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

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.

Gov. Perdue and Chief Hicks bask in mutual success of live gaming deal at Harrah’s

fr livegamingNorth Carolina Gov. Beverly Perdue and other dignitaries gathered at Harrah’s Cherokee Casino and Hotel Tuesday to officially mark the introduction of live table games at the casino.

Card dealers line up for on-the-spot job offers at Harrah’s Cherokee casino

fr harrahsjobfairHundreds of people stood in line, some for more than an hour, outside Harrah’s Cherokee Casino and Hotel last Wednesday waiting to enter and try their luck — at getting a job.

Dynamite rotunda comes to life at Harrah’s Cherokee casino

fr rotundaHarrah’s Cherokee Casino and Hotel never had an entrance that made visitors stop and say wow — until now.

Recession rebound: turnaround in progress at Harrah’s Cherokee Casino

After inching its way back from recession-driven declines during the past year, Harrah’s Cherokee Casino and Hotel is back in the catbird seat.

You could even call it a Royal Flush. The advent of live dealers and table games coincides with a $633-million transformation of the casino into a rollicking resort.

All hands on deck: live gaming approved by state

coverAfter nearly a decade of negotiations and broken promises, the state finally approved an agreement that allows table games with live dealers at Harrah’s Cherokee Casino.

The Eastern Band has worked since the early 2000s to get the state’s John Hancock on a live gaming compact, and now, it’s just a matter of weeks before the longtime dream comes to fruition.

Fate of live dealers hinges on state House

The quest to bring live table games to Harrah’s Cherokee Casino faces a final political hurdle.

Both the Governor and N.C. Senate have given live table games their blessing, with the N.C. House of Representatives now the lone hold-out.

Harrah’s Casino is limited to video-based gambling only. Adding live table games like roulette and poker would attract a new clientele of player, and in turn more money and jobs flowing through the entire region, according to the Eastern Band of Cherokee Indians.

“We aren’t going to see a big influx of industry coming in to Western North Carolina, so we have to do what we can to ensure we have economic development,” said Rep. Roger West, R-Marble. West sees the casino, which could employ more than 2,000 if it gets live dealers, as a key economic pillar that spins off in the region.

Whether the Eastern Band has the requisite votes to get the measure passed is unclear at the moment, however. But West is hopeful.

“I think the votes are there. If they aren’t, it is just a matter of getting them,” said West, who represents Macon, Clay, Graham and Cherokee counties.

However, many of the House legislators who are opposing live dealers cite moral and religious grounds, and convincing them to relinquish their convictions in the name of economic development might not be easy.

“My opposition stems from my longstanding belief that state sanctioned gambling has a corrosive effect on our society,” said Rep. Ray Rapp, D-Mars Hill.

Rep. Phil Haire, D-Sylva, said the good the casino has done in the region outweighs any negatives.

“I remember the days before they had Harrah’s — it has brought a whole lot of prosperity to the Eastern Band,” Haire said.

Haire said the jobs provided by Harrah’s are significant, not only the salaries but the health insurance. And Haire personally enjoys going to the concerts at Harrah’s major performance venue. He saw Diana Ross recently, and is headed to see Natalie Cole this weekend.

Haire hopes Cherokee’s casino operation won’t be held hostage to personal ideology.

“I think some people want to put a moral tag on it, but nobody makes you go to Cherokee to gamble. It is all voluntary,” Haire said.

Rapp was willing to go along with live table games for the existing casino campus, since gambling was already going on there. But Rapp is not comfortable with the prospect of Cherokee opening more casinos in the region on their land holdings.

The deal initially inked with the governor would have permitted Cherokee to open more casinos anywhere on land holdings it owned currently.

However, in an attempt to assuage legislators uncomfortable with expansion of gambling onto some of Cherokee’s more recently acquired holdings, new language was added. The new language limits the Eastern Band to a max of four more casinos, and they can only be built on land under the tribe’s domain as of 1988 — making newer land acquisitions off the table.

Live table games passed the senate last week by 33 to 14. All four state senators from the mountains voted for it: Sen. Jim Davis, R-Franklin; Sen. Ralph Hise, R-Spruce Pine; Sen. Tom Apadoca, R-Hendersonville; and Martin Nesbitt, D-Buncombe.

The tribe has hired lobbyist Steve Metcalf, a former legislator from Asheville, to shepherd live table games through the General Assembly. Metcalf declined to comment for this article.

A vote could come as early as next week. If it doesn’t come, it could be a bad sign.

