In 1988 the Michigan tribes operating casinos began negotiations with
the governor's office to draft the compact required by the IGRA. The
negotiations quickly came stalled, however, on the issue of video
gambling. The state was strongly opposed to video gambling devices while
the tribal governments were equally adamant in demanding the devices.
For several years negotiations all but ceased. Indian casinos, however,
continued to operate despite the lack of a compact. This continued
operation was made legal by a United States Department of Justice ruling
that allowed existing casinos to operate while compact negotiations
were "underway" but which did not establish any milestones to judge the
progress of "underway" negotiations nor create a date by which
"underway" negotiations were to be completed.
In April 1993 a Michigan appellate court decision made clear
that the state courts were unlikely to uphold the state's longstanding
opposition to video games of chance on Indian reservations. Given this
turn of events negotiations over the long delayed compact soon resumed
in earnest. The thirteen page compact was agreed to relatively quickly
and won legislative approval in late summer 1993.
As part of the compact, the signatory tribal governments were
given exclusive rights to operate casinos in the state, both on and off
reservations, and allowed the privilege of using video gambling devices.
In return the tribes agreed to pay ten percent of all profits from
those machines to government. Eight of the ten percent went to the
state's "Michigan Strategic Fund." The remaining two percent was
reserved for the local governments in the communities where the casinos
operated. The compact further stated that should the state allow
non-Indian owned casinos to operate, the tribes would no longer be
obligated to make payments into the Strategic Fund.
The possibility that the tribes might be allowed to operate
casinos in places other than federally defined reservations created
considerable opposition to the agreement within the legislature. In
particular some Detroit area legislators who opposed casino gambling in
that city attempted, but failed, to block the compact. This opposition
was grounded in Detroit voters' repeated rejection in prior years of
referendums to allow casino gambling in their city as well as a 1988
city ordinance banning casinos in Detroit should the state authorize
them. In 1994, however, Detroit voters demonstrated a sea change of
public sentiment by passing a referendum authorizing the establishment
of Indian owned and operated casinos.