Gambling Company’s suit against Narragansett Indians goes to Court

Wednesday, April 28, 2010


PROVIDENCE - A lawsuit that pits the Narragansett Indian tribe against its former gaming partner, Capital Gaming International LLC, is headed to trial.

At issue is $10 million, which the tribe borrowed from Capital Gaming back in 2001 when it was trying to open a casino in Rhode Island.

That didn’t happen, but the tribe began receiving a share of Twin River’s video lottery revenues in 2006, thanks to a bill that was passed in the General Assembly. Since then, the tribe has received approximately $2 million in gambling proceeds from the state, a windfall that Capital Gaming maintains has triggered the tribe’s obligation to repay its $10 million loan.

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Narragansett Indian Tribe

Capital Gaming has sued the tribe in Washington County Superior Court. In addition to allegations of monies owed, Capital Gaming claims the tribe had a duty under the terms of its promissory note to inform Capital Gaming when it started to receive gaming proceeds from the state.

But the Narragansetts disagree. In court papers, the tribe maintains that it isn’t required to repay Capital Gaming until it has opened a casino in Rhode Island.  Since this hasn’t happened yet, the promissory note hasn’t yet been triggered and no money is due.

“There’s no casino gaming revenue because there’s been no casino opened,” John Killoy, a lawyer for the tribe, has said.

As for the claim that they failed to tell Capital Gaming about the legislation that gave them a cut of Twin River’s revenues, the tribe has dismissed this as laughable, noting how much press coverage the issue received. The Narragansetts have also pointed out that the state law allotting them a portion of gaming proceeds prohibits the tribe from using the money to pay a pre-existing debt.

The state paid the tribe $674,130 in fiscal year 2009, $690,959 in 2008 and $583,228 in 2007, according to Rhode Island Lottery’s annual reports.

According to one of Capital Gaming’s lawyers, Paul F. Beckwith of Cooley Manion Jones LLP of Boston, recent efforts to settle the case have failed. The case is expected to go to trial as soon as a judge is assigned to hear the case.



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