“You never go to a vote unless you have the votes,” West said.

The General Assembly will only be in session for about six weeks.

 

Education fight resolved

It took years of lobbying and negotiations for the tribe to reach where it is now. In an historic agreement signed with Gov. Bev Perdue last November, the tribe agreed to give up a cut of its revenue from the new table games — on a sliding scale starting at 4 percent and maxing out at 8 percent over the next 30 years. In exchange, the state would grant live dealers and a guarantee that no other casinos would be allowed to encroach on its core territory, namely anywhere west of Interstate 26.

While Perdue and Republican leaders in the General Assembly had agreed in theory to live dealers last fall, they had locked horns on a seemingly obscure sticking point. Perdue wanted the state’s cut of casino revenue to go directly to schools, bypassing the General Assembly. That way, lawmakers couldn’t be tempted to tap the money for other uses.

The Republican leaders, however, said casino revenue couldn’t legally be put in a lockbox and earmarked for future years. One set of lawmakers today can’t impose mandates on how future lawmakers can spend money.

A compromise was reached that places the money in a special “Indian Gaming Education Revenue Fund.” The General Assembly can tap the fund at will — so it does put legislators hand in the till — but they have to hold a special vote to get money out. Otherwise, the money will be disbursed quarterly to school systems across the state based on their student body population, and can only be spent on “classroom teachers, teacher assistants, classroom materials or supplies, or textbooks.”

Logjam broken on live dealers for Cherokee, but not a done deal yet

A political impasse over live dealers and table games at Harrah’s Cherokee Casino has been resolved, but the tribe still has some heavy lifting to go before it can close the deal.

The Eastern Band of Cherokee Indians needs the blessing of both the governor and state lawmakers to add live dealers and table games. The tribe offered to give up a cut of gross gaming revenue to win the needed support.

While Gov. Beverly Perdue and Republican leaders in the General Assembly had agreed in theory to live dealers last fall, they had locked horns on a seemingly obscure sticking point. Perdue wanted the state’s cut of casino revenue to go directly to schools, bypassing the General Assembly. That way, lawmakers couldn’t be tempted to tap the money for other uses.

Republican leaders, however, said casino revenue couldn’t legally be put in a lockbox and earmarked for future years. One set of lawmakers today can’t impose mandates on how future lawmakers can spend money. It’s up to members of each General Assembly to craft the state budget each year as they see fit, regardless of instructions left behind by previous lawmakers.

For its part, the tribe preferred that the state’s cut of casino revenue be directed to education as well.

Sen. Jim Davis, R-Franklin, said it was admirable of the tribe to choose such a worthy cause for casino revenue, but it’s simply not possible to make those kind of promises.

“I think it is totally appropriate for the Eastern Band to express their wishes for where the money goes, but the General Assembly cannot determine for future General Assemblies where money goes,” said Davis, the state representative for the seven western counties, including Cherokee.

Based on letters written between the Republican leadership in the General Assembly and Perdue in recent months, each blamed the other for holding up Cherokee’s live dealers. The dispute underscored a longstanding source of acrimony between Perdue and her Republican counterparts over education funding.

It appears Perdue eventually gave in, according to a recent version of the live gaming deal.

New language in the proposed deal acknowledges the wishes of the governor and the tribe to see the state’s cut of casino revenue go to schools. But it likewise acknowledges that “the General Assembly is not bound” to spend the money for education. It will simply go into the state’s general fund instead.

Perdue seems to have extracted a promise that at least for the next couple of years, however, the casino money will go to education. But there are no guarantees after that.

“Gov. Perdue believes that the state’s revenue from the new compact should be used for education, and we are confident that will be the case for at least the next two years,” according to a statement from Chris Mackey, Perdue’s press secretary.

 

Other hurdles not yet cleared

While one logjam has been broken, the tribe still faces a challenge in mustering the necessary support to pass the General Assembly.

The tribe is actively lobbying to get the number of votes needed to bring bona fide live dealers and table games to the casino. On the Senate side, things are looking good, according to Davis.

“I think we have the votes in the Senate. I have been working really hard to get those,” Davis said.

It appears to be much closer in the House of Representatives, however — perhaps too close to call right now.

“Some people were concerned it might be another Las Vegas,” Davis said. “There are some people who have real ethical principles against gambling.”

One of those is Rep. Ray Rapp, D-Mars Hill, who has been torn over the issue.

Rapp is against gambling for the social ills it causes. For some, gambling is simply a form of entertainment and recreation. But for others, it is an addiction.

