A California Indian tribe that had partnered with the Mashantucket Pequots on a $300 million casino expansion project revealed in a federal lawsuit this month that the Mashantuckets withdrew from the deal.

The Pauma Band of Mission Indians filed suit over a 2004 compact they signed with Gov. Arnold Schwarzenegger that authorized them to add thousands of slot machines in exchange for paying the state a greater share of revenues, the San Diego Union-Tribune reported Thursday.

The tribe opened the Pauma Casino north of San Diego in 2001, under the terms of a compact forged in 1999.

In a statement issued by a spokesman, the Mashantuckets said the deal fell through almost a year ago when the two tribes “determined they were unlikely to secure the necessary funding to complete Pauma's project given the credit market conditions and the downturn in the economy both in California and nationwide.”

The Mashantuckets, owners of Foxwoods Resort Casino and MGM Grand at Foxwoods, have been wracked by declining revenues at their Connecticut properties and are seeking to restructure more than $2 billion in debt. They also are involved in pending casino projects in Philadelphia and Kansas.

The Mashantuckets' partnership with the Pauma, first announced in 2006, called for the Foxwoods Development Co., the Connecticut tribe's development arm, to oversee construction and management of a $300 million resort casino. It was to replace the Pauma's existing casino and was to feature 2,000 slot machines and 50 gaming tables. A 500-room hotel, an entertainment venue, restaurants and retail shops also were planned.

It was to open in the spring of 2009.

The Pauma operate 1,050 slot machines in their existing casino, the same number as in 2004, but their annual payments to the state total $7.75 million. They would owe $315,000 a year under the original compact. In their suit against the state, Schwarzenegger and the California Gambling Control Commission, they are asking for the return of about $26 million in payments and to revert back to the terms of the 1999 agreement.

The tribe, pointing to a recent court order that the state issue more than 10,000 slot machine licenses to Indian tribes, also wants to install more slot machines.