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SOUTH KINGSTOWN -- The shareholders of a former casino company that once partnered with the Narragansett Indian Tribe have gone to court seeking $10 million from the tribe.
The shareholders of the former Capital Gaming International Inc. say that the tribe’s promised cut from new video slot machines at Lincoln Park triggers an agreement the tribe had made with the gambling company in 2001.
That agreement states that if the tribe moves forward with another gambling project in Rhode Island, it must first pay back Capital for development expenses the company incurred here.
From 1993 to 1999 Capital Gaming was working with the tribe to bring a casino to Rhode Island. In the fall of 1999, the tribe dropped the financially ailing Phoenix, Ariz., company in favor a new partner, Boyd Gaming Corp., of Las Vegas. The tribe later dropped Boyd for its current partner, Harrah’s Entertainment.
Capital Gaming threatened legal action if the tribe did not make arrangements to repay $9.9 million in "development loans" and buy out its management contract. The two sides reached a settlement on April 2, 2001.
That agreement stated that 60 days after the opening of any Rhode Island gambling facility to which the tribe was "directly or indirectly" involved, the tribe would have to start paying back $10 million plus interest.
Last year, state lawmakers gave Lincoln Park permission to add 1,750 slot machines to the 3,002 that already existed. About 600 of those extra machines have gone online and the dog-racing track is undergoing a massive expansion to make room for the rest. As part of that deal, the Narragansetts were given 5 percent of the revenues from those new machines.
Capital Gaming’s shareholders, through an Illinois limited-liability corporation -- CGI-NIT -- filed suit yesterday in Washington County Superior Court seeking the money.
The tribe's lawyer, Jack Killoy, today said: "The tribe's position is that they have dealt with Capital Gaming in good faith and will continue to deal with them in good faith. The tribe will honor all of its obligations but this lawsuit is, at best, premature."
Further, Killoy said, the General Assembly made it very clear when giving the tribe a cut of Lincoln Park's slot revenue that none of that money could be used to pay off past casino debts.
"The tribe is being asked in this lawsuit to make an unlawful payment,'' he said.
As of this afternoon, the tribe had not officially responded to the governor’s office and no money has been transferred, according to Carcieri’s spokesman Jeff Neal.
On Nov. 7 voters will be asked to amend the state’s Constitution to allow the tribe and Harrah’s to build a casino in West Warwick.
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