Mohawk Catskills casino plans advance, backers survive a legal gauntlet

Jim Adams
4/11/01

HOGANSBURG, N.Y. – Surviving the sudden death of the main backer, attacks by tribal dissidents and lawsuits from spurned partners, the St. Regis (Akwesasne) Mohawk plan for a major casino in the Catskills resort district is moving a major step toward fulfillment.

The tribal council and its partner Park Place Entertainment Corp. disclosed details of a $500 million casino hotel with 165,000 square feet of gaming space, expected to open around the year 2004. The complex will also include a 2,000-seat theater and event center.

One analyst predicts the casino floor, the fifth largest in the country, could generate annual revenues of $1 billion to $1.5 billion.

“It is one of the largest deals, and probably the largest, between a tribe and a corporation,” said St. Regis Tribal Council spokeswoman Rowena General.

The tribe announced a letter of agreement with Park Place, which has major casino holdings in Las Vegas and Atlantic City and has been called the largest gaming company in the world. The seven-year agreement will give 70 percent of the profit to the tribe and 30 percent to the corporation.

Park Place also signed a consulting agreement to help run the tribe’s struggling Akwesasne Mohawk Casino in Hogansburg on the St. Regis reservation on the Canadian border.

“The St. Regis Mohawk Tribe can be proud to claim that we have partnered with the most successful gaming resort development and management company in the world,” said Tribal Chief Paul Thompson.

The tribe also filed a Land-Into-Trust application with the BIA March 23 for the casino site. Park Place has promised the tribe 66 acres from the former Kutsher’s Resort Hotel and Country Club in the Catskills. Last year the corporation paid Kutsher’s $1 million for a five-year option to buy the 1,450-acre Catskills landmark for $65 million.

The newly announced plans made several concessions. They called for a 750-room hotel instead of the 2,000 rooms announced last year. Observers said that was meant to reduce competition with local businesses.

The tribal council also agreed to put a temporary hold on plans for another casino further north until approvals for the Park Place project were complete.

Park Place revealed it is raising serious money to proceed with the project. A company spokesman said it is interviewing commercial banks for a $500 million loan to finance construction. Chief Financial Officer Scott LaPorta said it would refinance the loan with a bond issue after the casino opens.

“We will wait until the casino has a good track record before refinancing.”

The casino project is gaining speed after months of uncertainty following the unexpected death of Park Place head Arthur Goldberg in October. Goldberg had won the confidence of the St. Regis Tribal Council, especially in a successful fight against casino mogul Donald Trump’s attempt to derail the project in the New York Legislature.

The new chief executive, Thomas Gallagher, was reported to be uneasy partners with Goldberg, but worked to build rapport with the St. Regis leaders, visiting the reservation in December.

“The council had very good relations with Mr. Goldberg,” General said. “This helped produce good relations with Mr. Gallagher as well.”

There are other barriers including internal tribal divisions that up to two years ago had rival governments claiming control of the St. Regis reservation. Park Place faces several billion dollars in lawsuits from partners hired by the previous tribal council and discharged by the present one.

The Catskill Development Corp. had won federal approval for a casino site at the Monticello Raceway near Kutsher’s, when the new council broke the contract and signed with Park Place. Catskill is suing Park Place for $3 billion in U.S. District Court in White Plains, claiming it wrongfully interfered with the deal.

The President Casino-St. Regis Management Co. also is suing Park Place in state court, accusing the corporation of causing it to lose its contract to run the unprofitable Akwesasne Mohawk Casino in Hogansburg.

The most publicized legal problem may also be the shakiest. A group calling itself the Mohawk Tribal Court gained widespread attention in mid-March by issuing a $1.8 billion default judgment against Park Place. A group of tribal members sued the company, claiming it sabotaged the agreement with Catskills Development as a ploy to prevent a casino from ever being built and thus compete with its Atlantic City interests.

Park Place refused to acknowledge the tribunal, set up by a faction in the previous tribal government. The company tried unsuccessfully to get a federal court to stop the proceedings. The current St. Regis council abolished the court last month and denounced its ruling as “a publicity stunt by individuals with close associations to unscrupulous gaming interests.”

A council statement said, “Unfortunately, progress is once again being overshadowed by the recent tactics of a small group of dissident tribal members fraudulently posing as government and tribal court representatives.”

The tribal court ruling will have no effect, lawyers say, unless the plaintiffs can get state or federal courts to honor it.

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