Deadline Looms for Eastern Band of Cherokee Indians to Buy Caesars Southern Indiana
Posted on: December 16, 2020, 04:34h.
Last updated on: December 18, 2020, 02:01h.
The Eastern Band of Cherokee Indians stands at a crossroads, Principal Chief Richard Sneed told the Tribal Council Tuesday. The tribe will stay there for at least a day, if not longer, as leaders weigh whether to sign off on the purchase of Caesars Southern Indiana and enter the commercial gaming business.
Council members and tribal officials discussed their actions for three hours at a Tuesday special meeting. They proposed allocating up to $130 million in EBCI funds, as well as taking on debt of up to $160 million, to purchase the casino from Caesars Entertainment. Caesars operates the casino, while the property is owned by gaming REIT Vici Properties.
The council last month approved the creation of a limited liability company that would serve as a vehicle for EBCI to own and operate commercial casinos. The same month, EBCI entered into an exclusive 45-day negotiating period with Caesars to purchase the casino. According to information discussed at Tuesday’s meeting, the deadline to consummate a deal is Monday.
The tribe is considering commercial gaming as it sees its quarter-century monopoly on casino gaming in the region begin to slip away. Commercial casinos are coming to neighboring Virginia, and another tribal casino is planned near Charlotte, which EBCI is trying to block in court.
That tribal casino, which the Catawba Nation would operate and could open within the next two years, could cost EBCI $100 million in gaming revenue annually, Sneed told the council. A revenue loss that would significantly impact the tribe’s standard of living.
We will need at least three projects of (Caesars Southern Indiana’s) size and scope to offset that loss alone,” Sneed said. “The time to act is now. We have never been in a better position to act. We know the outcome if we do not act.”
Council members, though, chose to table the proposal and continue discussions. As of 7 am Wednesday morning ET, no new meeting has been scheduled.
Some EBCI Council Members Seek More Time
Under the plan discussed at the council meeting Tuesday, the EBCI’s $130 million would come from some combination of five tribal funds, including the debt service sinking fund. As the name implies, that fund is used to cover the debt, which the tribe has none, according to Treasury Secretary Cory Blankenship.
As of last December, the sinking fund had nearly $199 million. Other sources being considering are also multi-million dollar funds.
Council Member Dike Sneed said he needs more time to determine if the Caesars’ purchase is a good deal for the tribe. Council Member Albert Rose said he supports the move to commercial gaming, but he added he didn’t agree with the resolution to move forward.
“I just think we just need to slow down,” he said. “The threats ain’t as bad as you think they are.”
However, Council Member Perry Shell said the Seminole Tribe of Florida was in dire financial straits about a decade ago when it decided to pursue commercial gaming opportunities.
Now, with the Seminoles operating Hard Rock casinos nationwide, the tribe has enough revenue to provide services to its members for the next 75 years, he said.
With the deadline looming to complete the deal, tribal officials said there is not be much time for waiting. If EBCI can’t complete the deal, Sneed said there were 20 other bidders lined up to buy the casino.
Caesars must have an agreement in place to sell the casino by the end of the month. When the Indiana Gaming Commission approved the Eldorado Resorts takeover of Caesars, it required the merged company to divest of three of its five casinos in the state. It previously reached an agreement to sell Tropicana Evansville and received a one-year extension to sell Horseshoe Hammond.
Missed Opportunities and Possible Consequences
Tribal Council Chairman Adam Wachacha said his father served on the council that first approved tribal gaming. It was a move he said many in the community derided. However, it’s been a decision that’s helped fund the tribe’s health care, housing, and education systems.
He reminded his colleagues that a year ago, the Seminoles approached them about partnering for the casino that’s being built in Bristol, Va.
And if the deal to buy the Indiana casino falls through, it could have other repercussions for the tribe and its relationship with Caesars, the company that operates EBCI’s Harrah’s casinos.
Sneed told the council that Caesars won the right to develop a casino in Danville, Va. As part of getting that license, it included a right-of-first-refusal option for EBCI to negotiate an equity stake in that casino.
“If we tie up this deal and then we let it fall apart, that’s not going to look good when we go to the negotiation table on the Danville project,” Sneed said. “It’s going to be an issue.”
Can Caesars Still Operate the Indiana Casino?
If EBCI moves forward with the creation of the LLC, former Caesars executive Scott Barber would likely be named as the private entity’s CEO. That’s how a resolution was read at the council meeting Tuesday. Barber has been working with EBCI leaders, helping with due diligence on the Caesars negotiations.
Barber worked for more than 20 years with the gaming giant, most recently as its regional president for Mid-South and Mid-Atlantic operations.
With the close ties between EBCI and Caesars, could the Las Vegas company still operate the Southern Indiana casino under an agreement similar to the one for the North Carolina casinos? Sneed previously declined to answer direct questions about the negotiations.
Jenny Reske, IGC deputy director, told Casino.org last month that commission staff would be unable to predict how such a hypothetical proposal may be received.
“The order is for divestiture,” she said. “If Caesars wishes to present alternate proposals, it would be up to the Commission to accept those or not.”
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