred competing tribes from establishing casinos within 50 miles of the Potawatomi facility.

The Bureau of Indian Affairs signed off on barring competing casinos within 30 miles but not farther than that. The state and tribe have fought over how much the Potawatomi could reduce its payments to the state if a rival tribe built a casino 30 to 50 miles away.

In 2014, an arbitrator ruled the state would be responsible for the Potawatomi's losses in such a scenario and the state concluded it could be on the hook for up to $500 million, according to a letter from Ellen Nowak, Walker's administration secretary.

The Bureau of Indian Affairs rejected the arbitration decision soon afterward because it shifted costs from the Potawatomi to the Menominee. The state and Potawatomi have continued to negotiate on the issue since then.

The latest deal says the Potawatomi could reduce its payments to the state to cover losses the tribe suffered because of a casino that operated 30 to 50 miles from the Potawatomi casino. The maximum reduction would be $250 million and the reductions could cover losses at its casino only — not at its hotel or restaurants.

The Menominee for 20 years have sought to build a casino in Kenosha but have faced repeated setbacks, most recently in 2015, when Walker rejected plans for an $800 million casino that had been approved by President Barack Obama's administration.

Any future casino proposal would need the approval of President Donald Trump's administration and incoming Gov. Tony Evers, who beat Walker this month and will be sworn in on Jan. 7.

Evers spokeswoman Carrie Lynch said Evers' team was told of it after Walker had made his decision on it.

Potawatomi Attorney General Jeff Crawford said in a statement he looked forward to finalizing the deal with federal regulators.

"We appreciate the (Walker) administration engaging in good-faith, government-to-government negotiations to find agreement on this proposed compact amendment," Crawford said in his statement.

Doug Cox, chairman of the Menominee Nation, said he was unfamiliar with the Potawatomi agreement and needed to review how it might affect any future Menominee proposal.

"I've got to look at it myself," he said.

The deal with the Potawatomi comes as Walker wraps up his eight years in office. He announced last week he would appoint outgoing Attorney General Brad Schimel to the Waukesha County Circuit Court and is considering legislation that would be approved in a lame-duck session.