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Duluth loses appeal over downtown casino payments worth $12.4 million

Duluth leaders plan a further appeal of the case, which involves payments from the downtown Fond-du-Luth casino that had been providing the city $6 million a year.

Duluth officials will appeal an appeals court ruling in the downtown casino case that went against them and could cost $12 million.

A three-judge panel of the federal Eighth District Court of Appeals reversed a decision that would have required the Fond du Lac Band to pay the city for a two-year period. The case was sent back to the federal judge.

The city will ask the full appeals court to hear the case in hopes that there will be a different outcome.

“The consequences to the residents and taxpayers of the city of Duluth are far reaching and devastating,” Duluth Mayor Don Ness said Monday.

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The case involves the Fond-du-Luth casino in downtown Duluth, which was opened in the 1980s under a deal that provided about $6 million a year to the city. The money was used for road reconstruction.

The tribe did pay more than $75 million to the city over the years, but in 2011 the National Indian Gaming Commission ruled that the contract  between the city and band violated gambling laws, reports the Duluth News Tribune.

The tribe sued to get back the money it paid before 2009 but lost a court decision on that. Now, the legal question is whether the tribe must make the  payments for 2009 to 2011.

Federal Judge Susan Nelson initially ruled in November 2011 that the tribe does not have to make payments going forward from 2011, but that they must pay the $12.4 million for 2009-2011.

Both sides appealed and the appeals panel upheld the ending of the payments but sent the issue of the 2009-2011 payments back to Nelson for further review.

Fond du Lac Chairwoman Karen Diver told the Duluth paper:

“Obviously, we are quite pleased with the ruling. We will have to go back to the district court, Judge Nelson, but she has more options before her now. We are glad that the band’s position has been affirmed again.”