Massachusetts Tribe Faces Funding Dilemma
20 Jul, 2009 / GamblingCompliance Ltd. / Scott Van Voorhis
Serious cracks have emerged in the relationship between Mashpee Wampanoag leaders and a group of high-powered investors backing the tribe’s push to open a resort casino in Massachusetts.
Tribal leaders have voted not to “reaffirm” a casino development agreement with an investment group that includes South African gambling tycoon Sol Kerzner. The tribe contends the agreement gave the investors the lion’s share of profits from the proposed gambling venue.
However, the vote came after the financial backers of the Mashpee Wampanoag's quest to open a resort casino in a rural Massachusetts town quietly cut off payments to the tribe.
While it’s not clear exactly what has caused the bickering between the Mashpee Wampanoag tribe and their investment partners, the dispute comes after a landmark US Supreme Court case cast serious doubts over the ability of tribes across the country to open new casinos.
The Massachusetts tribe, which just won recognition in 2006, is currently seeking approval from the federal government to create an official reservation on which to build a casino.
In addition, the tribe is reeling from the conviction on an array of federal charges of its former chairman, Glenn Marshall, in part for his involvement in the Jack Abramoff Indian lobbying scandal.
“A sad chapter in our tribe’s history was closed yesterday at the federal courthouse in Boston,” the tribe’s new chairman, Cedric Cromwell, recently wrote to members. “While I am pleased with the progress we are making, we still face great challenges.”
The tribe’s casino plans suffered a serious blow in May, when its financial backers, led by casino moguls Kerzner and Len Wolman, stopped payments to the tribe. The pair are part of the original investors in Mohegan Sun and have also helped transform Rhode Island’s Twin River racino into a major regional competitor.
But the Mashpee Wampanoags fired off their own salvo in June, with the tribal council voting to put on hold the 2007 casino development agreement struck with the investors.
Tribal leaders, many of whom were elected after Marshall became ensnared in a federal probe, have taken a sceptical view of the casino development agreement the now disgraced former chairman signed with the investor group. Marshall was recently sentenced to 41 months in federal prison for embezzlement, social security fraud, tax evasion, and making illegal campaign contributions.
The agreement would pay investors $40m a year, while the tribe would get about $15m, the tribe’s new leadership contends, according to The Cape Cod Times. That’s based on a casino that would generate more $700m a year in gross revenue.
“It’s not a very good deal for the tribe,” said Clyde Barrow, a professor and gaming industry expert at the University of Massachusetts Dartmouth.
A spokeswoman for the investor group, known as TCAM, told GamblingCompliance, “Under the terms of our agreement with the tribe, which is in full force and effect, we do not feel it would be appropriate at this time for us to comment on any pending matters with the tribe.”
Still, the process has likely been an expensive and risky one as well for the investors, who have pumped millions into the tribe’s casino efforts with little chance of seeing that money again if a gambling venue fails to materialise.
That includes both bankrolling the tribe’s efforts to win federal approval for a proposed casino site in Middleboro and drawing up complicated casino development plans.
And the deal has gotten riskier in recent months since the nation’s highest court dropped a bombshell on tribes across Indian Country.
The Supreme Court ruled that tribes, like the Mashpee Wampanoags, which won recognition after 1934, are not covered under federal rules that allow tribes to create new reservation land, known as taking land into trust. This is a basic step for opening a tribal casino.
The tribe’s best bet now might be to drop efforts to open a full-fledged Indian casino and instead team up with a commercial developer, argues UMass Dartmouth’s Barrow.
Even if successful, winning federal approval could take years, by which time a number of commercial casinos may have been legalised and developed in the state, he noted.
Moreover, betting on federal approval now is a big ‘if’, with congressional legislation needed before tribes like the Mashpee Wampanoags can move forward with their casino plans, Barrow said.
Instead, the tribe might do better to team up with a commercial investor and compete for a casino license should Massachusetts lawmakers, as is widely expected, legalise casino gambling this fall.
“At this point, everyone is telling the tribe they need to get onto the commercial bandwagon,” Barrow said. “If they don’t do that, they may find themselves on the outside looking in.”
EDITORIAL FOOTNOTE: Aren't these people, the same investors, who negotiated a very good deal for themselves, many years ago with the Mohegan Tribe?
With the investors, saying the deal is still in effect, it sounds like this matter could spend a long and costly battle in court.
Maybe, the Mohegan Tribe, should somehow find the money, and help finance the deal with the Mashpee Wampanoags? This way, instead of the Mashpee Wampanoags being competitors of the Mohegan Sun, we could somehow share in the profits, of their venture in Massachusetts?
Shouldn't the Mohegans try to help the Mashpee Wampanoags? Wouldn't that make more sense, than the Mohegan Tribe trying to help tribes in Washington State and Wisconsin?
Instead, what are the leaders of the Mohegan Tribe (Mohegan Tribal Council) doing? The MTGA is promoting gambling in Palmer? Shouldn't they help another fellow tribe?
What good is all the money the Mohegan Tribe, has the ability to make, and not try and help this tribe? Maybe, they won't want our (the Mohegan Tribes) help, but maybe we should offer?
Are you listening Tribal Council? Are you working on this possibility? Some tribal members are wondering if this will be yet another case of the Tribal Council not doing anything? Should the tribe look into maybe funding the Mashpee Wampanoags? Will the MTGA help them? What do you think?