Sault Ste. Marie Tribe of Chippewa Indians v. Granholm

In 1988, the Indian Gaming Regulatory Act (IGRA) was enacted. IGRA authorized Indian tribes to operate gaming establishments. Numerous tribes (together, the tribes) (plaintiffs) began negotiating with the governor of Michigan (defendant) on the terms of operating slot machines on tribal land, but the parties had some disputes regarding the interpretation of IGRA. In 1993, the matter was resolved through a stipulated consent judgment. One provision of the parties’ agreement required the tribes to make payments to local governments in the amount equal to 2 percent of the “net win” derived from slot machines. The term “net win” was defined to mean “the total amount wagered on each electronic game of chance, minus the total amount paid to players for winning wagers at said machines.” One tribe, Hannahville, operated the Island Resort and Casino. In 1998, Hannahville began giving out promotional tokens, or “comps,” to its customers. Each token, called QuickSilver, allowed the customer a free play on Quicksilver promotional machines only. The promotional tokens could not be redeemed outright for cash, but a customer could win real money from playing; one QuickSilver credit could be cashed out for a quarter. A dispute arose regarding how to value the Quicksilver tokens with respect to the consent judgment. According to applicable accounting standards and industry-gaming standards, the tokens had a zero-dollar value from a revenue-recognition perspective. Hannahville valued the tokens as a zero-cent wager, producing a net loss on the QuickSilver machines and cumulatively lowering the amount that Hannahville owed to local governments. The governor argued that the tokens had a 25 cent value and that the consent judgment was unambiguous. The trial court ruled in favor of the governor, finding no ambiguity in the consent judgment and that “wager” could not be construed to mean a zero-dollar value. The court did not consider Hannahville’s proffered extrinsic evidence consisting of accounting and gaming-commission standards specifically applicable to casinos. Hannahville appealed.