Seminoles dump chief as feds expand casino probe

July 03, 2001 5:52 AM
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For Gary Fears, his interest in the development of casinos began in Illinois where the political fundraiser and real estate developer made a score as one of the original investors in Argosy Gaming, operators of the Alton Belle Riverboat casino.

A move to Florida apparently wasn’t motivated by an interest in retiring. In fact, for the past five years, according to a copyright story in the St. Petersburg Times, Fears has been active in the affairs of the Seminole Tribe and its efforts to open a casino.

 Fears reportedly tried hard to win a casino management contract with the Seminoles, allegedly by using questionable means, but failed when some officials in the city of Coconut Creek refused to provide their needed blessing to the contract.

Yet, with everyone denying any knowledge of the 10-year real estate lease for the property on which the casino was built, Fears turns up as the owner. The Times says a federal investigation has recently intensified. The probe has resulted in the Seminoles dumping its chief, James Billie over alleged misconduct and dismissing his staff. Billie was strongly tied to Fears in his efforts to win the casino management contract.

Fears told the newspaper that the lease agreement was intended to help Fears recoup his costs in the contract efforts.

Involved with Fears, both in Illinois and in Florida, was his son, Victor, who reportedly admitted to authorities that he had a cocaine problem. This was seen as a negative in any attempt he might have to pass a background check by the National Indian Gaming Commission.

Extension granted

A federal judge has granted the Mashantucket Pequots and their three neighboring towns 60 days to settle a lawsuit that seeks to block the tribe from expanding its reservation in Ledyard, Conn.

 The judge warned that absent a settlement the federal court will resume action.

At issue is the Bureau of Indian Affairs decision to add 165 acres on Route 2 to the Mashantucket reservation.

Affected by the Pequot request is a tract of 165 acres that might include residential properties in Ledyard and North Stonington.

Bailout

Financially troubled Cherokee Nation Industries of Muskogee, Okla., is being offered a bailout with a $1 million loan from the Cherokee Nation councilors.

The loan provides, however, that the CNI agree to conduct a 90-day national search for a new chief executive officer.

In addition, the Nation said it will lend another $500,000 to CNI if they can get ABC Telecommunications to accept the return of about $6 million of the $14 million in original inventory provided to CNI’s telecommunications division.

CNI’s chief executive officer, Hiram McFarland of Stilwell, Okla., resigned last week.

Northward competition

Two public companies that run racetracks with slot machines in West Virginia ”” Penn National Gaming Corp. (PENN) and Mountaineer Gaming Group (MNTG) ”” are now involved in a turf battle in Pennsylvania.

Last week, Mountaineer, operator of two small casinos in Reno and North Las Vegas as well as Mountaineer Race Track in Chester, W. Va., announced its intention to build a horse track in Erie, Pennsylvania.

Penn National, which has a number of off-track betting sites in addition to its Penn National Horse Track in Pennsylvania, sees the competition as “bad for the horse racing industry in the state.” A spokesman said the bid to build a $56 million racetrack in Erie “is tied completely to the prospect of slot machines being legalized in Pennsylvania.”

Ted Arneault, Mountaineer’s president and CEO, insisted the racetrack application has nothing to do with the possibility of slot machines being legalized in Pennsylvania.

Revenue threatened

Lakes Gaming Inc. (LACO), the company that was formed by entrepreneur Lyle Berman during the sale of Grand Casinos Inc. to Park Place Entertainment Corp. (PPE) nearly three years ago, seems to be cash rich but may soon be without incoming revenues.

Officials of the Tunica-Biloxi Tribe of Louisiana, owners of the Grand Casino Coushatta, have opted to take an early termination of its management contract with Lakes Gaming. The existing arrangement, which was expected to last through 2006, will end on Jan. 16, 2002.

Since other Indian tribes have previously ended their management arrangements with Lakes Gaming, this new action will leave Lakes Gaming with no operating casinos. There will be no revenue until Lakes is able to open proposed casino projects in Michigan and California.

News of the Coushatta termination caused Lakes Gaming stock to lose 40 percent of its value in early trading last week. However, the stock moved up to the mid $7 range before week’s end. Analysts said the company still sits on a substantial nest egg. The company has no debt and has net assets worth about $17 per share. On Monday, the company’s shares traded at $7.50 a share, up 10 cents from the opener.

Rosemont impact?

Illinois Gov. George Ryan has made no bones about his interest in seeing a casino license awarded to a group that would locate a riverboat casino in Rosemont, a Chicago suburb.

Staci Yandle and Mac Rider cast negative votes when the matter came before the Illinois Gaming Board. The terms of Yandle and Rider on the regulatory body end this month.

Last week, without commenting on the Rosemont issue, Ryan announced he would not reappoint the duo, even though both had indicated a desire to stay on.

Named as their replacements were two Chicago-area businessmen Elzie L. Higginbottom, a real estate developer, and Robert A. Mariano, a consultant.

Outraged was anti-gambling advocate, Rev. Tom Grey, head of the National Coalition Against Gambling. Said Grey, “Gov. George Ryan is sending a very clear message that if you don’t go along with what I send you, I’m going to replace you.”

Riverboat competition

Executives of Churchill Downs Inc. (CHDN) feared from the beginning that the opening of a nearby riverboat would seriously affect the attendance at the company’s Louisville racetrack.

The track announced last week that attendance for the spring meeting was off 3.2 percent and that the decline was due to the competition from the Glory of Rome riverboat across the river in Indiana.