The Assembly of Manitoba Chiefs is suing the Government of Manitoba for almost $1 billion, alleging the decision to approve the Shark Club Gaming Centre while refusing to open a First Nations-owned casino in Winnipeg cost First Nations millions of dollars in lost revenue.

A statement of claim filed Tuesday in the Court of Queen's Bench by the AMC, AMC Secretariat Inc. and Sand Hills Casino Resort Limited Partnership alleges the province and Manitoba Liquor & Lotteries breached its commitments to foster the First Nations gaming market by denying them access to Winnipeg, "the only market in Manitoba where casinos can generate significant revenue."

The suit seeks almost $870 million in combined general, aggravated and punitive damages, along with additional court orders designed to increase the gaming market possibilities for First Nations.

The lawsuit makes good on a threat made by then-AMC Grand Chief Derek Nepinak, who told CBC News in April the assembly was exploring its legal options after the Pallister government firmly denied a request to expand gaming in the city. Assiniboia Downs has been eyed by First Nations as a possible option for location.

"Winnipeg is the gaming market in Manitoba and for us to be shoved aside and kept out of the prime gaming market is unjust. It's in bad faith and we aren't going to stand for that," Nepinak said. "We are upping the stakes by looking at our legal options and moving from there."

Neither the government nor Manitoba Liquor & Lotteries has filed a statement of defence and none of the allegations have been proven in court. Both declined to comment further on the suit, but said they are currently reviewing the 41-page document.

Premier Brian Pallister has previously said the gaming market is oversaturated and has pointed to a 2016 Gaming Market Study showing the casino market is oversupplied throughout the province, including in the capital city.

"I want people to get jobs, I want people to have opportunities to grow and learn and work together and help each other, and the gambling industry isn't going to do that," Pallister said in September 2016.

Give Shark Club revenue to First Nations: suit

Along with damages, the suit by the AMC — which represents 63 First Nations communities in Manitoba — is also seeking a number of court orders.

The orders include:

an order for Shark Club — owned by True North Sports and Entertainment — to turn over its revenues to First Nations to be put into a trust

an injunction against opening any new non-First Nations casinos in Winnipeg without permission by the First Nations

approve the relocation of the Sand Hills Casino (located near Carberry) or some of their electronic gaming devices in the casino to the Winnipeg region

The claim points to the 1997 Bostrom Report commissioned under the former Progressive Conservative government and first adopted as policy in 2000 under the former Gary Doer NDP government.

The report recommended that five First Nations-owned casinos be approved to provide First Nations with a new revenue source to go to community improvements.

Aseneskak Casino near The Pas is 1 of 3 to open since the 1997 report calling for 5 First Nations-owned casinos. (Tyson Koschik/CBC)

Only three First Nation casinos have been opened since the report: Sand Hills near Brandon, Aseneskak near The Pas and South Beach Casino and Resort on Hwy. 59.

The two non-First Nation casinos — Club Regent and McPhillips Street in Winnipeg — are operated by Manitoba Liquor and Lotteries.

"[The government] kept the Winnipeg market for themselves and non-First Nation owners and relegated the First Nations to more remote areas in the province," the claim states.

In June 2013, the government approved a gaming license for the Shark Club Gaming Centre. It also added 500 new video-lottery terminals to the other two Winnipeg casinos, the suit states.

This was an alleged breach of the agreement with First Nations, who say the government had committed that the next casino in the city would be First Nations.

"The Shark Club takes up some if not all of the excess demand in [the] Winnipeg market for casino-style gaming," the claim states.

Sands Hills not profitable

The suit states that the Sand Hills Casino has operated at a loss each year and not made any net revenue for distribution to First Nations. Under its agreement, revenues are supposed to be shared equally among the First Nations of Manitoba.

The government has done nothing to increase the viability of the casino, the suit alleges. It states the government has increased equipment costs, denied extending its loan guarantees, refused to meet with the AMC or casino to discuss how to resolve the financial problems and refused multiple requests to move the site to Winnipeg.

Many Manitoba First Nations have received almost no financial benefit from the province's native-owned casinos. 2:42

In a statement provided to CBC News, newly elected Grand Chief Arlen Dumas says it is time the government steps up to create a solution.

"Gaming for First Nations in Manitoba is a part of our culture, and should be a meaningful tool for our economic development. We engaged with the Government of Manitoba starting 20 years ago in a regime for First Nations to get licences for, own and benefit from what was supposed to be the next five casinos in the province. These casinos were supposed to be established in viable markets. We were supposed to become more financially sustainable as a result. This did not happen," he said in the prepared statement.

"These were commitments made by the provincial government over and over again. Those commitments were broken and we are unjustly paying the price. It is time for this government to step up and work with us to create a real solution. We hope they will. If they refuse, we'll continue to seek justice for this in the courts."