Rapp voted against the state lottery several years ago and has been public enemy number one against the video gambling and video sweepstakes industry, leading the charge to outlaw the digital gambling terminals.

“Many of the people who are playing these games have little or no disposable income. They are taking away from their family’s basic needs, food and housing money, to gamble,” Rapp said.

Rapp had resigned himself to the casino’s presence in Cherokee and was willing to support the addition of live dealers there — but only there.

“If they were going to stay in those confines of the existing campus, I would be fine. They already have gambling there, so I could support that,” Rapp said.

But the deal brokered with the state would have allowed live dealers at any new casinos built by the tribe in the future on other tribally-held lands in Jackson, Swain, Graham or Cherokee counties.

“This wasn’t permitting it in place, but was allowing an expansion,” Rapp said. “That brought me up short.”

Specifically, Rapp was concerned about a tribally-owned tract of land near Andrews that is being eyed by the tribe for a small-scale casino — something less than a full-fledged casino but something slightly more than a bingo hall.

There has been movement to amend the language in the compact with the state to limit live dealers to gambling facilities on land held by the tribe prior to the mid-1980s — not tracts it has added to trust lands in more recent years. But that still may be too much of a blank slate for some legislators. If the vote was held today, it’s not clear how the final count would come down.

“It will be a very, very close vote in the House with both Republicans and Democrats voting against it,” Rapp said.

Davis said lawmakers might be a little more flexible after this week’s primary election is behind them.

Davis said while he personally doesn’t gamble, his Libertarian streak doesn’t think the government should over-regulate and limit free enterprise. He also is eager for the economic boost live dealers may bring.

“I think we need to do everything we can to enhance the economic climate in the western part of the state,” Davis said.

Harrah’s Cherokee Casino currently is limited to video-based gambling. The tribe has touted the economic impact of adding bonafide table games and real cards.

It would attract more guests — those of a different caliber and demographic than its core base of players today — which in turn will mean 400 more jobs and an economic boost for all of WNC.

It will also mean more money for the tribe, which uses casino proceeds to fund social programs, education, health care and other services for tribal members, as well as a twice-annual personal check for each of the 14,000 members of the tribe.

 

Years in the making

It took years of lobbying and negotiations for the tribe to get to this point. In an historic agreement signed with Perdue last November, the tribe agreed to give up a cut of its revenue from the new table games — on a sliding scale starting at 4 percent and maxing out at 8 percent over the next 30 years. In exchange, the state would allow real dealers and a guarantee that no other casinos would be allowed to encroach on its core territory, namely anywhere west of Interstate 26.

Perdue’s office is putting a positive spin on the prospects of passing the measure before she leaves office in November.

“We are comfortable that all of the issues around the agreement will be settled in time for the General Assembly to pass the appropriate legislation this year,” Mackey said in a statement.

Cherokee signs deal with Governor to bring live table games to Harrah’s

After years of lobbying and months of hard negotiating, the Eastern Band of Cherokee Indians sealed a deal with Gov. Beverly Perdue this week to bring table games, real cards and live dealers to Harrah’s Cherokee Casino and Resort.

“It has been along hard process,” said Cherokee Chief Michell Hicks. “With any negotiation you are going to have doubts but at the end of the day we kept pushing.”

Hicks has spent his eight years in office working toward a deal.

The addition of table games will mean hundreds of new jobs, thousands of new tourists and millions dollars more flowing through Western North Carolina.

“Lots of people claim their huge economic impact and you can kind of see it if you squint and tilt your head the right way — but with these guys you can probably see it from outer space,” said Stephen Appold, senior research associate with the UNC-Chapel Hill business school, who authored a report on the casino’s driving economic force in the region.

The tribe is still one step away from final success, however.

The tribe needs the General Assembly to ink the deal. The General Assembly is out on winter break, aside from a brief return to Raleigh this week to take up pressing issues that couldn’t wait. The deal with Cherokee was supposed to be one of those issues, but Perdue is at odds with the Republican leadership in the General Assembly over the state’s cut of revenue off the new table games.

Perdue wants the money to be placed in a trust fund and funneled directly to public education in K-12 classrooms across the state based on student population. GOP party leadership, however, wants the money to go directly into the state’s general fund with no special strings attached.

Republicans balked this week at quick-signing the compact, saying they need more time for review. Sen. Jim Davis, R-Macon County, said the GOP-dominated General Assembly simply didn’t have adequate time to read and review such a lengthy document.

