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A group of 14 tribal members say the decision and the meeting at which it was made violated the tribe’s charter and governing document – its highest law – on several fronts. The protest is trying to argue that not only is casino buying illegal, but ultimately a reckless investment of tribal dollars.
In a letter of protest and proposed resolution, a group of 14 tribal members seeks to undo the purchase of the gambling operation at Caesars Casino in Southern Indiana for $250 million.
The group of tribesmen, which includes two serving tribal council members and a former senior chief, say the decision voted on December 17 and the meeting at which it was made violated the charter and the document. ruler of the tribe – its highest law, analogous to the Constitution in American law – on several fronts.
In particular, the protest points to Section 16 of the Charter, which states that the Tribal Council “shall direct the management and control of all property, real or personal, belonging to the Tribe” and that “no one shall the right to enjoy … any money that may belong to the tribe, unless such person is an enrolled member of the tribe, and in the event that any money from any source whatsoever, belonging to the eastern band of the Cherokees , or distributed among its members, it is distributed per capita among the members who are entitled to it.
Protesters believe the decision violated this article because the company’s profits will not contribute to per capita payments and because the LLC’s board of directors set up to oversee the gambling business “is not not controlled or in any way under the control of EBCI and Tribal Council,” according to the resolution.
Only two members of the five-member council need be members of the EBCI, the Smoky Mountain News reports, and while the tribe has the right to make initial appointments, future appointments to the council would be made by serving members. However, EBCI would own 100% of the LLC that the board would oversee.
The protest also alleges that the special meeting convened on December 17 violated Article 10 of the Charter, which states that the principal chief can only call such sessions in an emergency.
“The purchase of a business does not fall within the provisions defined by law as an emergency under section 10 of the charter and as such was an unauthorized Tribal Council session,” the protest claims. .
Finally, the protest alleges that the purchase violates tribal law stipulating how casino profits can be spent. Section 16-C of the Cherokee Code states that one-half of casino revenue must be applied to per capita payments and the other half must be used to “support the operations, businesses, or programs of the tribal government; ensure the general welfare of the tribe and its members; promote tribal economic development; donate to charities; or finance the operations of local government agencies; whatever the Tribal Council may deem necessary or appropriate, subject to the provisions of the various funds set forth in this chapter.
Although the protest resolution asserts that “nothing in Section 16-C authorizes the use of these funds for the purchase of a casino or other operations outside the limits of the EBCI”, the law designates tribal businesses and economic development as permitted uses, and the casino purchase would not be the first time tribal funds have been spent on a commercial enterprise outside of the state. Last year, the tribe spent millions to help its existing business arm, Kituwah LLC, develop properties along Interstate 40 in Sevierville, Tennessee.
The protest is trying to argue that not only is casino buying illegal, but ultimately a reckless investment of tribal dollars.
“EBCI has already identified a reduction in gaming revenue at its existing facilities,” the resolution states. “Buying another gaming facility during a pandemic and knowing that gaming facilities across the country are losing revenue is a wild ride. The tribe’s desire to diversify its trading holdings is not realized by buying or creating the same business models elsewhere, especially in light of the current economic climate.
The protest points out that no specific source of funding for the $130 million promised as down payment was identified in the resolution passed on December 17 and argues that the 5% interest rate discussed to repay the debt associated with the purchase is much higher than it should be. expected in the current economic climate.
Meanwhile Senior Chief Richard Sneed, who has championed the purchase plan from the start, argues the project is in the best interests of the tribe and has been carefully reviewed and approved by elected officials, staff and consultants. .
“My record shows that I am here to serve the tribal citizens of EBCI and my faith in the validity of this project stands despite this protest,” he said in a statement. “I am happy to speak with any Tribal Citizens who are concerned about this project, as I believe it is the best next step in EBCI’s broader economic diversification plan to support programs and tribal services in the years to come.”
It is unclear when the protest will be heard. The Jan. 7 Tribal Council meeting was moved to Jan. 14 due to rising COVID-19 numbers. In the past, the Tribal Council has recognized protest resolutions and voted whether or not to hear them at its regular session, then scheduled a hearing for a later date.
