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Judge favors pueblos in dispute with state

Posted by April E. Olson | Apr 02, 2019



2 APR 2019

BY SARAH HALASZ GRAHAM [email protected]

A federal magistrate judge on Saturday sided with six Northern New Mexico pueblos in a long-running dispute with the state, saying the state has no right to the tens of millions of dollars in back revenue it charged the pueblos.

The New Mexico Gaming Control Board contended that the tribes owed New Mexico more than $60 million, by some estimates, for revenues earned from so-called free-play credits — the popular, randomly distributed gaming credits that casinos load onto gaming cards to entice gamblers to play slots.

Lawyers for the pueblos likened the state policy to requiring retailers to charge a tax on an item's full price even if it was sold at a discount.

“It's a common-sense observation that it makes no sense to claim revenue sharing based on something that is not, in fact, revenue,” said Richard W. Hughes, a Santa Fe attorney who represented Santa Clara and Santa Ana pueblos in the dispute.

Pueblo governors previously called the state's move “a specious attempt to reach deeper into the pockets of New Mexico's Native American tribes.”

Under previous gambling compacts, casinos were required to pay the state for revenues generated from those credits, but that rule was changed in 2015 after the federal government sided with the tribes that the practice violated generally accepted accounting practices.

Under former Gov. Susana Martinez, the state's Gaming Control Board sent out notices in April 2017 to most of the state's 14 tribal gaming entities, informing them they owed back revenue on freeplay credits doled out between 2011 and 2015. That prompted three pueblos — Tesuque, Sandia and Isleta — to file suit. Three more — Santa Clara, Santa Ana and San Felipe — eventually joined.

Of the three initial plaintiffs, Sandia owed the most — $26.5 million. Tesuque owed $10.4 million and Isleta owed $3.3 million. Though he could not provide exact statistics, Hughes said his clients together owed more than $20 million.

In her ruling, Judge Kirtan Khalsa sided with the pueblos, noting generally accepted accounting principles, as applied in the gaming industry, mandate that free-play credits not be included in revenue.

Hughes said he and his clients “feel like it was a complete vindication of the pueblo's position, a position we've taken consistently for the 10, 12 years this dispute has been going on.”

Donovan Lieurance, the acting executive director of the state's Gaming Control Board, whose members are defendants in the case, said he recently was made aware of the case and could not comment. “We're waiting to see what the administration wants to do and go forward from there,” he said.

Martinez initially was named a defendant in the suit. Because federal law mandates that named parties in federal lawsuits transfer to their successors after an election, Gov. Michelle Lujan Grisham is now a defendant, and her office will decide whether to appeal.

A spokeswoman for the Governor's Office said Lujan Grisham is reviewing the case. Hughes said he and his colleagues have been wondering whether Lujan Grisham will appeal. Either way, he said, he's definitely seen a change since January in the executive branch's handling of Native American issues.

“Unlike her predecessor, Gov. Lujan Grisham has been extremely open to tribes' concerns and has been very willing to meet with us and discuss our concerns and incorporate them into decision-making,” he said. “That's been very encouraging to us.”

About the Author

April E. Olson

Partner - Tempe Office