CONCHO — A shift in political power has led the Cheyenne and Arapaho Tribes to drop ties to PokerTribes.com, a multimillion dollar website that could have paved the way for online gambling in Oklahoma.
Incoming Gov. Eddie Hamilton, whose official capacity is in dispute while the tribe struggles with a divided government, recently replaced several high-ranking casino personnel and an attorney general who were involved in PokerTribes.com. The tribe paid $9.5 million for the website, which isn't currently active.
He also directed attorney Richard Grellner to stop pursuing a lawsuit seeking approval to operate the site. Grellner filed the lawsuit Dec. 26 in federal court in Oklahoma City against the U.S. Department of Interior; court records show it's pending.
Based in Concho, the tribe of 12,000 people operates four casinos, including Lucky Star Casino, which has locations in Concho and Clinton.
Changes in leadership
In a letter to tribal members and published in The Cheyenne and Arapaho Tribal Tribune, Hamilton said management changes include the departure of Lucky Star's chief executive officer, chief operating officer and two others, as well as an attorney general for the tribe who facilitated the PokerTribes contract.
Hamilton said the changes were not related to the website but instead represent a “shift in business and tribal strategy and philosophy.”
He vows in the letter to better handle money belonging to the tribe, which has been plagued with financial troubles in recent years. “We have put a stop to wasteful spending of our tribal monies. We will be evaluating the best way to use resources such as lobbyists, lawyers, advertising companies and entertainment groups,” Hamilton wrote.
And despite spending millions on the PokerTribes website, the tribe is abandoning the project.
“The Cheyenne and Arapaho Tribes are not affiliated with or pursuing any partnership with PokerTribes.com. With regard to the $9.5 million investment made by the previous administration, we are exploring our options with our leadership team, tribal council and legal advisers,” he wrote.
Did politics pull the plug?
Isaias Almira, managing director of Universal Entertainment Group, which created the site, said having the tribe drop the project could damage his firm's credibility, not to mention waste millions of dollars.
“We spent close to $40 million on this project. The Cheyenne and Arapahos spent close to $10 million on this project. And due to the political agenda taking office, they are destroying everything. It just doesn't make sense,” he said.
The money was used to pay employees to create the complicated software required to run the site. Source codes had to be written in many languages to support international players. The domain name PokerTribes.com was expensive due to its popularity, he said. And a server hosting facility was built inside Lucky Star Casino at a cost of $500,000.
The tribe is now threatening to sue his company, Almira said — something Hamilton hinted at in his statement.
“It's not right what they are doing. It's not like we sold them phony software or a phony website that doesn't exist,” Almira said. “We did everything right for them.”
The last hurdle
The tribe paid Universal Entertainment Group $9.4 million for PokerTribes.com, which was available to players in the U.S. until the state intervened. Gov. Mary Fallin later agreed to allow the website to operate only with international players, with the state receiving a percentage of the revenue like it does from brick-and-mortar casinos under its tribal gaming compact.
By tapping an international audience, PokerTribes was estimated to generate $132 million annually by 2018, according to court documents. That would have added millions to state coffers.
Several casino officials attempted to tap into the money and were personally written into the contract, which was provided to The Oklahoman. Charlie Morris, who was employed by the tribe as attorney general and collected a $100,000 fee — half from the tribe, half from Universal Entertainment Group — for negotiating the contract was also set to receive 1 percent of the annual revenue, according to the documents. That provision was not found in a later version of the contract, Grellner said.
Darrell Flyingman, a former governor of the Cheyenne and Arapahos who is fighting to be recognized as the tribe's current governor, filed a lawsuit against Morris in tribal court to recover the $50,000 the tribe paid.
“I used to have faith in attorneys. And I had faith in Indian attorneys. I figured they would really look out for our best interests, but they don't. It's all money,” Flyingman said.
Flyingman has asked the FBI to look into the tribe's financing of PokerTribes.com. An FBI spokesman would not confirm whether the agency is investigating.
Brian Foster, former chief executive officer of the tribe's casinos, resigned from his post in January during the tribe's change in administration. He said PokerTribes had a lot of support within the tribe and in the state governor's office.
The Cheyenne and Arapahos are the only tribe in Oklahoma that has an agreement with the state to operate Internet games from tribal lands with international players.
According to a letter dated Dec. 9 from Oklahoma Gov. Mary Fallin's general counsel, Steven Mullins, to then-tribal Governor Janice Prairie Chief-Boswell, the state disagreed with the U.S. Department of the Interior, which blocked the deal and led to the lawsuit.
Grellner, who was representing the tribe in the lawsuit, said getting an injunction from the federal court was the final hurdle.
“They are at the very last step,” he said. “This is the most irrational decision I've ever seen.”
The tribe has a history of money troubles relating to the increase of revenue at its casinos. An FBI investigation resulted in the convictions of more than a dozen tribal officials for embezzlement between 2006-2010. In 2012, a Custer County district judge froze $6.4 million belonging to the tribe until its leadership dispute could be settled.