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From the Denver Post:

Tribes' casino deal found to be illegal by U.S. regulators

By Mike Soraghan
Denver Post Staff Writer

Washington - The developers of a proposed Indian casino near Denver negotiated "excessive compensation" in a lopsided deal with the impoverished tribes the casino is supposed to help, federal Indian casino regulators say.

The regulators deemed illegal the agreement between Golden developer Steve Hillard and the Cheyenne and Arapaho tribes of Oklahoma, putting the embattled casino proposal in even further jeopardy.

But Hillard said that the deal followed the tribes' wishes and that the rejection by the National Indian Gaming Commission is simply the first step in a negotiation process.

"The developer doesn't get paid a cent until the casino makes money," Hillard said, defending the plan. The gaming commission's rejection, he said, "is standard operating procedure for 'Come on in. Let's talk."'

The tribes and Hillard, head of a development group called the Native American Land Group, have proposed a casino with related development near Denver International Airport. But the project has been rejected by the U.S. Interior Department and Gov. Bill Owens.

Owens said the National Indian Gaming Commission's stance bolsters his case.

"This confirms that this is a bad deal, not only for the people of Colorado, but for the tribes as well," Owens said Monday.

The commission determination was issued internally in November but not made public until released this month to The Denver Post under a Freedom of Information Act request.

Calling the arrangement "quite troubling," the commission said the Native American Land Group limited its expenditures and risks while guaranteeing itself a big cut of the profits.

"The development agreement enables NALG to collect large amounts of money, over a potentially lengthy period of time, for doing nothing - performing no ongoing services for the tribes and ... giving the tribes nothing in return," wrote acting general counsel Penny J. Coleman.

Under the agreement, the Native American Land Group would receive 39 percent of the casino's net revenues during the first six years and 29 percent over the six subsequent years. After 12 years of operation, all of the profit would go to the tribes, whose members' per-capita income averages less than $9,000 a year.

The commission said that percentage amounts to an ownership interest in the proposed casino, which is not allowed under the Indian Gaming Regulatory Act.

Hillard said regulators prefer agreements that give developers a portion of total revenue before expenses. But tribal leaders wanted an agreement in which his company got paid only out of profits.

"We think it's a much better deal for the tribes," Hillard said.

Attempts to reach tribal leaders were unsuccessful.

The Native American Land Group is composed of Hillard's Golden-based Council Tree Communications; the Arctic Slope Regional Corp., a $1 billion-a-year Alaska native corporation; three other native corporations; and several private equity firms.

Hillard said he and the tribes will negotiate further with the commission after filing new claims with the Interior Department in the next two months or so.

The tribes claim 27 million acres in Colorado but offered to give it up for the rights to buy land for a 500-acre reservation for the casino. Interior rejected the claim in September.

"We're on exactly the same plan as we were on Day One - which is to move patiently forward," Hillard said.

Staff writer Mike Soraghan can be reached at 202-662-8730 or msoraghan@denverpost.com.

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