Court Rejects Connecticut Casino Tax Lawsuit

A Connecticut casino lawsuit over taxes is over. The lawyer who argued successfully to prevent an Indian tribe in Connecticut from blocking collection of local and state property taxes on slot machines at the largest casino in the Western Hemisphere said the ruling Monday by a federal appeals court sets a good precedent for other Indian-run casinos across the country.

The 2nd U.S. Circuit Court of Appeals in Manhattan ruled Monday against the Mashantucket Pequot Tribe, which operates the Foxwoods Resort Connecticut casino. The decision overturned a lower-court judge who had earlier ruled for the tribe over the town of Ledyard and the state of Connecticut.

The appeals court noted the town maintains roads throughout the Indian reservation and provides emergency services. It said it also educates tribal children at a cost of at least $236,000 annually. The 2nd Circuit called it a close case but said the tribe’s interests in sovereignty and economic development don’t trump the interests of the state and town. “The town and state have more at stake than the tribe,” the appeals court wrote. “The economic effect of the tax on the tribe is negligible; its economic value to the town is not.”

“We are very pleased,” said attorney Benjamin S. Sharp, who argued for the imposition of the tax. “It is a significant decision.” Sharp said that the lawsuit brought by the tribe pertained to only two slot machine companies that generated about $20,000 in property tax income annually. But he added that there were seven more slot machine distributors and the tribe had suggested that the principle the lower court had applied in banning the Connecticut casino taxes could be applied to anyone who maintained property on tribal lands.

“That would total hundreds of thousands of dollars a year,” the lawyer said. And he said it was likely that similar property tax challenges would be brought on other tribal lands across the nation if the 2nd Circuit had not acted as it did. A lawyer for the tribe did not immediately respond to a request for comment.