Rather than risk a court battle, the tribe and the state compromised.

Supreme Court has ruled tribes are exempt from some sales taxes but must pay others. Indian tribes are exempt from most state regulation, but the U.S. ``Everything that is subject to a sales tax off the reservation will be subject to sales tax on the reservation.'' ``It's a real big deal,'' said Mark Pederson, an attorney for the Minnesota Department of Revenue who helped negotiate the agreement. The agreement with the band, which operates the most profitable Indian casino in the state, came after years of negotiations. Minnesota officials expect the state will receive millions of dollars through the agreement, under which the Shakopee Mdewakanton Dakota band began collecting sales taxes on March 1. The Indian tribe that runs Mystic Lake Casino has agreed to collect sales tax on food, cigarettes, liquor and hotel rooms on its reservation and split the proceeds with the state.