The Catawba Nation Faces $125 Million Separation Fee for Casino Resort Partnership Dissolution
Posted on: October 12, 2023, 09:19h.
Last updated on: October 12, 2023, 09:20h.
The Catawba Nation, a federally recognized Native American tribe, may be required to pay a substantial $125 million separation fee to SkyBoat, LLC, a North Carolina-based firm, if the tribe decides to dissolve their partnership. The partnership involves SkyBoat financing and managing the tribe’s upcoming permanent casino resort. The Catawba Nation opened a temporary gambling facility, Two Kings Casino, in 2021, offering about 1,000 slot machines, following their federal recognition.
SkyBoat, a commercial real estate development firm led by Wallace Cheves, facilitated the Catawba Nation’s placement of their 17 acres of land in King County into the federal trust. This placement is a necessary requirement for a federally recognized Native American tribe to operate a casino on its sovereign land under the Indian Gaming Regulatory Act (IGRA). However, the National Indian Gaming Commission (NIGC) later notified the Catawbas that SkyBoat had too much control over their gaming activities, resulting in noncompliance with IGRA.
Costly Separation Fee
Wallace Cheves formed a subsidiary called SkyBoat Gaming to oversee the construction and management of Two Kings Casino and the future permanent resort, a $273 million investment. As part of their agreement in 2021, the Catawbas are obligated to pay a $125 million termination fee to Cheves. Catawba Nation Chief Brian Harris, who took office earlier this year, argues that the exit fee is unreasonable.
The NIGC found that SkyBoat, in violation of IGRA regulations, served as the primary point of contact for negotiating contracts with third-party vendors and managing construction payments for the temporary gaming facility.
Fee ‘Based on Air’
Seeking to dissolve the partnership and avoid daily civil penalties of up to $57,527, the Catawbas are facing a roadblock due to the $125 million separation fee. Catawba Nation Chief Brian Harris expressed concern that SkyBoat is stalling the casino resort project and preventing the economic and quality-of-life benefits it would bring to the tribe and the local community. Harris emphasizes the need for a fair deal that allows the Catawbas to fully enjoy the financial benefits of the project, create thousands of jobs, and generate tax revenue for local governments and the state of North Carolina.
“SkyBoat is holding hostage this casino resort project and all of the economic and quality-of-life benefits for our people and residents of the area,” Harris said in a statement. “We need a fair deal so we can realize the full financial benefits of the project, create 2,600 permanent jobs and hundreds of construction jobs, and provide local governments and the state of North Carolina with tax revenue and other investments under our compact.”
Chief Harris argues that the $125 million fee is not supported by any evidence or documentation provided by SkyBoat regarding potential revenue losses resulting from the termination of the partnership.
Currently, negotiations are ongoing to find an exit deal that satisfies both the tribe and SkyBoat. Chief Harris hopes to commence construction of the permanent casino early next year.