Gaming money OK’d

By Kathy Helms
Diné Bureau

WINDOW ROCK — The Economic Development Committee approved legislation Wednesday which would authorize the Navajo Nation to commit to a $100 million loan from JP Morgan Chase to establish gaming on the reservation.

The legislation must be approved by the Navajo Nation Council.

Derrick Watchman of JP Morgan Chase told the committee that, a couple years ago, the Office of the Controller issued a request for proposals, looking for banks to submit qualifications and experiences for financing Navajo Nation projects, in particular gaming.

“After a rigorous RFP process, the Controller’s Office selected my bank, JP Morgan Chase. So with that, we’ve been working with the gaming team and putting together a term sheet ... that pretty much we’re all agreeable to,” Watchman said.

“JP Morgan Chase is in agreement and willing to commit $100 million for gaming projects of the Navajo Nation. In my portfolio, we have over $2 billion in gaming assets that we manage around the country, so our experience is quite extensive,” he said.

Watchman, who is also a member of the Navajo Tribal Utility Authority Management Board, said he has been at the bank for five years, has done several dozen Indian gaming transactions, and knows how to finance gaming projects within Indian Country.

“Looking at this particular structure, it was decided to go with a bank loan to the tribe as opposed to a loan for gaming enterprise, for a couple reasons. One, the Nation has a very solid and high-balance assets account.

“The Nation has a balance of about $2 billion. So with that, there’s enough credit volume there to allow for the Nation to issue $100 million in credit line so it can support a gaming operation,” he said.

“What’s being contemplated in our proposal is that the council would approve the resolution and the term sheet, and thereafter, the controller, the president and the Attorney General’s Office would go into detail and then negotiate the final loan document.”

He said there is a whole series of documents that have to be negotiated before council authorizes the president to have the final sign-off.

However, before he could go into further details regarding the proposed terms, Delegate Ervin Keeswood, who was on hand to assist presenters, requested the committee go into executive session.

Earlier in the day, Eddie Lockett, director of the Navajo Gaming Regulatory Department, said the Nation also is exploring the possibility of establishing Class II gaming, or bingo, at the Aneth Chapter in Utah.

“Published newspaper articles, advertisements, along with a recent report from the National Indian Gaming Commission, indicates and reflects that there is, in fact, bingo-based activities and other gaming-like activities in the state of Utah as we speak,” Lockett said.

“Our understanding is there is no regulation and no enforcement that is taking place at this particular time. These facilities are set up and (are) similar to Native American bingo halls that they actually have there.

“Some halls have electronic machines for the devices and some of these halls, you go in and you purchase like a cellular phone card for Internet access,” he said. There is no formal surveillance, with the exception of one surveillance camera over the cash register.

“We do know that we have two larger facilities that are actually there and operating in the Salt Lake area, and that the owner that is actually overseeing these operations has been in business for an estimated period of time of about 30 years,” Lockett said.

The owner has been citing a 1979 court case to justify the ability to operate. Other facilities observed offered poker and video poker, “which was openly unimpeded by any type of enforcement action,” Lockett said.

“The fact that these clubs exist and operate openly within the state of Utah led to an inquiry by the Aneth Chapter as to whether or not some type of foundation could be afforded should the Nation see fit to permit them to have that,” Lockett said.

“After consulting with the chapter and the National Indian Gaming Commission, as well as other individuals, the Navajo Regulatory Office determined that it would be appropriate to explore further this matter to see if there is opportunity for foundation with respect to Class II gaming.”

Lockett said he is awaiting a response from the National Indian Gaming Commission. “Depending on what that response is, what will happen is there will be a very small delegation that will make a request to the state of Utah to discuss this matter with us, and to see where we stand with it and where they stand with this issue,” he said.