gaming

Holy Cow! Foxwoods about to Default on $1B in Debt

Matthew L.M. Fletcher

From the New London Day via Pechanga:

On the brink of default, the Mashantucket Pequots are seeking to restructure $2.3 billion worth of debt, a senior adviser to the tribe said in interviews this week.

The debt is $1 billion more than the tribe’s Foxwoods Resort Casino – North America’s largest casino and once the world’s most profitable – can sustain, the adviser said.

”We’ll be asking creditors to take a big haircut,” he said.

While restructuring the debt with Malaysian investors, bondholders and banks, the Mashantuckets would continue to operate Foxwoods and MGM Grand at Foxwoods “as usual,” according to a plan drafted by Miller Buckfire, an independent New York investment bank.

”Restructuring will have no impact on operations,” reads the plan, a copy of which the senior adviser provided to The Day. The adviser discussed the tribe’s fiscal crisis on the condition of anonymity, offering a rare look at the Mashantuckets’ finances.

The tribe is at risk of defaulting Monday on the terms of a $700 million line of credit with a syndicate of banks, the adviser said.

”Our goal is to reduce debt,” he said. “My feeling is that further reductions (in the casinos’ work force) would be counterproductive to the quality of the business.”

The tribe, grappling with the recession’s devastating effect on the gaming industry, laid off hundreds of casino employees in 2008, and also trimmed the size of its government and cut benefits for tribal members, including their monthly “incentive” payments.

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What’s Going on With Tribal Sovereign Immunity?

Matthew L.M. Fletcher5 Comments

Since we started this blog in fall 2007, there have been a plethora of tribal sovereign immunity federal and state court decisions. Most of them are routine — slips and falls, internal tribal disputes — but a handful of these cases are worth watching because of the subject matter and the general uniqueness of the problem.

Oklahoma gaming compacts — the Oklahoma Supreme Court has been interpreting the Class III Oklahoma gaming compacts as virtual waivers of immunity, in almost comically formalistic ways. These compacts, passed by the state’s voters, are a take-it-or-leave-it prospect for tribes. They allow for suits against the tribes in a court of “competent jurisdiction,” which the Oklahoma court has interpreted to mean state courts. Opinions here and here.

Dram Shop Actions — Again, these would not be unusual except the Oklahoma Supreme Court has found a waiver of immunity in state courts for dram shop actions. That case, Bittle v. Bahe, conflicts with the decisions of several other courts (discussion here).

Bivens Actions against tribal cops — A federal common law cause of action against tribal officers gained ground in federal district court, but didn’t get so far in the circuits (here and here).

Section 1983 claims against tribal cops — Did gain ground (here).

Payday loan operations — Currently up for review in the Colorado Supreme Court are franchises owned by two tribes doing business as payday loan operators and attempting to avoid state process and investigation (here). A related California case is here.

Tribal fee lands — A Washington court held that it continues to have in rem jurisdiction over tribally-owned fee lands (here).

Cherokee Freedmen case — the D.C. Circuit allowed the Vann lawsuit to proceed against tribal officials under the Ex parte Young theory, but more or less vacated the district court’s theory that the 13th Amendment somehow abrogated tribal sovereign immunity.

Suit against Gun Lake Trust Acquisition Dismissed

Matthew L.M. Fletcher4 Comments

Here is the news report.

And the materials:

DCT Order Dismissing Patchak Claims

Gun Lake Band Motion to Dismiss

US Motion to Dismiss Patchak Claims

Colusa Case Reaches Judgment

Matthew L.M. Fletcher1 Comment

From a Picayune Rancheria press release:

Sacramento – In a decision with wide-ranging ramifications for California’s budget woes, the Honorable  Frank C. Damrell, Jr., Judge of the United States District Court for the Eastern District of California, entered final judgment today that Indian tribes conducting gaming in California are entitled to an additional 10,549 slot machines under their compacts with the state. Chukchansi Tribal Chair, Morris Reid stated, “This will allow the 1999 Compacted Indian tribes to provide an additional $30 million to the state of California. We are thankful the state will now have millions more to pay for programs and the tribes will be able to provide better support for their members.” The tribes were denied these gaming devices for a decade due to the state’s miscalculation of formulas under the compacts. The decision orders the State of California to undertake a draw within 45 days to assign the gaming devices to the various tribes gaming in California.

Morris Reid, Tribal Chair of plaintiff Picayune Rancheria of Chukchansi Indians, commented that, “The State and tribes lost millions of dollars the past decade that they can never get back due to the state’s miscalculation of the number of gaming machines available under the compacts, but the federal court’s decision wisely corrects this going forward. This is a great win for all of Indian Country.”

LTBB Credit Rating Dips

Matthew L.M. Fletcher

From the Petoskey News-Review (H/T Junior; also Indianz):

Standard & Poor’s — an independent global provider of credit ratings — has reduced the Little Traverse Bay Bands of Odawa Indians’ credit rating twice in one week.

