Proposed Catawba casino for NC has momentum, but many hurdles still to overcome

Proposed Catawba casino for NC has momentum, but many hurdles still to overcome

A rendering of the Catawba tribe’s proposed casino and resort, which would be built near Kings Mountain

A proposed casino resort near Kings Mountain could be a jackpot for the Catawba Indian Nation, based just over the border in Rock Hill, SC. Consideration of the controversial project has already provided a boon to state and congressional Republicans connected to the project.

But legislative and regulatory hurdles remain for the $273 million, 17-acre project, including a lawsuit filed by the Eastern Band of Cherokee Indians, which already operates two casinos in the state and views the Catawba proposal as improper and illegal competition.

And the ultimate decision could still lie with Gov. Roy Cooper.

Seven years and two governors ago, the Catawba decided they want their own casino resort, one similar to the Harrah’s Cherokee Casino Resort, 135 miles away. But because of the two tribes’ differing histories with federal authorities and their respective state governments, the Catawba were stymied.

The Catawba lost federal recognition as a tribe in 1959. They began petitioning to regain that recognition in 1973; the effort took 20 years, ending with the Catawba Indian Tribe of South Carolina Land Claims Settlement Act of 1993. Under that settlement, the tribe gained recognition, along with $50 million for economic development, land acquisition, education, social services and elderly assistance.

But in return, the Catawba relinquished claims to land the tribe said was stolen by the state of South Carolina.  It also agreed to be excluded from the Indian Gaming Regulatory Act — a law that determines how tribes can open and operate lucrative casinos, the revenues from which have helped many Indian communities to rebuild and acquire a measure of economic prosperity.

Instead, the Catawba agreed to be bound by the more restrictive Settlement Act and by the laws of South Carolina. That put the tribe in a unique — and uniquely disadvantageous — position. Of the nearly 600 tribes recognized by the federal government, the Catawba are the only one headquartered in South Carolina. And that state has been resistant to Class III gaming — where the real money is.

Games of chance and gamesmanship

The heart of the problem lies in the different classes of gaming allowed under the Indian Gaming Regulatory Act.

  • Class I is limited to social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as a part of, or in connection with, tribal ceremonies or celebrations.
  • Class II expands that to allow bingo games — live and electronic.
  • Class III is essentially all other gambling — high stakes card games like poker, blackjack, baccarat, video machines simulating any of those games, and slot machines. Class III is what most people think of when they imagine a casino — games available in places like Las Vegas and Atlantic City.

The Catawba have tried several times to turn a profit with the Class II bingo parlors allowed under South Carolina law, but so far have been unsuccessful. The tribe sued South Carolina for the right to operate video poker machines, but ultimately lost that fight at the state Supreme Court level. The U.S. Supreme Court declined to take up the case.

Unable to conduct the kind of gaming it wanted in South Carolina, the tribe shifted its strategy. Under the 1993 settlement, the tribe’s “service area” includes not only the state of South Carolina, but also the North Carolina counties of Cabarrus, Cleveland, Gaston, Mecklenburg, Rutherford and Union.

If the Catawba could acquire land and build a casino within that service area in North Carolina, the tribe wouldn’t need to take on the enormously complex task of establishing a separate reservation in the state. They’d be positioned to take advantage of North Carolina’s record of having a more lenient stance toward Class III gaming, building on the success of the Cherokee casinos.

“They can argue that if it’s within that service area, if it’s close enough to their headquarters, then their people can commute to the area to work,” said Cheryl Schmit, director of Stand Up For California, a nationally recognized nonprofit organization that focuses on gambling issues including Indian casinos in that state.

The proposed site for the Catawba Two Kings Casino Resort near Kings Mountain is less than 50 miles from the tribe’s headquarters in Rock Hill. Moving into North Carolina could provide a path to conducting Class III gaming. But even if it could operate here, the tribe would still be bound by its1993 agreement.

At least that’s how it looked before the tribe took a number of recent steps:

North Carolina House Speaker Tim Moore (R-Cleveland), a Cleveland County attorney, has also represented developers involved in the project, though he has recused himself from discussion of issues related to the Catawba in the General Assembly.

“Gaming is always both legal and political,” said Schmit. “It appears to me that the Catawba have lined up the political part very well. It feels like they have, so to speak, the trump card.”

But the tribe may not have either the political or legal ends tied up just yet.

Conflicts and compacts

The casino project faces stiff opposition from the Eastern Band of Cherokee Indians, a tribe that had its own struggles in opening its casinos in North Carolina.

The tribe now operates Harrah’s Cherokee Casino Resort in Cherokee and Harrah’s Cherokee Valley Resort in Murphy. The Catawba’s proposed casino could cut into the Cherokee revenues, especially since it would be near King’s Mountain. That’s just 35 miles from Charlotte, the state’s largest and wealthiest city. The Cherokee and Murphy casinos are about 165 miles and 220 miles from Charlotte, respectively.

At a U.S. House subcommittee hearing that examined the proposed legislation last week, Richard Sneed, principal chief of the Eastern Band of Cherokee, offered a scathing assessment of the plan and, in particular the involvement of Cheves — a controversial figure with a history of criminal and civil enforcement actions against him that involve illegal gambling, money laundering and the operation of illegal sweepstakes gaming in South Carolina.

North Carolina Republican Congressman Mark Walker also seemed to echo many of Sneed’s concerns about potential corruption, as he made inquiries about possible conflicts of interest with the plan.

Even if Congress and the president were to approve the legislation, at least two major hurdles would remain.

First, the Cherokee are suing in federal court to block the Catawba project. As Chief Sneed told the congressional subcommittee last week, the Cherokee believe the 17 acres on which the casino is to be built are ancestral Cherokee land. The Cherokee also believe the manner in which the casino was approved defies established law and precedent.

And even if the Catawba prevail in that suit, the Indian Gaming Regulatory Act still requires tribes to negotiate a gaming compact with the governor of the state in order to engage in Class III gaming. Former Democratic Gov. Jim Hunt refused to sign a compact with the Eastern Band of Cherokee Indians in the 1990s. Only after fighting the state in federal court did the Cherokee open their first casino in 1997.

Gov. Roy Cooper opposed the Catawba project when he was the state’s attorney general. His predecessor in the Governor’s Mansion, Republican Pat McCrory, did as well — though he eventually agreed to consider a deal on the casino.

But if everything else falls into place, the Indian Gaming Regulatory Act could force Cooper’s hand.

Under the act, if the tribe believes the governor has not or will not negotiate in good faith, it can take the matter to court. If a court finds that the state has not negotiated in good faith, it can order the state and the tribe to negotiate a contract within 60 days. If the two parties can’t agree in that window, the court can order them into mediation.

It’s generally better for a governor to negotiate rather than lose leverage by being thrown in mediation, Schmit said. With a court or mediator deciding the issue, the state might not get concessions it might have been able to successfully negotiate.

“So the clock may not have started yet, if there’s legislation and this lawsuit,” Schmit said. “But once that’s out of the way, it will start.”

Policy Watch reached out to the governor’s office by phone and email this week to ask about any potential negotiations. The governor has not yet responded.