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Partners Still Optimistic Of La Center Project Despite Financial Difficulties Confronting Mohegans

Posted on August 1st, 2010

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Even with the financial challenges facing the Mohegan Tribe of Connecticut, the tribe remains very positive about its capability to finance for the Cowlitz Indian Tribe’s long-planned casino project in the La Center area. The Mohegan Tribal Gaming Authority, which operates the Mohegan Sun in south eastern Connecticut and Mohegan Sun at Pocono Downs in Plains Township, Pennsylvania, is the major financial backer of the $510 million casino complex to be located west of La Center’s Interstate 5 interchange. The Mohegan tribe has teamed up with David Barnett, a Seattle developer and a member of the Cowlitz tribe, in building the casino and resort. Barnett, a key figure behind the Cowlitz Tribe’s casino proposal, is currently recuperating after a serious vehicular accident last fall.

The chief operating officer of the Mohegan Tribal Gaming Authority, Jeff Hartmann, said Thursday in an earnings conference call that despite the Mohegan tribe’s $1.6 billion debt and the drop in Mohegan Sun’s third quarter profits, the La Center casino project is still “very viable.” He said they are very eager to get on with the project which is expected to generate hundreds of jobs. Mohegan Chairwoman Lynn Malerba, who is also very positive that the casino will be built, confirmed Hartmann’s statements. However, the land on which the Cowlitz casino will sit still has to be put into trust. The Cowlitz Indian Tribe filed an application in 2002 asking the federal government to grant them the 152-acre reservation so that they can build a casino resort and hotel complex on it. But an existing ruling from the Supreme Court says that those tribes which were not under federal jurisdiction before 1934 when the Indian Reorganization Act became law are not allowed to have land put into trust.

This is a major hurdle that the tribe has to deal with, although the case is now before the U.S. Congress and is being debated in an attempt to overturn the Supreme Court’s decision. The Cowlitz Tribe claims that it was already under federal jurisdiction previous to 1934, although it gained federal recognition only in 2000. Malerba said Thursday the Bureau of Indian Affairs under the Department of Interior is taking too much time in deciding on the application of the tribe. She said had been spending time in Washington D.C. to follow up the case and she hopes the authorities involved will move quickly and hand in a decision soon.

She said the Cowlitz Tribe should be allowed to have that land put into trust and she believes the tribe will be granted that right. A memo from Secretary of the Interior Ken Salazar written on June 18 for the Bureau of Indian Affairs ordering the department to proceed quickly with decisions on gaming applications, stated, in part, “It is important that we move forward with processing applications and requests for gaming on Indian lands within the context of objective statutory and regulatory criteria.” The Cowlitz tribe spokesman Phil Harju said the tribe is looking forward to an early decision.

The Thursday conference call was arranged in order for Mohegan officials to provide information on the Mohegans’ third quarter financial results, which must be reported regularly to the federal government because its debt is traded publicly. Net income for the third quarter months of April, May and June was $11.6 million, a substantial drop of 50 percent from the same months last year. Chief executive officer of the Mohegan tribe Mitchell Etess said they had not expected to post this very dismal figure which was the lowest third quarter returns since 2002, since they had been hopeful about revenues.

Etess said the market has not been very active and people are saving rather than spending. He added that they are working harder to find ways to make their products more appealing and draw more customers. Leo Chupaska, the tribe’s chief financial officer said the tribe is considering refinancing its debt obligations. Malerba said the mess brought about by the economic downturn has been quite extensive and has severely affected the gambling industry. Besides the Cowlitz casino project in Washington, the tribe has also plans of putting up casinos in Wisconsin and Massachusetts. Hartmann said they are momentarily holding back plans for the Massachusetts proposal while keeping track of the ongoing developments in the state legislature where a negotiation process on an expanded gambling bill has gone on for a week.

The approval of the online gambling bill by the House Financial Services Committee was hailed by Malerba as the bill would allow Mohegan Sun to offer online poker through its website