Following the tribe’s Aug. 11 announcement that it was attempting to re-negotiate the payment of its $122 million in senior unsecured notes — which were originally issued in 2006 to support the construction of the Odawa Casino Resort — and would therefore be suspending its $6.3 million in interest payments due Aug. 17 to its holders; Standard & Poor’s issued a statement Aug. 12, that it would immediately reduce the tribe’s credit rating from ‘CCC’ to ‘CC’ with a negative outlook.

According to Standard & Poor’s credit rating definitions, available on their Web site — www.standardandpoors.com— a ‘CCC’ credit rating means that a company is currently vulnerable, and ‘CC’ means the company is highly vulnerable.

In its Aug. 12 release, Standard & Poor’s also stated that once the tribe missed its interest payment on Monday, Aug. 17, that its credit rating would be reduced to ‘D,’ which means the company has failed to pay one or more of its financial obligations, and that the global credit-rating provider believes the tribe will fail to pay all, or substantially all of its obligations as they come due.

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Court Denies California Motion for Reconsideration in Compact Dispute with Colusa

Matthew L.M. Fletcher

Here are the materials in the most recent filing by the federal court in Cachil Dehe Band v. Schwarzeneggar (E.D. Cal.):

California Motion for Reconsideration

Colusa Opposition to Motion

California Reply Brief

DCT Order Denying Motion for Reconsideration

The summary judgment materials that are the subject up for reconsideration are here.

Article on Soo Tribe’s Future Post-Greektown

Matthew L.M. Fletcher2 Comments

From the Detroit News:
That’s the simple question, with complicated answers, facing the Sault Tribe of Chippewa as it decides what to do about Greektown Casino-Hotel.

The bankrupt Detroit gambling hall that began as a dream of self-sufficiency has turned into a legal nightmare and financial albatross that’s divided 38,000 tribal members, choked the tribe’s finances and forced its leaders to rethink long-term ambitions aimed at improving the lives of one of the state’s most historically oppressed people.

“It wasn’t supposed to end up like this,” said Bernard Bouschor, a former Sault Tribe chairman who now sits on its board of directors. “Not after we spent so much time and money.”

The predicament in which the tribe finds itself is serious: likely losing Greektown, which by revenue is the smallest of Detroit’s three gambling halls, to creditors or a new buyer in a federal bankruptcy court hundreds of miles from home. It deeply contrasts with the bright promise the casino held for the tribe when the fight for a crack at the downstate market first started two decades ago.

Back then, vying for a piece of Detroit’s gaming market had a simple impetus: a desire for self-sufficiency.

For decades, Chippewa leaders sought recognition by the federal government, and when that hurdle was finally cleared in 1975, the tribe won the right to receive federal and state assistance offered to Native American groups.

Those dollars were spent to upgrade a standard of living that for decades had fallen far behind the acceptable norm.

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California Court of Appeals Decides Calculation of Tribal Per Cap in Child Support Dispute

Matthew L.M. Fletcher1 Comment

Here is the opinion in M.S. v. O.S. An excerpt:

In this paternity action, O.S. appeals an order requiring him to pay child support for his young twins. He contends the trial court abused its discretion by including in his income for purposes of guideline support twice-yearly bonuses he received from his Indian tribe, and attorney fees the tribe paid on his behalf. We agree with O.S. on the second issue, and reverse the order and remand the matter for further proceedings. Additionally, for the court’s guidance on remand, we hold it may properly include the bonuses in his gross income.

Federal Judge Contempt Order against Ysleta Del Sur Pueblo

Matthew L.M. Fletcher1 Comment

Here are the materials in the ongoing dispute over gaming in El Paso (reported here, via Pechanga).

Texas Motion for Contempt

Tigua Response Brief

Texas Reply Brief

DCT Order Granting Motion for Contempt

And an additional order, just for fun:

DCT Order Clarifying Judgment

Tribal Suit in Conn. Courts against Insurer Succeeds

Matthew L.M. Fletcher

Here is the opinion in Viejas Band of Kumeyaay Indians v. Lorinsky, in the Appellate Court of Connecticut. The tribe sued and won in the trial court over an insurance policy for casino employees.

An excerpt:

The named defendant, Jay Lorinsky, appeals from the judgment of the trial court, rendered after a jury trial, in favor of the plaintiff, the Viejas Band of Kumeyaay Indians (Viejas). On appeal, Lorinsky claims that (1) the court incorrectly concluded that the accidental failure of suit statute, General Statutes § 52-592, permitted Viejas’ case to be filed in state court, (2) the evidence was insufficient to support the jury’s award of damages and (3) the court improperly denied the defendants’ motions for a mistrial and to set aside the verdict. We disagree, and, accordingly, affirm the judgment of the trial court.