Attorney Robert Saunooke recently submitted a formal protest to the tribal council of the Eastern Band of Cherokee Indians in North Carolina regarding its plan to purchase Caesars Southern Indiana in Elizabeth for $250 million. The Indiana Gaming Commission had ordered Caesars to sell the Southern Indiana casino by December 31 as a condition of its acquisition by Eldorado Resorts last July.
Principal Chief Richard G. Sneed submitted Resolution No. 363 (2020) proposing the purchase and it passed 48-45 in a special session on December 24, 2020. It would be the tribe’s first move into commercial gaming but not its first time investing in an out-of-state business. Last year, the tribe spent millions to help its existing business arm, Kituwah LLC, develop property in Sevierville, Tennessee.
Saunooke, a member of the Eastern Band, said, “Aside from the fact that I think this is a horrible business deal, it appears to me the way it’s set up that it violates the tribal charter, which requires the tribal council to control all real and personal property of the tribe. And the way the company is set up it is controlled by a board that the tribal council has no authority over. They can’t fire, they can’t direct, they can’t do anything with, which would be violation of our charter. That’s in Section 16 of the charter.”
Saunooke added, “The second reason is we don’t have the money to pay for this. The silos that our gaming funding is put into under Chapter 16 has capital improvements, infrastructure, debt reduction, but there’s no pool of money in our general fund that allows us to purchase casinos with it. The tribe can obligate itself with loans and stuff. They’re going to have to violate our ordinances and pull money out to purchase it, which I think is wrong.”
Saunooke received a response from Tribal Council Attorney Carolyn West on January 9. She wrote, “Mr. Saunooke failed to submit a valid protest. First and foremost, Mr. Saunooke is not an interested party because he does not present a direct financial stake in Resolution No 363 (2020). Additionally, he failed to include a direct impact statement which renders the protest deficient and the protest shall not be placed on the tribal council agenda.”
Saunooke, however, claimed he is an “interested party.” He said, “Ms. West is incorrect in her opinion as she states that the protest does not present a ‘direct financial stake’ in the resolution and did not present a ‘direct impact statement’. Both of these statements are incorrect as the statute in question does not require a ‘direct financial stake’ and the protest I submitted stated that the decision directly impacted benefits I receive and the right to manage property held by the tribe under the charter. There is no requirement in the protest ordinance of more than this.”
Saunooke continued, “We’re not getting anything. I don’t think people realize the $250 million they’re paying doesn’t buy us a building, because we don’t own the building. It doesn’t buy us any gains or any funds for any tangible goods. We’re basically paying to assume a lease obligation that Harrah’s has with this company that owns that building and the group that’s there. Because we’re not buying any assets, why are we paying so much money for it?”
Saunooke also pointed out the deal has no financial benefits. He said an analysis indicated the property could have EBITDA of $40 million a year. “But of that $40 million, all the tribe can pull out is $10 million. And even that $10 million can’t go to the members of tribe. Even that’s a 25-year return on investment. Nobody puts money into a business that doesn’t have a return on the investment in less than three years. It’s just not financially viable,” he said.
Saunooke agreed the tribe needs economic diversification and needs to find new revenue streams. But he questioned why that would mean spending so much money on a separate casino in Indiana. He has proposed investing some of that money back into the two Harrah’s casinos the tribe owns, in Cherokee and Murphy. He added there are many other business ventures the tribe could investigate that would yield a quicker return on investment.
Besides Saunooke’s protest as an individual, he’s also a member of and the attorney for a group of 14 individuals, including former Principal Chief Michell Hicks and two current tribal council members, Albert Rose and Bo Crowe, who also filed a formal petition seeking to stop the purchase. Their petition states the special meeting at which the council approved the purchase did not meet the requirement for an emergency session. Also, the limited liability company the tribe established to run commercial gaming operations does not comply with the charter. Finally, the group is concerned that spending $250 million, including $120 million from tribal endowments, during a pandemic “is a fool’s errand,” according to the petition.
Rose said while he disagrees with the venture on several fronts, the most critical issue is the management agreement for the LLC. He said it seemed the vote was rushed and council members did not have enough time to fully vet the document. Also, he said, “Tribal council oversees every board but this board will oversee itself. We have no control.”
Sneed said, “My track record shows that I am here to serve tribal citizens and my faith in the validity of this project sustains despite this protest. I am happy to speak with any tribal citizen that has concerns about this project as I fully believe it is the best next step forward in the tribe’s larger economic diversification plan to sustain tribal programs and services in years to come.”
