Tonkawa Tribe pays $2 million to settle lawsuit

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

The Tonkawa Tribe of Oklahoma has paid $2 million to a Las Vegas gaming management company that alleged in a lawsuit the tribe violated management agreements with the company when it took over control of two tribal casinos in north-central Oklahoma and barred company employees from them.

Gaughan Gaming, which had managed the Tonkawa Indian Casino in Tonkawa and the tribe’s City Lights Casino in Newkirk near the Kansas border since 2007, sued the tribe in March alleging that tribal officials forcibly evicted Gaughan and its employees from the casinos and took over their control.

An attorney for Gaughan, Mike McBride of Tulsa, said a settlement agreement was reached over the past week in U.S. District Court in Oklahoma City, before a panel of the American Arbitration Association and before the Tonkawa Tribal Gaming Commission.

“It was unfortunate that Gaughan had to pursue litigation and arbitration. But ultimately Gaughan prevailed and justice prevailed,” McBride said.

An attorney for the tribe, Gary Pitchlynn of Norman, said the tribe paid far less to Gaughan under the settlement agreement than the company would have received had it continued to manage the casinos.

“I don’t consider it a win for Gaughan Gaming,” Pitchlynn said. “They essentially settled for far less than what they were scheduled to make.”

He said the casinos have made more money and have been maintained better since the tribe hired its own employees to manage them. The casino management company’s license was suspended on Sept. 28, the same day the tribe ordered company employees out of the casinos.

“Everything has been good since then,” Pitchlynn said.

In its lawsuit, Gaughan claimed the Tonkawa Tribe breached management contracts and suspended the company’s license without cause and in violation of its own procedures. In connection with the settlement, the tribe dismissed efforts to suspend the gaming licenses of Gaughan and two key employees who had previously been cleared of wrongdoing by the National Indian Gaming Commission.

Gaughan officials said the company operated the Tribe’s casinos for more than three years, making well in excess of $52 million for the tribe. Gaughan’s management agreement said the company would receive 30 percent of the casinos’ net profits as compensation for its services.

Gaughan’s contracts with the tribe were set to expire in July at the Tonkawa Indian Casino and in September 2012 at Native Lights.

John Gaughan, CEO of the company, said issues that led to the dispute originated with disagreements with a couple of tribal leaders.

“But we greatly appreciated the experience of working with the NIGC and helping the people of the Tonkawa Tribe. We wish those tribal members nothing but the best in the future,” Gaughan said.

Gaughan became involved with the tribe’s casinos after they were shut down by the NIGC in part because it did not have an approved management contract to operate the Tonkawa Indian Casino. Gaughan’s lawsuit said the company helped the tribe reopen the 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 said the tribe was placed on probation.