Seminoles sue to break ‚unconscionable‘ contract with Hard Rock Casino developers

The Seminole Tribe wants a judge to break what it calls an „illegal and unconscionable“ contract with the developers of the Seminole Hard Rock Hotel & Casino complexes, saying the deal negotiated by its leaders could cost tribe members USD 2 billion.

The filing in Broward Circuit Court said developer Power Plant Entertainment has been paid more than USD 310 million in the two years since the tribe opened new casinos in Hollywood and Tampa.

Power Plant is an arm of the Baltimore-based Cordish Company and Coastal Development.

The tribe contends that Power Plant stands to make more than USD 2 billion over the first 10 years of the contract for „doing absolutely nothing.“ Since the Hollywood Hard Rock opened in May 2004, Power Plant has „provided no services to the tribe,“ the lawsuit said.

Alan J. Kluger, the tribe’s attorney, said tribal gaming nationally has expanded rapidly in the past five years, and along with it laws and understanding of Indian agreements with developers. While the deal seems one-sided „in hindsight,“ it may have appeared reasonable at the time, he said.

„The tribal leadership isn’t taking this action because it is being greedy, but because it has a fiduciary duty to its members,“ Kluger said, adding the tribe will keep making payments of USD 18 million a month during the lawsuit. „Obviously, USD 1.7 billion or USD 2 billion is not reasonable.“

Representatives of the Cordish Company and Coastal Development could not be reached for comment. The companies formed Power Plant and developed massive hotel restaurant and retail facilities the tribe says generate revenues of more than USD 600 million per year.

The crux of the tribe’s contention is that Power Plant is being paid 30 percent of all gaming revenues as an „advisory fee,“ separate from its development fee and financing fees. Under tribal laws and the National Indian Gaming Regulatory Act, it is illegal for gambling revenue to go to a third party, according to the lawsuit.

The 3,000-member Seminoles, formed as a tribe more than 300 years ago and recognized by an act of Congress in 1957, are a protected class shielded by federal law from improper contracts and agreements.

„The tribe has fallen victim to just such an illegal and unconscionable contract which is resulting in wrongful enrichment of non-tribal members,“ the lawsuit said. „Such abuse against a protected people cannot be tolerated.“

The lawsuit marks a reversal for the tribe’s leadership, which has staunchly supported the deal even as it drew criticism from some tribe members and caught the attention of the Internal Revenue Service.

Last fall, Tribal Counsel James Shore said the „tribe believes the original deal with Cordish was fair,“ while acknowledging it was negotiating with Power Plant on a buyout.

In 1999, then-tribal Chairman James Billie began negotiating with Cordish to build high-end hotel and casino projects on Indian land in Broward County and Tampa. After Billie reached an agreement, he was suspended from the tribe following a protracted power struggle over a number of issues, including the Cordish deal.

The tribal council then amended the original agreement with provisions that further favored Cordish and could cost tribe members an additional $ 100 million, according to the lawsuit. The amendment shifted Power Plant’s „advisory fee,“ from 17 percent of gross revenues for 15 years to 30 percent of net gaming and non-gaming revenues over 10 years.

Both the agreement negotiated by Billie and the amendments made by council members after he left did not exclude the tribe’s already lucrative gaming profits. The tribe was making USD 250 million annually from its aging casinos in Hollywood and Tampa, meaning Power Plant still got 30 percent — USD 75 million — for casinos its didn’t build, the lawsuit said.