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Detroit: Casinos One Step Closer to Reality


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Tribe, casinos near deal

MotorCity and Greektown would pay $39.5 million apiece to Lac Vieux Indians if terms approved

Monday, October 6, 2003

By Becky Yerak / The Detroit News

DETROIT -- A 6-year-old lawsuit filed by a plucky Upper Peninsula Indian tribe against Detroit's casino establishment is on the verge of being settled, enabling two gambling halls to start building their more grandiose properties possibly in time for the 2006 Super Bowl.

The deal calls for MotorCity and Greektown casinos to pay $39.5 million apiece over 25 years to the 500-member Lac Vieux Desert Band of Lake Superior Chippewa Indians. A term sheet is being circulated for signatures and is expected to be signed by the three parties, as well as the city of Detroit, by midweek.

Lac Vieux had sued Detroit in 1997, saying its constitutional rights were trampled when the city gave preferential treatment to MotorCity and Greektown ownership groups that financially backed the statewide ballot measure to allow casinos.

Last year, a U.S. appeals court in Cincinnati told the city it could not issue building permits for construction until the case was resolved.

Casino owners have said that if construction doesn't start by year's-end, it will be difficult to have the rooms ready for the 2006 National Football League championship, which will be held in Detroit.

Despite the tentative deal, potential pitfalls remain.

MGM Grand Detroit Casino is conspicuously absent from the settlement agreement, which was finalized Friday. The property, owned by publicly traded MGM Mirage of Las Vegas, is not in lockstep with Greektown and MotorCity because it says it did not need or get any special breaks from the city and therefore should not be a party in the lawsuit.

"The underlying lawsuit involved people who received a preference in the original procedure," MGM Mirage spokesman Alan Feldman said Sunday. "We did not receive a preference."

But MGM is under pressure to participate in a settlement. For one thing, Lac Vieux said it will continue to pursue its case against MGM. It claims MGM still benefited from the city's casino selection process -- deemed unconstitutional by two U.S. courts -- because the city had to approve or reject all three casinos as a group.

Lac Vieux would be getting a richer deal than previous offers. Earlier this year, The Detroit News reported that one casino alone was offering $12 million up front and $1 million a year for 20 years. In recent financial documents, MotorCity parent Mandalay Resort Group and MGM Mirage disclosed they would pay the city up to $20 million each to cover costs arising from the lawsuit, as well as the city's bungled effort to acquire riverfront land for a gambling district.

Two former Greektown Casino investors, Dimitrios Papas and Ted Gatzaros, also have offered an additional $15 million to Lac Vieux, but they are not part of the settlement deal. It is in the pair's best interests to participate in a settlement with Lac Vieux because if the settlements were to fall through and the city were forced to pick new casino operators, the $265 million deal Gatzaros and Papas signed to sell their 40 percent stake to Greektown's existing owners could become worthless.

But Gatzaros and Papas are in an unrelated dispute over various payments from current Greektown owners.

That means there is more than $90 million on the table for the 500-member Watersmeet, Mich., tribe.

The deal between Lac Vieux, the city and the two casinos also is subject to a final agreement, as well as approvals by the individual casinos, the city and the court.

You can reach Becky Yerak at (313) 222-2760 or [email protected].

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