March 5, 1998

Phoenix companies sues Muckleshoot Indians over casino dispute

SEATTLE (AP) -- The Muckleshoot Indian tribe has been accused in a lawsuit of using a clerical error to dump an Arizona company that financed, built and managed a casino on the reservation near Auburn.

The case filed by Capital Gaming Management Inc. of Phoenix in U.S. District Court says the company was cut out of two years of profits from the operation, now being run by the tribe, and seeks $50 million in damages.

Tribal gaming officials did not return phone calls Tuesday, and the tribe's lawyers would not comment.

Capital Gaming also manages casinos for the Tonto Apache Tribe in Payson, Ariz., and the Umatilla Tribe in Pendleton, Ore.

An initial hearing on the Muckleshoot case is scheduled June 12 before Judge John C. Coughenour.

Indian casinos in the state are not required to reveal their income, but the suit said the Muckleshoot casino had $61.3 million in gross revenues and $30.1 million in net revenue last year, a 49 percent profit margin.

The dispute arose after Capital gaming missed a state license renewal deadline and was fired Jan. 30 by the tribal gaming commission.

"This is the most easily proven case of breach of contract, bad faith and defamation that I have ever seen in my career as an attorney," said William Papazian, general counsel and senior vice president at Capital Gaming.

Missing the deadline "was really just an oversight," said Carrie Tellefson, director of policy, planning and support at the Washington State Gambling Commission. "If they hadn't missed that, there wouldn't be a problem with them getting a license.

"Our agency sent a letter to Capital to say they are in good standing and certifiable. The technicality in Washington state is that to be certified you have to have a tribe that's willing to certify you.

"Apparently the Muckleshoot Tribe wasn't willing to do that."

Capital Gaming designed and built the casino, putting up $10 million in cash. Under a management contract signed in 1995, the company trained casino personnel and set up gambling and security systems in exchange for 3.9 percent of gross revenues until 2000, when the the operation was supposed to be turned over to the Muckleshoots.

The contract specified that the tribe would waive its sovereign immunity from lawsuits in case of disputes, Papazian said.