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Wednesday, 19 December 2012 00:00

Billing error for casino IT services translates into $4.1 million refund for tribe

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The Eastern Band of Cherokee Indians was accidentally overbilled $2.7 million for IT service over several years by the company that manages Harrah’s Casino.

The tribe contracts with Caesars Entertainment to manage casino operations. A billing error resulted in the tribe paying $2.7 million more than it was supposed to for IT services provided as part of the casino management contract.

“The overcharges were the result of inadvertent accounting and budgetary timing issues for the years 2002-2011,” according to John Houser, chairman of the Tribal Casino Gaming Enterprise board.

Caesars will reimburse the Eastern Band of Cherokee Indians $4.1 million — an amount that includes 10 percent compounded interest.

The error was discovered after the TCGE requested Caesars to take another look at its Information Technology service charges during the annual budget process, according to a report from Houser.

The analysis showed that Caesars had “historically overcharged” the casino in Cherokee for IT services from 2002 until 2011, the report stated. The Cherokee casino is one of three other Harrah’s casinos nationwide that paid more than the going rate for IT services.

The $4 million the tribe receives from Caesars will be divvied up under the same formula that applies to all other casino profits. Half will go to tribal coffers for tribal operations, and the other half will be distributed among the enrolled members of the Eastern Band. The additional money will be tacked onto enrolled members’ June per capita check — coming out to less than $200 per tribal member on top of their regular distribution. This year, tribal members received slightly more than $7,000 each from casino profits.

“Tribal leadership wants to ensure that our Tribal members understand we are committed to make every effort to resolve this and any other necessary accounting adjustments,” said Michell Hicks, principal chief of the Eastern Band, in a written statement. “Leadership has also called for an outside party to review the procedure for calculating the overcharges to ensure the calculated amounts are correct and properly reconciled.”

Hicks also wants to assure tribal members that Harrah’s casino was only overcharged on IT services, not in other areas such as marketing, audit or legal services, which Caesars Entertainment also provides.

The tribe has hired an outside consultant to review Caesars’ analysis of the past problems with its IT services billing to ensure that the reimbursement amount is correct. Until that assessment is complete, the money will be kept in an interest bearing account, and the tribe will not pay for any IT services.

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