A $21 million lawsuit was filed in U.S. District Court last week against the Picayune Rancheria of Chukchansi Indians and its business authority by a Florida-based company that was reportedly managing Chukchansi Gold Resort & Casino and arranged for it to open at the of 2015, The Fresno Bee reports.
The multi-million dollar lawsuit stems from efforts by the tribe to reopen its Coarsegold, California casino in 2015 after it was shut down in October 2014 by the state and the federal government after a gaming office raid resulted in a dispute between tribal factions. The suit, filed last week by Osceola Blackwood Ivory Gaming Group alleges breach of contract, negligence, fraud, and state Business and Professions Code violations. Punitive damages are also being sought by the company from both the Chukchansi Economic Development Authority and the tribe, according to the report.
The suit alleges that in the summer of 2015, tribal officials approved an agreement to pay the Florida-based group 30 percent of net revenues for a period of seven years, which is reportedly allowed under the rules of the National Indian Gaming Commission (NIGC). The tribe spent the better part of 2015 trying to get the casino reopened and recoup some of the millions of dollars reportedly lost during the time the venue was closed. Osceola and the tribe reached an agreement in the summer of that year, however, an election later in the year changed the political ideology of the tribal council.
According to the complaint, the tribe’s sovereign immunity was “expressly, unequivocally and irrevocably” waived in approving the agreement, allowing the company to sue the Chukchansi Tribe if it breached the agreement. The agreement between the tribe and the Osceola firm was for the management of the casino and hotel. The group also reportedly assisted the tribe in its negotiation settlement with the NIGC, in addition to aiding the tribe in securing resources to reopen the property.
The contract was rearranged by the tribe and the group when the latter secured financing without the assistance of the gaming group. At that time, the contract was reportedly revised from a five-year contract to a seven-year contract and a decrease in net revenues from 30 percent to 25 percent. The original contract was a management agreement for Osceola to reopen and operate the hotel and casino. The gaming company stood to pocket $21 million from the deal based on incoming revenues.
The $21 million specified in the lawsuit, is money Osceola is losing “that it otherwise would have been paid under the terms of the management agreement had (Chukchansi) properly submitted the management agreement to the NIGC for approval,” according to the news agency. The lawsuit states that in assisting the tribe sans an approved agreement from the NIGC, the group assumed a “financial risk,” and that the tribe’s economic development arm promised that the management agreement would be submitted, a lengthy process that could take up to a year to be approved. Osceola reportedly worked 13 months with the understanding that the agreement would be submitted to the gaming commission by the tribe after the Chukchansi Gold Resort & Casino opened on Dec. 31, 2015. The gaming group worked for Chukchansi until Aug. 10 of last year.
Spokesman for the company, Patrick Muncie, said, “Osceola Blackwood Ivory Gaming Group fulfilled every aspect of its business relationship with the Chukchansi Tribe, which included guiding them through the regulatory process and – once all approvals were obtained – opening the shuttered casino within a matter of days,” according to the report. The company reportedly said that thanks to the operational model it put in place, significant revenue is now being generated by the hotel and casino for the tribe.