Tribal law allows “interested parties” – defined as people with a direct financial interest in the outcome of the decision or with property interests that will suffer as a result of the decision – to protest any Tribal Council decision provided that do so within 10 calendar days of the decision being made.
Robert Osley Saunooke, a tribal member registered as an attorney in Florida and Washington, DC, represents protesters and is a protester himself. Saunooke sent the document to President Adam Wachacha on December 24, as tribal offices were closed for the holidays. On the same day, Caesar’s Entertainment officially announced a “definitive agreement” to sell the operation to EBCI.
“As an enrolled member, Tribal Council actions have a personal impact on my ability to receive benefits, enjoy ownership and control of Tribal businesses, and obtain funding for programs and other services that I value. as a member of the tribe,” one letter read. , signed by Saunooke, attached to the resolution. “The Tribal Council’s actions violate the oath of office taken by its members, including the duty to act as a fiduciary in the protection of resources and the enforcement and enforcement of tribal laws.”
The 14 signatories also include former Principal Chief Michell Hicks, Birdtown Representative Albert Rose, Wolfetown Representative Bo Crowe, Nolan Crowe, Gaynell Crowe, Kema Crowe, Annie Owens, Albert Arch, Horace Arch, Vanessa Lawson, Dennis Junaluska , Keith Wachacha and Randy Catt. .
In an interview, Rose said he disagreed with the company on several fronts, but for him the most critical issue was the LLC’s management agreement. He had the impression that the vote had been rushed and that Board members had not had enough time to assimilate the final annotated version of the document. In fact, they received the final version of the management agreement the same day they were asked to vote on it, he said.
“When we formed Kituwah LLC, we checked in the chambers how we wanted the board to be set up and what the qualifications were for the board,” he said. “I have requested several working sessions to make changes to the management agreement and have not yet been granted a working session to review the management agreement.”
Rose is alarmed at how little control the tribe will have over EBCI Holdings LLC.
“The tribal council oversees each council, and that council will oversee itself,” he said. “We have no control.”
The tribe has been discussing the potential purchase since November 5, when Chief Sneed posted a video on his Facebook account discussing the project. On November 12, the Tribal Council approved a resolution allowing Sneed to continue the due diligence process. On December 15, the body filed a resolution that would have allowed Sneed to enter into a purchase agreement, ultimately approving that same resolution two days later in a supposedly open meeting that was not streamed online as this is usually the case with tribal council meetings and has not been advertised. beforehand.
The vote followed a separate Q&A session advertised only on Sneed’s Facebook page after hours the previous day. It was held via Microsoft Teams and open only to tribe members. Sneed’s office asked tribal members who work as reporters not to report on the proceedings.
The buy decision prevailed by a slim vote of 49-44. Ultimately, the tribe agreed to a $250 million deal with $130 million upfront from tribal money. The remaining cost would be financed by a loan that the new company EBCI Holdings LLC would provide the service using proceeds from the casino. As a result, the tribe would own the gambling operation at Caesars Southern Indiana, but not the land — the annual lease payment for the 238-acre property is $32.5 million.
The purchase is part of the tribe’s ongoing efforts to diversify its revenue streams in the face of looming competition for its hugely lucrative casinos in Cherokee and Murphy. The business is expected to bring in $40 million a year in earnings before interest, taxes, depreciation, and amortization, although Indiana state laws mean the LLC can only return 25% of profits to the tribe each year, estimated between 3 and 5 dollars. million. Casino taxes in Indiana are hefty, with operations bringing in between $150 million and $600 million in gross revenue needed to pay 35%.
However, Sneed said, the overall ROI would be 19-23% because the tribe would still own 100% of the LLC. Proceeds above the 25% returned to the tribe could be used to purchase other commercial gaming businesses, and the tribe could access all of the assets of the LLC should it ever decide to dissolve it.
The casino is up for sale following a July merger between Eldorado Resorts and Caesars Entertainment. The merger created the nation’s largest casino and entertainment company, and in some states, including Indiana, the company had to sell some businesses to avoid violating market share laws. According to Casino.org reports, Caesars Southern Indiana consistently ranks among the top five casinos in Indiana based on adjusted gross revenue.
