When the sometimes-violent power struggle in the Picayune Rancheria of Chukchansi Indians near Yosemite, California led to closing the Chukchansi Gold Resort and Casino in October, it was the first time an Indian casino has been closed by court order. However, it was only the latest in the saga of how large casino revenues often provoke fierce political infighting in tribes when members don’t want to share profits.
Although it is only the latest in such battles, the Chukchansi’s very public feud is one factor credited with helping to produce the first example of Indian gaming being rejected by the voters of California. The tribe’s battle and its casino’s closure was very much in the news when voters marked ballots for or against Proposition 48—with no votes garnering more than 60 percent. The proposition would have approved of a tribal compact between the North Fork Mono Rancheria Indians and the state authorizing a casino on off-reservation land in northern California.
All of these factors highlight the fact that Indian gaming has produced some enormous profits for some tribes, with billions of dollars produced in the approximately 60 casinos in the Golden State. Nationally, Indian gaming generates $28 billion, with California accounting for about $7 billion of that.
The Chukchansis’ casino was closed after a squad of 15 armed men, several of them with experience in both police work and the military, representing one of the feuding tribal factions raided the casino in search of audit documents that had been demanded by the National Indian Gaming Commission (NIGC). After taking several security personnel prisoner in search of the documents, and alarming hundreds of casino patrons, the squad was itself arrested by Sheriff’s deputies.
The casino was shut down on the orders of the NIGC and a federal judge granting the request of the California attorney general’s office, which said it feared for the safety of the casino’s patrons and employees. The judge, J. Lawrence O’Neill, has characterized the situation as an “explosive keg.”
According to Denise Runge, an expert on the gaming industry based at Helena College University of Montana, and quoted by the Contra Costa Times, “It’s a classic struggle over money and tribal rights and control for what everybody recognizes is a very lucrative enterprise.”
Phil Hogen, former chairman of the NIGC further explains, “All of a sudden, you’ve got a government with a lot of responsibility and a lot of clout that didn’t develop over decades like a lot of our other government institutions.”
Now that several members of the 15-man team that raided the casino, including its leader, Tex McDonald, have been arrested and jailed, the possibility exists that a compromise, “caretaker” tribal council with members from all three factions might be able to come together to reopen the casino.
Meanwhile the tribe loses millions of dollars every week the casino and its 1,800 slot machines stays shuttered. Exactly how much it is losing is unknown since Indian tribes are not required to open their financials to public scrutiny. Despite the secrecy, however, estimates are that the hotel and cause gross about $100 million a year, with 1,100 employees and bond payments of about $24 million a year. After expenses the tribe has about $1 million a month to divide among the members.
Another tribe that is going through a similar internal struggle is the Paskenta Band of Nomlaki Indians, who own the Rolling Hills Casino, near California’s state capital: Sacramento. An armed standoff between members of the tribe and security forces occurred earlier this year. One bone of contention is the strange purchases made by tribal officials of 162 ounces of gold and a corporate jet.
In 2013 some members of the Berry Creek Rancheria locked themselves up in tribal headquarters adjacent to the tribe’s Gold Country Casino & Hotel to protest efforts by other tribal members to “disenroll” them. Disenrollment is one of the most volatile issues among gaming tribes, and is sometimes used as a weapon to get rid of political opponents.
The Berry Creek standoff lasted for 11-hours until Sheriff’s deputies broke it up and made multiple arrests.
The difference between the last two instances and that of the Chukchansi is that no casino was closed as a result. Now the casino’s financiers are asking themselves the hard question: will the casino ever reopen?
Those money people who represent at total of $250 million that was used for upgrading the casino and hotel have been meeting with members of the three factions to try to get them to cooperate so that the casino can operate again.
The tribe has dealt with the threat of default before, most recently in 2012 when the tribal leaders put together a financial restructuring, but at the high interest rate of 9.75 percent due to the tribe’s perceived instability.
But now the holders of that debt are getting worried. The most pressing worry is that the tribe might miss one of its two annual payments, due in March.
Reggie Lewis, a spokesman for the Lewis/Ayala tribal faction told the Fresno Bee, “Nobody cares what’s going on as long as they got their money, but they are concerned now, they realize until we get this all settled they will not be having their payments and their interest paid back.”
The bondholders don’t have many options besides riding out the closure. Because the tribe is a sovereign nation they can’t sue to take tribal property, although they do have a claim to the hundreds of slot machines.
Moody’s Investors Service noted the tribe’s problems in January when it withdrew its rating from the tribe’s economic development authority due to a lack of audit records.
The tribe was actually helped when voters rejected the North Fork compact since that tribe’s casino would have been in direct competition with the Coarsegold casino.
