Connecticut tribe threatens: Casino or real estate

Aug 13, 2002 12:15 PM

An Indian tribe that once controlled thousands of acres in several Connecticut cities and towns have put state officials on notice: give us a casino license or we’ll sue to have the land returned to us.

"We don’t want to displace anyone," Chief Quiet Hawk of the Golden Hill Paugussetts Tribe was reported as saying. "We want to be good friends and neighbors. But someone took our lands away and the laws give us a right to pursue remedies."

Those remedies could include moving people out of their homes and off the land once owned by the Indians.

Connecticut already has two casinos, Foxwoods Resort and Casino and the Mohegan Sun. Both are among the largest gambling establishments in the world.

The U.S. Bureau of Indian Affairs is considering the Paugussett’s application for federal recognition with a decision expected before the end of the calendar year. Such recognition is necessary before a gaming compact could be negotiated. The tribe plans to put a Las Vegas-style casino in the economically-depressed city of Bridgeport.

Ironically, Bridgeport was the site chosen by casino mogul Steve Wynn a decade ago when he eyed Connecticut as a solid location for a gaming operation. His plan failed to generate the necessary support from the community.

But, the Paugussets say they will settle their land claims for $1 if the state provides them with the necessary approvals to build an entertainment complex and casino in Bridgeport. The project would generate 17,000 jobs, they say.

Although some Bridgeport officials support the casino, state Atty. Gen. Richard Blumenthal remains opposed, both to this project and to any other tribal casino. As for the argument that the Indians would displace thousands of residents with their land claims, Blumenthal insists that he is prepared to continue the fight against all such claims.

Silver lining

"Look for the silver lining," says the lyrics of the old song and that’s exactly what Robin Farley, chief gaming analyst at UBS Warburg, is suggesting.

Sure, gaming tax rates have been increased by the Indiana legislature, she notes, but "we believe Argosy, and to a lesser degree Park Place and Harrah’s, may have found a silver lining." Although, she only had one week of experience to review, she said she believed "that dockside has been extremely beneficial to some Indiana operations, and Argosy in particular."

Explaining her views, Farley recently wrote, "We look at what happened to revenues in two states that went dockside, Illinois and Louisiana. Illinois went dockside in July 1999 and gaming revenues were up 36% in the first 12 months. In Louisiana, the state allowed dockside in April 2001 and gaming revenue increased only 8%." The reason Louisiana failed to achieve Illinois results was that Illinois had enforced its cruising requirement while Louisiana had not, Farley explained.

"Given that Indiana enforced its cruising requirements the way Illinois, did," she opined, "we would anticipate that Indiana’s increase would be closer to the Illinois model."

Bids due

After months of haggling, Illinois gaming regulators have finally developed a procedure whereby casino companies will bid for the state’s 10th and final gaming license.

Also submitting proposals will be nearly a dozen communities interested in having the riverboat located in their jurisdiction. The regulators said potential license holders could develop partnerships with communities, a plan even state Atty. Gen. Jim Ryan said he could live with.

In order for the process to go further, the Emerald Group, controversial owners of the license, would have to sell the license to the approved bidder, recouping only their actual costs. If that doesn’t happen within the next year and one-half, all bets are off and it all goes back to square one.

Some state officials are hoping the license question can be resolved within the next 45 days.

Elections to decide

Political observers in Rhode Island believe that the election results in November will have a major influence on the future of gambling in that state. That’s no different than what is happening in Maryland, maybe more so.

It’s almost cut and dried in Maryland where the Democrat candidate opposes any expansion of gambling while the Republican supports slot machines at racetracks.

In Rhode Island, where they already have slot machines at the Lincoln Greyhound Park and Newport Jai-Alai, the question is whether an Indian casino will be permitted. So far, three of the four candidates oppose casino gaming while the fourth says it should be decided by the state’s voters. The latter candidate also feels that the voters should decide whether existing tracks should be permitted to have more slot machines.

Currently, the state takes in about $150 million in tax reveues from the two pari-mutuel operations where the slot machines dominate the action. And, said one candidate, " a full-blown casino would kill the existing video-lottery terminals."

Maryland hasn’t really addressed the question of casinos but the racetrack slot machine issue has been debated for several years.

Rebate affirmed

Despite moaning and groaning from state officials, the Iowa Supreme Court has affirmed its ruling that the state’s three racetracks were unjustly taxed in the amount of about $100 million.

The dispute erupted when the tracks protested being taxed at 36% when the state’s riverboat casinos were taxed at 20%.

The state argument that it had the authority to treat each activity differently was rejected by a majority of the high court that returned the case to a trial court to determine how the matter will be resolved.

Some $54 million is actually due to the Prairie Meadows Racetrack and Casino, which is owned by Polk County and is leased to the non-profit Racing Association of Central Iowa. Track officials have already volunteered to negotiate the actual amount with the state.

The Insider

Wheeling Island Gaming Inc., a wholly-owned subsidiary of Delaware North Companies of Buffalo, N.Y., reported last week that its Wheeling Downs Racetrack and Gaming Center had second quarter revenues of $25.6 million, an increase of $5.9 million over the same period of a year ago. Inc. (UBET) has been notified that its trading activity has been moved from the Nasdaq National Market to the Nasdaq Small Cap Market.

PayPal Inc. (PYPL), which is scheduled to be acquired by eBay, is under investigation on two fronts, according to the company. Federal regulators are looking at the proposed merger of the two companies while the attorney general of New York has issued subpoenas regarding PayPal’s online gambling business.

Mikohn Gaming Corp. (MIKN) plans to address its recent financial weakness by eliminating the jobs of about 100 employees and moving its Las Vegas manufacturing facilities to a plant in Utah.

Nevada Gold & Casinos Inc. (UWN) says its board of directors has approved a plan for the repurchase of up to 100,000 shares of the company’s stock. Also, the company said it was increasing its ownership of Dry Creek Casino LLC to 69% from 51%.

According to a news source in London, England, Michael Flatley, whose Irish dance shows have been popular in the U.S., is interested in acquiring the bankrupt Aladdin Hotel/Casino. The property has been looking for a buyer since London Clubs Ltd. backed out of its Aladdin commitment.

Acres Gaming Inc. (AGAM) will hold a conference call to discuss its fourth quarter and fiscal year earnings on Wednesday, Aug. 21, at 2 p.m. PDT.

Ainsworth Gaming Technology, a competitor to Australia’s more prominent Aristocrat Gaming, has been struggling to get started in the highly-competitive business. For the three months ended on June 30, the company said it had a negative cash flow of $9.6 million.

Positive news from the lawmakers in Montana. The legislative committee decided against raising the tax on video poker and keno machines. The vote was 17-3.

Global Cash Access (GCA) announced last week that it had signed contacts with 15 gaming properties to provide ATM machines for their casinos.

Majestic Investor Holdings LLC and Majestic Investor Capital Corp. has offered to exchange up to $152.6 million in 11.653% senior secured notes registered under the Securities Act of 1933.