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Will third time be the charm for Laguna?

Copyright © 2018 Albuquerque Journal

Laguna Pueblo leaders have for years sought to leverage profits from the tribe’s two casinos, hotels, restaurants and gas stations by expanding the tribe’s economic reach beyond tribal lands.

The Route 66 Casino west of Albuquerque is run by the Laguna Development Corporation owned by Laguna Pueblo. (Jim Thompson/Albuquerque Journal)

Their latest effort is to seek a state license to open a race track and casino in Curry County near Clovis – a venture tribal leaders hope fares better than the pueblo’s first two attempts to get into off-reservation gaming.

This venture follows a failed attempt called “Project Yellow” to purchase the Isle of Capri riverboat casino in Lake Charles, La., that began in 2016.

That ended up costing the tribe and its subsidiary companies a $20 million deposit and millions more in fees and lost earnings.

Laguna Development Corp. lost a bid to build a new casino on the state fairgrounds replacing the old facility pictured above. (Marla Brose/Albuquerque Journal)

The Pueblo’s first attempted foray into off-reservation gambling was in 2011, when its development company failed in its bid to build and run the racino on the state fairgrounds in Albuquerque – a controversial project with major neighborhood opposition and charges of political favoritism in the contract award to another bidder by the administration of Gov. Susana Martinez. Critics dubbed it the “Dirty Downs Deal.”

Pueblo leaders have been looking at economic expansion for some time.

A spokesman says the 8,000 member pueblo has had profits of $100 million from its business operations over the last 10 years.

But records of Tribal Council meetings in 2013 show that leaders were concerned with “stagnant” earnings from its two casinos – the Route 66 Casino near Albuquerque and the Dancing Eagle Casino near Grants – and related business operations on tribal lands along I-40 west of Albuquerque.

There has been a proliferation of tribal gaming in New Mexico, with some saying the Albuquerque market is saturated. Council minutes also show that tribal leaders were concerned the Navajo tribe would open a competing casino north of 1-40 near Laguna’s Route 66.

6th and final racino

Laguna’s new venture, the Curry County racino proposal, is in the early stages.

“We don’t have any application filed with us, so we’re not sure what model of ownership they will be submitting,” said Ishmael Trejo, director of the state Racing Commission.

Laguna Development Corp., which is owned by Laguna Pueblo, announced earlier this month that it had formed a separate company, L&M Entertainment, with the Miller Companies of Hinsdale, Ill., to submit a proposal for a license to build and operate a race track and casino in the Clovis area.

At least one competing racino proposal is expected that would involve the city of Tucumcari.

State law allows for a sixth and final racino in New Mexico, a number capped by the state’s gaming compacts with the tribes.

The five operating racinos are: Sunland Park Racetrack & Casino, Sunland Park; Ruidoso Downs & Billy the Kid Casino, Ruidoso; Sunray Park & Casino, Farmington; The Downs at Albuquerque, Albuquerque; and Zia Park & Black Gold Casino, Hobbs.

The state Racing Commission would make an initial decision on whether to authorize another track, and if so would select a winning bidder along with the state Gaming Control Board.

If the project gets the go-ahead, Trejo said the commission and board would jointly conduct background investigations on officers and directors of a racino.

Skip Sayre, chief of sales and marketing for Laguna Development, said the development company “has established an arms-length relationship between the pueblo government and the corporation, which has an experienced team and board of directors overseeing operations.”

Sayre said Laguna Development’s management and the pueblo have a good working relationship with state regulators in New Mexico and that he doesn’t foresee any problems arising from its application for a racino license, like those experienced in Louisiana.

Loss of $23 million

Laguna Pueblo went down a long and winding road in its unsuccessful attempt to buy the Isle of Capri riverboat casino in Lake Charles, La. – a journey that cost the tribe at least $23 million.

Laguna Development Corp. attempted to buy the Isle of Capri Casino Hotel in Lake Charles, La. (SOURCE: Islelakecharles.Com)

According to tribal records, the plan failed when pueblo sovereignty ran into Louisiana state requirements for background investigations of all individuals having control over a casino’s operations.

“It was an exhaustive process in preparing for licensure in Louisiana, and unfortunately we were not able to get to the finish line,” Sayre said.

Council members, who represent the 8,000 members of the pueblo, also sit as stockholder representatives of Laguna Development Corp. and vote on policy issues. The sticking point was that Louisiana regulators could have forced a Laguna Council member to resign from the council under certain circumstances based on background checks.

The pueblo argued that violated its sovereignty and was unnecessary because tribal law disqualified any council candidate convicted of a felony or a misdemeanor involving “moral turpitude.”

La. endeavor fails

In August 2016, Laguna Development Corp. signed a letter of agreement to purchase the Isle of Capri riverboat casino and later that year the Tribal Council approved financing for the purchase. It earmarked $42 million for the deal.

But there was a problem from the start when Louisiana regulators determined that every Tribal Council member would have to submit “suitability” applications that included criminal and financial histories.

If gaming authorities in Louisiana found any member “unsuitable,” that council member would have to be removed before the Louisiana Gaming Control Board would approve a casino license for any tribal subsidiary company.

Tribal leaders decided to take the question of whether all council members should submit suitability applications to Louisiana regulators to a plebiscite of the six pueblo’s villages. They split three for and three against.

The Tribal Council then voted not to submit “suitability” applications for all members to the Louisiana Gaming Control Board and directed Laguna Development Co. to explore alternatives.

Pueblo Gov. Virgil Siow said in a letter to tribal members that agreeing to submit the applications would be “allowing Louisiana to dictate who may serve on Council.”

The development company came up with three options for restructuring the legal entity that would own the casino, but Louisiana gaming officials rejected them, according to Tribal Council minutes.

The parties went back and forth but couldn’t reach an agreement by the deadline to meet licensing requirements.

The Louisiana Gaming Control Board never had a public hearing on the Isle of Capri purchase, according to a spokeswoman, and the Louisiana Attorney General’s office didn’t respond to an email request for an interview.

Under terms of the original purchase agreement, the $20 million deposit was forfeited to the Isle of Capri Casino Hotel, Eldorado Resorts Inc., which had merged with the original owners while the sale was pending.

According to Laguna Tribal Council minutes in December 2017, the companies set up to make the purchase had spent an additional $3 million on legal fees and other costs.

Sayre said he didn’t believe Laguna Development’s proposal will face the same problem in New Mexico.

“In Louisiana two sovereign governments ultimately were not able to reach an agreement on licensing,” he said. “I don’t see that happening in New Mexico based on the structure we will be presenting.”

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