Council delays Indiana casino decision
Tribal Council voted 10-1 today to table a resolution that would have allowed the tribe to move forward with a $290 million agreement to purchase the gaming operation at Caesar’s Southern Indiana Casino.
The operation is up for sale as the result of a July merger between Eldorado Resorts and Caesars Entertainment — the same company that owns Harrah’s, the tribe’s casino management company. The merger created the nation’s largest casino and entertainment company, and in some states the union put them afoul of antitrust laws, meaning that the company had to sell off some of its operations in those jurisdictions. The casino in Elizabeth, Indiana, is one of those properties.
The resolution presented by Principal Chief Richard Sneed asked Tribal Council to OK an upfront payment of $130 million as well as a $160 million loan, which would be paid off over five years at 5 percent interest.
On Nov. 12, council passed a resolution with a vote of 8-3 authorizing Principal Chief Richard Sneed to move forward with due diligence on the property prior to entering into an agreement to purchase. Caesars is required to enter into such an agreement to divest itself of the property by Dec. 31, so the clock is ticking.
However, council members had questions about the project and the speed with which action was required from them after receiving key information. In particular, several members referenced a closed-door meeting that had occurred the previous day and questioned why that meeting could not have occurred on air for tribal members to see.
“I think if we could have aired this yesterday and let them see some of this stuff, it would have been a lot different,” said Big Cove Representative Richard French.
Other members had questions about the source of the funding. The proposal was to fund the initial $130 million investment through the Debt Service Sinking Fund, Endowment Fund 1, Endowment Fund 2, the Cherokee Sovereign Wealth Fund and the Business and Economic Development Fund, but the proposal did not attach specific dollar amounts to any of those funds.
Finance Secretary Cory Blankenship told the body that, given a day to gather the information, he could pull together a more specific proposal.
The money in question is currently in investment funds that generate a return of 6 to 8 percent. The casino investment is expected to yield a return of 19 to 23 percent, by contrast. However, that would not all come back directly to the tribe. State laws in Indiana mean that the business entity controlling the operation — a new LLC yet to be created by the tribe — could remit only 25 percent of the profits directly back to the tribe each year, said Blankenship. However, that is an Indiana law and not universal. The entity could use the remaining funds to invest in similar commercial gaming opportunities in other states, thereby preventing the need to pour more tribal funds into future casino purchases.
Tribal Council plans to take public input and questions about the potential venture over the coming days and take a final vote on the resolution as soon as possible. Tribal members are encouraged to text or email their representatives with questions they would like to see answered.