Back in mid-July the 2nd Circuit Court of Appeals ruled on an interesting case regarding tribal sovereignty at Indian casinos. The case pitted the country’s largest casino, Foxwoods, against the town of Ledyard and the State of Connecticut. The issue: Could Ledyard and Connecticut levy a personal property tax on non-tribal vendors who lease slot machines to Foxwoods? The original court decision held that various laws prevented Ledyard and Connecticut from imposing the tax on tribal vendors. However, the 2nd Circuit unanimously reversed the decision.
The main issue is whether or not the federal laws, such as the Indian Gaming Regulatory Act (IGRA) prohibits the tax. The court held that the interests of the state and town outweigh the federal interest.
The tax, imposed on non-Indian vendors, is likely to have a minimal effect on the Tribe’s economic development. While IGRA seeks to limit criminal activity at the casinos, nothing in Connecticut’s tax makes it likely that Michael Corleone will arrive to take over the Tribe’s operations.
Or, as the court put it,
The Town and State have more at stake than the Tribe. The economic effect of the tax on the Tribe is negligible; its economic value to the Town is not. The Tribe’s sovereign interest in being able to exercise sole taxing authority over possession of property is insufficient to outweigh the State’s interest in the uniform application of its generally-applicable tax, particularly where, as here, there is room for both State and Tribal taxation of the same activity.
Ledyard has begun to again receive tax payments. The other question is will the Pequots appeal to the Supreme Court or ask for an En Banc appeal to the entire 2nd Circuit? We’ll know the answer to that question soon.