Walker rejects Menominee request for Kenosha casino

MADISON, Wis. (AP) - Gov. Scott Walker on Friday denied the Menominee Nation's request for permission to build an off-reservation casino in Kenosha, saying approving the project could leave the state owing a rival tribe hundreds of millions of dollars.

The decision is devastating for the Menominee, who have been pushing to build a casino at Kenosha's Dairyland Greyhound Park dog track for years in hopes the facility would pull the tribe out of poverty. But the governor said Friday that the state's compact with the Forest County Potawatomi requires Wisconsin to refund payments that tribe has made to the state if a Kenosha casino became a reality.

"After a comprehensive review of the potential economic impact of the proposed Kenosha casino project, the risk to the state's taxpayers is too great," Walker said in a news release.

Walker, a Republican mulling a 2016 presidential run, had until Feb. 19 to make a decision on the casino but chose to release it Friday, a day before he was scheduled to attend a conservative summit in Iowa for potential GOP presidential candidates. Walker told reporters in Milwaukee Friday morning that the timing had nothing to do with politics.

"If that's the case, I would have shut it down right off the bat," Walker said.

Menominee Chairwoman Laurie Boivin said in a statement the project would have improved her people's lives but the Potawatomi and Walker's presidential aspirations dashed their hopes.

Potawatomi Attorney General Jeff Crawford said in his own statement that Walker gave the project a thorough review "and we agree with his determination that this project is not in the best interest of Wisconsin."

The Potawatomi have been fiercely opposed to the new casino, fearing it would siphon profits from their Milwaukee facility about 30 miles away. The Potawatomi's gambling compact with Wisconsin mandates the state reimburse the tribe for any losses linked to a Kenosha casino as well as refund payments the tribe has made to the state in exchange for the exclusive right to offer gambling in southeastern Wisconsin. Walker's administration has estimated those payments could run into the hundreds of millions of dollars.

The tribe also has argued it wouldn't have to make any future payments to the state if the new casino went through since their guarantee of exclusivity would be gone. The Potawatomi has already withheld $25 million from the state out of concerns Wisconsin would end up owing the tribe if the governor approved the new casino. Potawatomi spokesman George Ermert didn't immediately respond to an email inquiring about whether the tribe would now pay the state that money.

The federal Bureau of Indian Affairs earlier this month nixed a deal between the Potawatomi and the state that would have established the financial terms for reimbursement, however, raising questions about whether the state remains on the hook. The Potawatomi have filed a federal lawsuit in Washington, D.C., challenging the BIA's ruling.

The Menominee and the state brokered a new compact that called for the Menominee to pay the state 7.5 percent of its annual winnings and cover revenue losses if the Potawatomi stopped paying. But state Department of Administration Secretary Mike Huebsch warned the governor in a memo this week that the deal wouldn't cover back payments. On Thursday the Menominee announced they were seeking to post a bond ranging between $200 million and $250 million to protect the state.

Wisconsin Assembly Minority Leader Peter Barca, a Kenosha Democrat, said Walker's decision would cost thousands of jobs and millions of tourists. A lawyer whom Walker's administration hired to handle the Menominee's request commissioned an independent study that found the new casino would hurt the Potawatomi and the Ho-Chunk Nation, another Wisconsin tribe that runs its own casinos and opposed the Menominee plan, as well as the counties in which they operate. But the report concluded that the Kenosha facility would generate an overall positive economic impact for the entire state.

"I think the governor failed basic economics," Barca said. "He should be coming to Kenosha and Racine this weekend and talking with us about how to make up for this colossal mistake rather than flying to Iowa."

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Associated Press writer Scott Bauer contributed to this report from Milwaukee.