Going from fair to ‘unconscionable’

May 30, 2006 3:51 AM

The Seminole Tribe of Florida has filed a lawsuit against casino developer David S. Cordish and his company, Power Plant Entertainment. The tribe contends that their contract with Cordish, signed in 2000, is illegal and violates federal law.

Power Plant Entertainment stands to earn between $1.6 billion and $2.2 billion over a 10-year period for developing the tribe’s two Hard Rock Hotel and Casino operations in Tampa and Hollywood. But the tribe says Cordish’s company has done "absolutely nothing" since the casinos opened in 2004.

They are asking the court to void the contract, which they say illegally allows a non-Indian a "proprietary interest" in their operations. The contract calls for Cordish to receive 30 percent of the net gambling proceeds for 10 years. Cordish is also receiving 30 percent of revenues from two casinos that existed before the Hard Rock ones were developed, even though he had nothing to do with them.

The tribe says it did not know the contract was illegal at the time they signed it, and are asking for the return of more than $310 million in fees they’ve already paid to Power Plant. In its lawsuit, the tribe called the contract "illegal and unconscionable" and said "[this] abuse against a protected people cannot be tolerated."

The tribe’s lawsuit seems to come out of nowhere. Last year tribal attorney Jim Shore released a statement saying, "The Tribe believes the original deal with Cordish was fair." They’ve given no reason for the change of heart. Three years ago, the tribe asked federal regulators to invalidate a similar contract with another developer, and won a settlement.

The statement issued from Cordish’s company raises a warning flag:

"If a Tribe can unilaterally declare that it has violated its own ordinances and thereby avoid paying its contractual obligations on the most successful project in the history of Indian gaming, then no prudent business would be willing to provide the financing needed for any Indian economic development."

Leaving a Legacy at Mohegan Sun

William J. Velardo has a lot to be proud of. He helped establish one of the most successful casinos in the world. After 11 years as CEO of the Mohegan Tribal Gaming Authority, Velardo, who recently announced his resignation, will be returning to his hometown of Las Vegas.

During his tenure, Velardo oversaw the $1.1 billion expansion of Mohegan Sun and the $280 million purchase of Pocono Downs racetrack in Pennsylvania. And the steadily growing success of Mohegan Sun just keeps coming — a second quarter report by the Tribal Gaming Authority showed marked increases in all revenue categories over last year’s earnings.

Mohegan Tribal Chairman Bruce ”˜’Two Dogs’’ Bozsum said of Velardo, ”˜’He has overseen tremendous growth in our operations, led our diversification activities and has helped to put in place a superior management team that will continue to serve the authority very well over the coming years,’’ Indian Country Today reported.

Mitchell Grossinger Etess will take on the role of CEO of the Tribal Gaming Authority. Etess, who has also been with the authority for 11 years, is currently president and CEO of Mohegan Sun.

Council Opposes Ballot Initiative

Last week, the Barstow City Council voted 3-2 to oppose Measure H, the ballot initiative that would create an Indian gaming zone in the city. With two votes for the initiative and two votes against, Mayor Pro-Tem Gloria Darling’s vote pushed it over the edge. She had previously voted to remain neutral on the subject, but changed her mind after researching all the proposed gaming projects in Barstow.

The initiative has stirred the growing pot of resentment amongst local tribes. The proposed zoning district includes the site where the Chemehuevi tribe wants to build an off-reservation casino, but leaves out the area where the Big Lagoon Rancheria Tribe and Los Coyotes Band of Cahuilla and Cupeno Indians want to build.