Council puts the brakes on Indiana casino purchase - The Cherokee One Feather
Wednesday 16th December 2020
The purchase of a casino in southern Indiana, being dubbed 'Project Hoosier', has been put on hold for the time being. During a specially-called Tribal Council session on the afternoon of Tuesday, Dec. 15, Council tabled Res. No. 363 (2020) which would have approved funding for the Tribe's purchase of the business.
The resolution asked for $130 million of the total price tag of $250-300 million to be paid from various investment funds of the Eastern Band of Cherokee Indians. During discussion on the legislation, an amendment was passed to add the $130 million price to the resolution, but another amendment failed which was specifying that those funds would come from "in coordination or combination" from the Tribe's Debt Service Sinking Fund, Endowment Fund #1, Endowment Fund #2, Cherokee Sovereignty Wealth Fund, and the Business and Economic Development Fund.
Information from the Office of the Principal Chief states that the project, in what would be the Tribe's first foray into commercial gaming as opposed to Indian gaming (regulated under the Indian Gaming Regulatory Act), is estimated to bring in $40 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) with 25 percent of the excess cash flow, approximately $3 million annually, going back to the Tribe for governmental services. This EBITDA is the total after lease payments are paid and the remaining 75 percent will be retained by the company to service an aggressive debt repayment strategy.
Principal Chief Richard G. Sneed, who submitted the legislation, stated that, per the state regulatory boundaries imposed on this commercial gaming license, no revenue will be used as per capita distribution for tribal members. Res. No. 363 states in part, "...the revenues that the Tribe will receive from Project Hoosier will be allocated to help fund health, education, and welfare services and benefits for tribal members."
Voting to table the resolution was 10-1 with Birdtown Rep. Albert Rose being the only dissenting vote for that particular measure, but other Council representatives had questions as well and opposed several amendments that were put forth during discussion.
Chief Sneed opened the discussion with a statement, "We have enjoyed, for over 22 years now, an unprecedented success story in the gaming industry. While much of our success is attributed to the outstanding properties that we operate, we cannot ignore the fact that market forces have leaned heavily in our favor because of a lack of competition."
He spoke of the possible loss of tribal revenue that competition could bring. He added, "We find ourselves, today, facing competition from all sides. The Catawba casino decision by the Department of the Interior, if allowed to stand, poses a potential loss of revenue to our Tribe that could easily exceed $100 million."
He then asked, "What does this mean to the average tribal citizen? First, a loss of per capita distribution. Second, and I believe even worse, would be a reduction in the tribal budget would which translate to loss of tribal jobs, loss of services including elder services - jobs and services that our predecessors helped us secure by voting to approve gaming."
On the proposal itself, he noted, "This project before you has been thoroughly vetted, and the due diligence that was conducted drilled down into every facet of this project from financials to the property itself."
Rep. Rose stated later in the discussion, "It's not that I don't want the Tribe to move forward. I just think we need to slow down. The threats aren't as vast as we think they are."
Cory Blankenship, EBCI Secretary of Treasury, said, "Even though we have a short window of time, the amount of diligence work that has gone into this particular deal as a tribal member and as an employee of the tribal government appointee of Principal Chief Sneed, I would not stand here and bring to you a particular deal that I didn't think was good for this Tribe moving forwards...future generations, including my own kids and their kids, are looking to us for leadership. So, we've got to make some tough decisions."
Tribal Council Chairman Adam Wachacha was in favor of the resolution, "If we do everything right and we do our due diligence and we continue to keep our public educated, then I feel the support will be there for us. I support the idea of moving into commercial gaming, and I feel that this is step one...if we really want to shoot for the stars, we've got to start somewhere, and I feel that the due diligence has been done."
Along with purchase of the property, the Tribe would establish EBCI Holdings, LLC to oversee the business. In addition to a chief executive officer and chief financial officer, the new LLC would include a five-member board of which at least two people would be EBCI tribal members.
A month ago, Council approved funding for the due diligence on the project.
As of press time, there has not been a date scheduled for this issue to be brought back to the Council floor.