“I regret we weren’t able to vote on it this session,” Davis said. “But for the Governor to drop this in our laps without giving us a chance to read it seems shortsighted.”

Hicks said the tribe isn’t worried that the deal will fall apart, but merely sees it as a delay.

“It is frustrating but I am pleased we have progressed to the extent we have and I am confident in the very near future it will be approved,” Hicks said. “We’ve taken a giant step forward.”

Hicks, the vice chief, half a dozen tribal council members and a delegation of advisors from within the tribe and hired lobbyists spent the first part of the week in Raleigh getting the gaming compact signed by the Governor and pushing the General Assembly to take it up.

While the General Assembly doesn’t officially reconvene until May, Hicks hopes legislators will return to Raleigh soon to decide on the bill.

“We truly hope we don’t have to wait for May,” Hicks said.

The region desperately needs the jobs and the state desperately needs the revenue. Calling a special session of the General Assembly during the off-season to take up economic development isn’t unheard of. The state did it to approve incentives for Dell Computer several years ago.

“We are like any other company or organization. We feel if we are creating jobs, we should have our Governor and legislature get behind us,” Hicks said.

In the meantime, there is plenty of work to be done to prepare for table games, and the tribe and Harrah’s aren’t wasting any time.

“As of yesterday the planning process was rolling,” Hicks said Tuesday.

Table games must be bought, space made for them on the casino floor, and an army of dealers must be hired. The hiring and specialized training of the casino dealers will be the lengthiest part of the process.

Hicks said the timeline for the roll out of live table games will be laid out within the week.

 

A delicate dance

Ultimately, Cherokee is giving up a share of its revenue on the new table games to secure the state’s approval. How much revenue has been a chief issue in the negotiations. The tribe also wanted a guarantee from the state that no other casinos will be allowed to encroach on its territory.

The two issues were linked at the bargaining table. Cherokee offered up a bigger piece of the pie if the state would promise to keep other casinos out of the rest of the state.

The state would only agree to a relatively small exclusive territory, however, and settled for a smaller share of revenue as a result.

Cherokee will give the state 4 percent of gross revenue off new table games for the first five years, 5 percent for the next five, 6 percent for the next five, 7 percent for the next five and 8 percent for the final 10 years of the 30-year gaming compact.

This helps Cherokee in the early years after rolling out table games, when the tribe is still paying-off its start-up costs for the games and realizing their potential.

As for exclusive territory, Cherokee got less of what it wanted. The state would only grant exclusive gaming territory west of I-26 in Asheville.

Written correspondence between the tribe and the Governor’s office over the past four months paints a picture of their respective positions, and the compromises they arrived at as negotiations played out. Neither side would talk about their positions during the deal making, but letters between the two provide a surprisingly candid storyline of where the parties stood.

Only in retrospect are the tactics and bargaining positions of the tribe truly apparent.

“We knew where the stopping point was. Again in any negotiation you have to have a starting point and a stopping point. We knew how far we could push and how far we could be pushed,” Hicks said.

Those decisions were made in concert with the vice chief and tribal council, Hicks said. Cherokee drew on its history of more than 300 years of experience negotiating deals with other governments, “not all in our favor,” Hicks pointed out.

But in this case, the gaming compact is fair to both parties, with neither trying to take advantage of the other, Hicks said. Hicks said the tribe is pleased with its deal.

The tribe has reaped about $226 million a year off the casino recently. Half funds tribal government — from education to housing to health care — while half goes to tribe members in the form of per capita payments.

That amount is sure to increase with the addition of live table games.

Until now, the casino has been limited to digital video gambling machines. Despite the handicap, the Eastern Band of Cherokee has catapulted to the forefront of WNC’s economy.

The approval of live table games comes just in time. The tribe is nearly finished with a $633-million expansion of the casino that remade the property into a destination resort.

When the tribe embarked on the expansion six years ago, it hoped that live table games would be in its cards one day — rather than the video gambling machines it had been limited to.

The expansion has already proved its worth, even without live table games rounding out the picture. Revenue peaked at Harrah’s Cherokee in 2007 before the recession began to take its toll. Profits have been on the rise since 2010.

Casino General Manager Darold Londo predicts Harrah’s Cherokee will return to its pre-recession levels by the end of next year — even without the addition of table games.

“That’s quicker than the industry,” Londo said, crediting the Cherokee expansion project. “The industry doesn’t expect to recover sometime until 2014 or beyond, whereas we expect to hit that sometime in 2012. We’ve had the ability to control a little bit more of our own destiny.”

