Casino owes millions to tribe, panel says

By J. ANDREW CURLISS, Staff WriterA board that oversees Harrah's Cherokee Casino is holding nearly $45 million that should have gone to the tribe and its members, the National Indian Gaming Commission says.
Half the money is owed directly to the 13,000 members of the Eastern Band of the Cherokee Indians -- a potential windfall of about $1,700 apiece. The other half should go to the tribal government for general purposes.
The federal Indian Gaming Commission said in an advisory opinion received last week that the Tribal Casino Gaming Enterprise board improperly created the two reserve funds that hold the money. It is not clear when tribe members might see the cash.
"I'd sure put it to good use," said Wilma Morris, 77, who rents cabins to tourists near the casino. "I'll tell you: They must be doing a fantastic job down there. We're just sitting back collecting the checks."
Tribe members already receive profits from the casino, which sits near the Great Smoky Mountains about 300 miles west of Raleigh. Last year, the distribution totaled about $7,000 per member.
The Eastern Band's Tribal Council is to meet today and later this week to discuss how to respond to the opinion, officials said.
The tribal administrator, Paxton Myers, pointed out that the tribe had cooperated with the Gaming Commission's review. "We've always said that we will abide by their ruling," he said.
The tribal chief, Michell Hicks, could not be reached.
Vice Chief Larry Blythe said Monday that some might want to file an appeal and resist making the payouts. "I would hope at this point we are just dealing with how to distribute it," he said.
Casino part of boom
The tribe has operated the casino since 1997, when the state agreed to allow video-based games. The operation is part of a national boom in Indian gaming, approved by state and federal authorities to spur economic development on reservations.
In Cherokee, the casino has grown to include 3,300 video slots, poker and blackjack games and a new hotel. An additional hotel tower is under construction. The tribe is also pushing for a live poker parlor.
The Tribal Casino Gaming Enterprise, made up of members appointed by the tribal council, handles the long-term operations and management of the casino, which is run day-to-day by the Las Vegas casino giant, Harrah's.
The gaming commission said that the enterprise board overstepped its authority in creating the reserves. Records show that each of the accounts topped $20 million by August, when federal authorities began the inquiry. They now contain $44.75 million.
One reserve was for land purchases near the casino. The other is called a debt service fund, though records show it was not used only to pay off debt.
The gaming commission noted that the debt reserve was created, in part, as a cushion to keep twice-a-year payouts to members high. The rationale, officials said in interviews, was to avoid anger or other repercussions in a slow year -- and to make sure that the checks continued to grow.
A tribal memo spells it out.
The debt reserve, the memo says, would allow flexibility to spend "part or all" of its balance to "provide year-over-year growth, or to avoid an adverse impact on a tribal distribution."
'Not imprudent'
The debt reserve was created on top of one that already exists. Officials said that fund will be able to pay off all debt by mid-2005, estimated at $140 million.
The new debt reserve was made possible by savings generated when the tribe negotiated a new long-term management contract with Harrah's that included a 7 percent reduction in Harrah's fee.
The gaming commission noted that the tribal board's actions were "not imprudent from a business perspective" and that the tribe appears to have acted in good faith. But tribal and federal laws simply do not allow for such diversions, the commission said, and so the money should be distributed.Staff writer J. Andrew Curliss can be reached at 829-4840 or acurliss@newsobserver.com.