Tribe: Red Hawk Casino may close because of looming debt
By Dale Kasler, Sacramento Bee
The owners of Red Hawk Casino say they may have to close the 3-year-old gambling palace following a devastating $30 million jury verdict.
With its financial pressures intensifying, the Shingle Springs Band of Miwok Indians warned in court papers of a “doomsday scenario” if the cash-poor tribe is forced to pay the December judgment. Under that scenario, the tribe said lenders would take steps to seize the casino’s cash, forcing Red Hawk out of business.
“Any efforts to presently execute on the judgment would likely have catastrophic consequences for the tribe and all who depend on the casino for their livelihood,” tribal attorney Sanford Kingsley wrote in a recent filing in El Dorado Superior Court.
The Shingle Springs casino employs 1,350 workers.
A jury in December awarded $30 million to Sharp Image Gaming Inc., the tribe’s former business partner, over a breach-of-contract dispute. Sharp said the tribe reneged on an agreement for the company to supply slot machines.
Sharp Image lawyer Matthew Jacobs called the tribe’s shutdown warning nonsense. He said in court papers that the tribe’s creditors would do everything they could to keep the Highway 50 facility going.
For now, Sharp Image won’t collect on the judgment. A judge issued a tentative ruling this week preserving the status quo, the tribe said Friday. A final ruling on the issue is expected in a couple of weeks.
Nevertheless, the tribe’s warning provides fresh evidence of the dire financial circumstances that have enveloped the Shingle Springs band, which owes its casino creditors a combined $598 million.
Because of its financial troubles, the tribe said it’s having trouble pursuing an appeal of the December verdict. If the verdict stands, the tribe could default on its debts.
The tribe’s warning also makes it increasingly likely that the casino’s future will be the subject of a lengthy and convoluted legal battle, with bondholders and other creditors fighting the tribe and each other over assets.
This fight will surely be complicated by the doctrine of sovereign immunity, which generally protects tribes against legal claims and puts the Shingle Springs tribe’s most important assets – including the casino – out of creditors’ reach.
“You can’t take their land, you can’t take the building,” said Nelson Rose, an Indian gambling law expert at Whittier College. “I guess you could take the slot machines.”
Gregory Guedel, an Indian gambling lawyer in Seattle who is not connected to the case, said bondholders and other creditors will probably have to negotiate a settlement with the tribe to stretch out debt payments while keeping the casino open.
That’s what happened at tribal-owned Foxwoods Casino in Connecticut – the world’s largest – which defaulted on $2 billion in debts two years ago.
Aside from the hurdles presented by the tribe’s sovereign status, it simply makes more sense for creditors to work out a deal with the tribe.
“It’s still better to have a trickle of money coming in” than to have the casino fold, Guedel said.
As it is, the tribe has temporarily halted principal payments on a $66 million startup loan from Red Hawk’s outside management firm, Lakes Entertainment Inc., because of the casino’s weak cash flow.
Red Hawk pays millions of dollars each year to the state and El Dorado County under a compact that the Shingle Springs band signed with former Gov. Arnold Schwarzenegger.
Sure, lay off 1350 workers, HANGTOWN can absorb the welfare application with no problems,let the State California write the pay checks,Give the county seat a reason to short change the spender freaks up Here, so they ***** a little more about why they get ignored so much.
After All, our Little city got a endless check book for more drainage holes,ponds,curb ,gutter,parking meters, Forest farmers burning the forest,figuring out how to build a condom big enough for a lake holding about 39 trillion gallons of water, keep the soil,oil,fish out the water.
They DON’T WANT STOP TILL its clear all way to the bottom of the lake.
Are they taking better Psychedelics than the Cartels are shipping into town every week?
The planes fly in, out, very often at the council meeting dates at the airport for their connections.
Terry are you still taking care the old customers,RETREADS, that neaver gave up their bad habits?
Now that Jack Abramoff served his time,Tom Delay never served a day. Grover Norquist still has clout,so does Ralph Reed.John Doolittle no mo clout.Plus ???
Google Jack Abramoff, read WikipediA The Free Encyclopdia, check out the good old days of the Bushies and Indian casinos.
They should make Red Hawk more bicycle friendly. That would fix everything. 30-40 million should do it.
I like that liberal quip about the ‘Bushies’ and Indian Casinos. Liberals, ever on the lookout to extract more cash from their helpless supplicants, magically eschewed their usual legal political challenge methods to…grudgingly…allow the establishment of these clip joints on every vacant lot in California, making sure the state could confiscate a big chunk of the booty. Isn’t it interesting how liberals can usurp the will of the people by inserting federal judges in key appellate courts to overturn their majority votes on contentious issues?
(Gay marriage being the latest example)
Liberals ostensibly opposed these casinos, so why didn’t those same judges put the brakes on these majority voted measures? It seems we have the Mob in charge of California under the Nom de Plume of “Liberals”…….