New GM’s job is to make good on Harrah’s gamble to transition from casino to resort

When Brooks Robinson left his manager’s job at Domino’s Pizza to be a dealer in the fledgling casino market of Tunica, Miss., he wasted little time finding that first rung in his climb up the corporate ladder.

“I had never been in a casino,” Robinson admits. But he knew an opportunity when he saw one.

“The gaming world was coming to Mississippi, and it was so interesting to me. There was a great opportunity in that market. I had high hopes of quickly moving up the ranks,” Robinson said.

Now 18 years later, Robinson has gone from frontline card dealer to the general manager of the $500 million a year operation of Harrah’s Cherokee Casino and Resort.

Robinson takes over the top position at Harrah’s Cherokee this week from Darold Londo, who has steered the casino through a major $633-million expansion over the past six years.

It’s Robinson’s job to follow through on the expansion, not only overseeing the final phases of construction over the next year but managing the opening of myriad new restaurants and retail shops within the resort.

His biggest challenge is far less tangible, however.

“People say if you build it they will come, but in the state of the world we are in today that is not always the case,” Robinson said. “We have to go out and do a strong job of promoting this new resort and sharing with the rest of the world what we have to offer.”

Indeed, that’s the ultimate jackpot behind the expansion. It has set the stage for Cherokee’s casino to capture not only a new demographic of gamer, but any tourist looking for a destination resort in the mountains. More than 1,000 first-class hotel rooms, an array of restaurants, nightlife, big-name entertainment, shopping, and even a spa will remake Harrah’s Cherokee Casino into a bona fide resort unrivaled by any other in North Carolina.

“We can appeal to a whole segment of the market we haven’t been able to previously,” Londo said. “Brooks is taking charge of an organization that is bigger, more dynamic, more complex. It has more potential than what we had six years ago.”

Potential, however, is the key word.

“You can build the box and create the structure, but the marketing piece and the delivery of service, the promise to our guests of a different experience and feel of this property is something we have to really focus on,” Robinson said.

For Harrah’s Cherokee to come into its own as a true resort, Robinson has to inspire a new culture among its 2,000-plus employees. Working at a resort takes a different mentality.

“It is more than excellent customer service. It is creating and environment that is totally resort like,” Londo said.

Every employee has to be part-salesman. Room service waiters should be able to tell guests what concerts are coming up, valet attendants should be familiar with the restaurants menus, and so on.

It’s true now more than ever, after news this week that the casino will at last be able to offer live table games — something Robinson didn’t know for sure when doing the interview for this article.

When the tribe embarked on the casino expansion six years ago, it hoped that live table games would be in its cards one day, rather than the video gambling machines it had been limited to. Live table games with real dealers was contingent on approval from the state, however.

After years of lobbying and months of hard negotiating, Gov. Beverly Perdue signed a deal with the tribe this week to make that dream a reality (see related article).

It makes Robinson’s job all the more daunting — and exciting — to overhaul the casino floor and bring the new table games online.

Robinson has put down roots in Haywood County, where he lives on five acres in Bethel with his wife and two teenagers. He is the only casino general manager at Harrah’s that raises goats and chickens and harvests vegetables from a backyard garden — although his wife takes most of the credit for their family experiment in farming.

When Robinson made the move to Harrah’s last summer, he knew the general manager post might be in the cards one day.

“It was like that rookie quarterback in the NFL that is behind a superstar waiting in the wings to take over,” Robinson said.

The Cherokee casino is a standout among the 40 properties under the Harrah’s corporate brand, Robinson said.

“The reputation of this team is something that is known across our company,” Robinson said. “It was clear when I got here they had truly adapted and wanted to be the best they could possibly be.”

Robinson came to Cherokee from Harrah’s Louisiana Downs casino where he served as vice president of operations.

The roll of assistant general manager will be filled by Lumpy Lambert, an enrolled tribal member and current vice president of casino operations.

“The long-term experience and proven track record Lambert brings will help us complete our transition to a resort destination,” said Robinson.

Lambert joined the casino in 1997, its very first year in business, as a casino operations supervisor. In 2002, he became vice president of operations. Lambert was a critical member of the team who defined the property's master plan expansion project.

As for Londo, he has taken on a new role at the corporate level of Harrah’s over new and expanding markets. It will be Londo’s job to size up locations for new casinos and envision what type of casino would work.

The expansion in Cherokee proved Londo has a knack for turning dreams into reality.

“Obviously I didn’t join Harrah’s thinking I was going to be a development guy,” Londo said. “But I love it, it is fun.”

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