Harrah’s Entertainment Could Be Saddled With Another $2.8 Billion Debt

10.29.2007 | 8:12 pm | News, casinos

While currently in the process of being acquired by a number of private equity buyers, the takeover of Harrah’s Entertainment could cost proposed joint owners Apollo Management and Texas Pacific another $2.8 billion in increased debt.  The potential debt relates to a lawsuit started in 2000, which may result in the debt element of the takeover increasing to some $16.7 billion!

The lawsuit was original taken out by the St. Regis Mohawk Tribe of New York in 2000, and relates to a deal which Harrah’s Entertainment signed under its former name, Park Place.  The Mohawk Tribe claim that the joint venture casino agreement they signed was a way of keeping the Mohawk Tribe away from Harrah’s Entertainment’s four Atlantic City casinos. 

In a move which caused much controversy in the States, the Mohawk tribal court awarded the St. Regis Mohawk Tribe of New York $1.8 billion in damages and an additional $1 billion in interest.  While Harrah’s Entertainment do not recognise such Tribal Court rulings, the Mohawk Tribal Court are currently attempting to ratify the award through the federal courts.

This saga yet again brings the Tribal governance issue to the forefront of the political agenda, just ahead of next years presidential elections.  In what could potentially become a political “hot potato” all parties involved will be wary of upsetting either side of the argument.   Is the ruling correct? Is the ruling valid under US legislation?

These are all questions which need answers, as the unique Tribal casino agreements throughout the US come under further scrutiny.  This is yet another chapter in the history of the US casino industry which looks like being dragged through the courts, under the full public glare.  This case has been ongoing for some seven years, and nobody is holding their breath for a swift settlement of the issue.