A native group in Michigan is refusing to share its casino revenue with the state because the Michigan Lottery decided to take its action online.

The Gun Lake Tribe, more formally known as the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, was due to make a $7m semi-annual revenue sharing payment to the state on June 1. But the tribe, which operates the Station Casinos-managed Gun Lake Casino in Allegan County, withheld the payment based on its belief that the Lottery’s online site violates the gaming compact the tribe negotiated with the state in 2007.

The Michigan Lottery launched its online site in November 2014, offering not only traditional draw ticket sales but also online scratch tickets, which critics have likened to online slot machines. The Lottery has estimated the online sales will total $480m over the site’s first eight years of operation.

The tribe’s withheld payment became public knowledge after the Michigan Economic Development Corp issued a statement warning that it was preparing to lay off an unidentified number of its 300 staff members as a result of its funding shortfall.