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Gaming revenue steady on White Earth, but Star Lake takes a big bite

The Shooting Star Casino in Mahnomen is still the main driver of gaming revenue for the White Earth Nation. File photo1 / 2
A view from inside the front entrance of the Shooting Star Casino. Submitted photo2 / 2

The White Earth Nation made nearly $10 million this year from its casino operations in Mahnomen and Bagley, but it will write off nearly $6 million in costs for its aborted casino project at Star Lake in Otter Tail County.

The gaming income is used for tribal operations, it is not distributed among tribal members.

The White Earth Band made $9.8 million from its casinos in fiscal year 2018 (which ended Sept. 30) with most of that coming from its flagship operation: The Shooting Star Casino in Mahnomen made $8.9 million, while the smaller Bagley casino earned $971,000, according to a report from White Earth Secretary-Treasurer Alan Roy.

Tribal gaming operations reported $120.4 million in revenues, along with $110.7 million in expenses. The amount left over is the $9.8 million in profits.

Looking ahead to the 2019 fiscal year, Roy expects gaming profits to rise by about $900,000, to $10.7 million — mostly due to higher revenue forecasts.

The tribal gaming budget currently has cash reserves of about $19.5 million, Roy reported. This includes cash carryover from previous years. The total cash on Sept. 30, 2017, at the end of that fiscal year, was $17.6 million. "So we grew cash reserves by about $1.9 million," Roy said. "But this doesn't include tribal transfers."

The tribe transferred $9.7 million from gaming in FY18 to sustain the general fund, otherwise reserves would have grown by $11.3 million, he said. Similar transfers are expected in 2019.

The Bagley Casino continues to experience increased revenues and net income, earning $9.7 million in revenue through Sept. 30, with expenditures of about $8.7 million, for profits of $971,000.

Financial audits from Brady Martz & Associates are now underway. The report is required to be sent to the National Indian Gaming Commission no later than Jan. 28. "Currently the auditors have not found any discrepancies," Roy said, as was reported to him by Jay Welsh of Brady Martz and Associates on Dec. 5. "If there are issues, the report will highlight those areas," Roy said.

The Tribal Council earlier this year decided to kill the controversial Star Lake Casino project and is now taking its financial lumps: There will be a $5.8 million reserve taken in Fiscal Year 2018 as an extraordinary item for the write-off of expenditures related to terminating the Star Lake Casino project, representing costs related to the Environmental Assessment Worksheet, engineering and architectural plans for the casino, infrastructure planning and related financing and construction preparations — including $428,000 spent on a new electrical substation, as part of a $2 million agreement with electrical cooperatives.

The Tribal Council is disputing the Electric Service Agreement with Lake Region Electric Cooperative (the local provider) and Great River Energy (provider of power to Lake Region).

The agreement was signed in the spring of 2016, and includes $2 million tribal Letter of Credit with these entities.

So far, the tribe has paid about $428,000 towards the substation construction, independent of the letter of credit. The remaining amount due on the letter of credit is about $1.2 million and it was presented for payment by the energy cooperatives and paid by Bremer Bank on Dec. 3. The tribe has since passed a resolution calling for arbitration under the agreement.