Penobscot Nation Chief Kirk Francis testifies Wednesday during a joint session of the Judiciary and the Legal and Veterans Affairs committees at the Maine State House in Augusta. Kennebec Journal photo by Joe Phelan Buy this Photo

AUGUSTA — Lawmakers began delving into the politically and economically contentious issue of tribal casinos Wednesday as they consider altering a 40-year-old agreement that treats tribes in Maine differently than Native American communities across the country when it comes to gambling.

Tribal representatives said that Maine has wrongly restricted their communities’ ability to use gambling as an economic development tool for decades while allowing hundreds of millions of dollars to flow to national corporations operating the state’s two casinos. After years of disappointing losses at the ballot box and in Augusta, tribal leaders and their supporters want the Legislature and voters to relinquish control and allow Maine tribes to be regulated by the same federal law that governs an estimated $30 billion tribal gambling industry nationwide.

The proposal is one of 22 sweeping changes to the 1980 Maine Indian Claims Settlement Act that, if enacted, would restore much of the sovereignty that tribal leaders say they lost 40 years ago.

“We’re not here for casinos. That’s not what we’re here for,” said Michael-Corey Hinton, an attorney for the Passamaquoddy Tribe. “We are here to restore our sovereignty and our ability to self-govern. Under federal law, that would include the right to game.”

Wednesday marked the second full-day of testimony that lawmakers heard on the 22 recommendations from a task force charged with examining potential changes to the 1980 settlement act between the state and the Penobscot Nation, the Passamaquoddy Tribe and the Houlton Band of Maliseet Indians.

Those recommendations would grant – or restore, in the eyes of supporters – more sweeping authority to tribes on taxation, natural resource management, land use and criminal prosecution on tribal lands.

Corey Hinton, attorney for the Passamaquoddy Tribe, testifies Wednesday during a joint session of the Judiciary and the Legal and Veterans Affairs committees in the Judiciary Committee hearing room of the Maine State House in Augusta. Kennebec Journal photo by Joe Phelan Buy this Photo

But the sweeping proposals are encountering pushback from industry groups concerned about tougher environmental regulation and municipalities. Even Gov. Janet Mills, who made improving tribal-state relations a high priority of her administration, warned last week that the changes could end up “breeding confusion and extensive litigation.”

That agreement ended a legal battle over ownership of roughly two-thirds of Maine’s acreage while providing the Passamaquoddy Tribe, the Penobscot Nation and the Houlton Band of Maliseet Indians $81.5 million to purchase about 300,000 acres and invest in their communities.

But the settlement also led to decades of jurisdictional fights and sovereignty disputes over environmental regulation, fishing rights – and gambling.

Gambling is addressed in just one of the 22 recommendations produced by the task force, but is likely to be among the thorniest proposed changes. Some lawmakers have already discussed pulling the gambling recommendation out of the bigger bill and dealing with it separately.

The task force recommended that the tribes in Maine instead be regulated by the federal Indian Gaming Regulatory Act passed by Congress in 1988. That act gives federally recognized tribes the ability to operate casinos with table games and slot machines on tribal lands, but gives states some say in how the facilities are operated by requiring a compact between the tribes, federal authorities and state officials.

Penobscot Nation Chief Kirk Francis recalled for lawmakers on Wednesday that, after the 1980 agreement, his tribe was forced to shut down high-stakes bingo and slot machines that had been operating for nearly a decade. Francis said the forced closures came as a surprise to tribal members because gambling was never mentioned during the settlement act negotiations.

While the Penobscot Nation subsequently gained state authorization for high-stakes bingo, tribes in Maine have repeatedly tried and failed to win approval from voters or legislators to open casinos. Yet even as they rejected tribal attempts to open casinos, Maine voters approved two separate referendum questions that led to the creation of Hollywood Casino in Bangor and Oxford Casino in western Maine.

Both casinos are run by large corporations – Penn National in Bangor and Churchill Downs in Oxford – and are regulated by the Maine Gambling Control Board. Francis said the Penobscot Nation closed its bingo operation in 2015 and eliminated several dozen jobs after seeing revenues steadily drop since the Bangor facility opened in 2006.

“So I get frustrated when I hear legislators talk about the need to protect their gaming constituents and jobs in their towns,” Francis told members of the Judiciary Committee and the Veterans and Legal Affairs Committee. “Penn National is not a constituent. They are a special interest that is temporarily operating a casino in Bangor. When that casino starts to lose money some day, they will be gone and – like the many other corporate interests that have come and gone in this state – they will leave behind lost jobs.

“The Penobscot Nation could be providing those jobs,” Francis said. “And unlike corporate entities, we will forever be in this state and any profits we make would go directly back into our communities.”

Penn National opposed the proposed changes on Wednesday.

“The gaming market in Maine, fundamentally, is saturated,” Chris Jackson, a lobbyist for Penn National, told lawmakers. “We know that to be the case. Our gross gaming revenues dropped significantly when the Oxford Casino opened in 2012, as our studies accurately predicted they would. But still we remain a very significant economic contributor both at the state and local level.”

Jackson said the 50 percent tax rate on slot machine revenue alone resulted in more than $22 million last year flowing directly to programs that support scholarships at Maine colleges and universities, veterans’ programs, harness racing, the Fund for a Healthy Maine and other initiatives. Anything that would negatively impact Hollywood Casino would also affect the money that flows to those programs.

But if additional casinos are authorized in Maine, they should have to go through the same voter-approval and regulatory process as Hollywood Casino and Oxford Casino.

“We would prefer no additional casinos in Maine,” Jackson said. “We think the people of Maine have said time and time again that they don’t want additional casinos in Maine. However, if there are additional casinos, we want to make sure they are regulated the same way with level of taxation and the same payout mandated by law to customers.”

A representative for Oxford Casino/Churchill Downs was expected to submit written testimony on the bill.