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Gaming firm sues Tonkawa Tribe over casino control

By Tim Talley
Oklahoma City, Oklahoma (AP) March 2011


A Las Vegas gaming management company sued the Tonkawa Tribe of Oklahoma last week, alleging tribal officials violated management agreements with the company when they took over control of two tribal casinos in north-central Oklahoma and barred the firm’s employees from them.

Gaughan Gaming, which has managed the Tonkawa Indian Casino in Tonkawa and the tribe’s City Lights Casino in Newkirk near the Kansas border since 2007, filed the lawsuit in Kay County District Court claiming the tribe broke the management contracts when it forcibly evicted Gaughan and its employees from the casinos and took over their control.

The lawsuit requests an injunction to stop the tribe’s gaming commission from summarily suspending Gaughan’s gaming license and to return control of the tribe’s casinos to Gaughan. A hearing on a request for a temporary restraining order is set for this week before Kay County Associate District Judge Philip Ross.

An attorney for the tribe, Gary Pitchlynn of Norman, said a dispute involving alleged breach of contract by Gaughan resulted in suspension of its tribe-issued gaming license for the Tonkawa casinos. The license was suspended on Sept. 28 – the same day the tribe ordered company employees out of the casinos.

“There is a continuing arbitration going on,” Pitchlynn said.

The company’s attorney, Jimmy Goodman of Oklahoma City, said its gaming license with the tribe was suspended without the legally required hearing. Goodman declined to comment on whether tribal politics played a role in suspension of the license and removal of Gaughan’s employees from the casinos.

“We want the tribe to be forced to live by its agreement and leave us in there until this is resolved,” Goodman said. Gaughan’s contracts with the tribe expire in July at the Tonkawa Indian Casino and in September 2012 at Native Lights.

The lawsuit says Gaughan has helped finance the tribe’s gaming activities and that since the Native Lights Casino opened in 2006, the casinos have generated more than $52 million in net revenue for the tribe. Gaughan’s management agreement states that it will receive 30 percent of the casinos’ net profits as compensation for its services.

“Prior to the tribe’s forced eviction of Gaughan Gaming, Gaughan Gaming handled every aspect of the casinos’ operations, including without limitation advertising, marketing, employee-customer relations and game-play,” the petition states. “Each of these elements of the casinos’ operations ties directly to the casinos’ profitability and ultimately the net profits.”

The lawsuit says disagreements arose between Gaughan and the tribe early last year involving “stale and outdated disputes relating to events that occurred long in the past and have long since been cured.” Any unresolved disputes are subject to arbitration under the management contract, it says.

Gaughan notified tribal officials in August that it would seek arbitration to resolve disputes over its management of the casinos, but the tribe’s gaming commission cited them when it voted to suspend the company’s gaming license, according to the petition.

In February 2006, before Gaughan became involved with the tribe’s casinos, its gaming operations were shut down by the National Indian Gaming Commission in part because it did not have an approved management contract to operate the Tonkawa Indian Casino. The lawsuit says Gaughan helped the tribe reopen its gaming operations.

The tribe was fined $1 million by the Financial Crimes Enforcement Network, which found that large cash transactions at the Tonkawa Bingo and Casino were not reported, as well as evidence that organized crime figures had used the casino and off-track betting operation to launder money, according to the tribe’s website. The lawsuit says the tribe was also placed on probation.



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