SC Native American tribe expected to cut ties with casino partner amid federal scrutiny
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ROCK HILL — Amid major leadership changes, South Carolina's only major Native American tribe is expected to cut ties with the company that helps operate its casino, ending business relationships that have led federal gaming regulators to threaten the Catawba Nation with fines and temporary closure of its North Carolina gaming hall.
Hundreds of Catawba Nation members came to the reservation east of Rock Hill over the weekend to discuss a National Indian Gaming Commission report questioning how the tribe allowed the Greenville company, Sky Boat, to maintain significant control over the development and expansion of Two Kings Casino without the proper regulatory approvals meant to ensure the tribe is the primary beneficiary of gaming operations.
Tribe members have turned sour on Sky Boat and subsidiary companies controlled by Greenville businessman Wallace Cheves that have developed and managed the casino, provided slot machines and leased the casino's parking lot. Tribe members are expected to vote on whether the tribe should continue its long-standing relationship with the companies.
Many tribal members told The Post and Courier they blame Sky Boat, which has been tied to the Catawbas since 2008, for the closure of the Catawba's high-stakes bingo hall in Rock Hill.
Efforts to reach Cheves were unsuccessful.
Cutting ties with Sky Boat would mean the Catawbas would have to build a parking deck, find a new manager and rent new slot machines for Two Kings Casino in Kings Mountain, N.C., located 45 miles northwest of the tribe's South Carolina headquarters. But it could also placate federal regulators, who found in an investigation that the Catawbas began operating before seeking the necessary approvals for several contracts with Sky Boat, which handed over too much power in expanding the current, temporary casino building.
If a motion to drop Sky Boat wins a majority of support from members at a weekend meeting, it could be the end of the Nation's business dealings with Cheves, who was named in a Wall Street Journal report calling into question arrangements between companies he controlled and the families of high-powered S.C. politicians.
Even if the motion doesn't get enough votes, two cousins running against each other to succeed the long-time Chief William "Bill" Harris both say they plan to mount a campaign to cut ties with Sky Boat after an election this summer.
Tribal leaders declined to say what plans the Nation had for operating the casino once they've ended their relationship with Sky Boat.
The Catawbas have estimated the casino could generate $150 million in annual revenue for the tribe within its first five years. It's unclear what financial impact ending agreements with Sky Boat will have on profits.
Bill Harris, a 67-year-old who's been involved in tribal politics for more than 20 years and helped win the long fight by the Nation to to build a casino on what it says is ancestral territory in North Carolina, will leave office in July.
The general election to name his successor begins this weekend with two of his distant cousins running to replace him, Jason Harris and Brian Harris.
Jason Harris, an assistant chief who's served on the tribe's executive committee for nearly 17 years, said if he wins the bid for chief, he would enter into an amicable settlement agreement with Sky Boat to ends the company's ties with the tribe.
Brian Harris, a member of the tribe's general council, views signing a settlement agreement with Sky Boat one last big check. Brian Harris did not say how he planned to get out of contractual agreements with Sky Boat, only that he thinks tribal government should end it immediately because of the federal regulator's findings.
The National Indian Gaming Commission said in a notice that the tribe failed to follow government protocols when it handed over decision-making control on expansion of the temporary casino.
The Catawbas and Sky Boat have filed an appeal to avoid facing fines that could top $57,000 a day or lead to temporary closure as the tribe seeks to end the last remaining agreement it holds with Sky Boat associated companies — the lease of casino's slot and video poker equipment.
Federal regulators, in their December notice, did not directly address the contracts between the tribe and companies tied to Sky Boat's Cheves and his development partners that gives the companies a 20 percent cut of gaming revenue from the casino's slot machines, Bill Harris said in a letter sent to members on Dec. 14.
A Wall Street Journal investigation this past summer found that the brother of U.S. Rep. Jim Clyburn, a high-ranking House Democrat from Columbia, and the husband of Nikki Haley, the former South Carolina governor and United Nations ambassador, did work for the tribe and received a small stake in the slot machine companies' share of gambling profits.
Also getting a share was Butch Bowers, a prominent Columbia attorney who represented South Carolina's past three governors and who the Associated Press previously reported was the lead negotiator for the tribe's management company during casino talks with the state of North Carolina starting in 2013.
If the Catawbas end their relationship with Sky Boat and partners, payments to South Carolina politicians' families and Bowers also will cease.
Bill Harris told tribal members in a letter they should not be concerned about the federal investigation.
"We would urge the Catawba Nation to not assume the media has the story right," the letter said. "We will defend the nation's integrity and appeal the notice of violation, but we are working to settle it as there is actually little in dispute."
At the moment, Two Kings Casino is housed in a series of temporary red modular buildings with 1,000 video slot machines and electronic table games. But the Catawbas have plans to build a permanent $300 million casino with 2,000 employees, 5,000 games and four restaurants inside a 29-story hotel that would feature a man-made river and waterfall in Kings Mountain.
Two Kings is located in North Carolina because the Catawbas, in exchange for federal tribal recognition, signed a deal nearly three decades ago that holds them to state, not federal, gambling laws in South Carolina. So casinos are not allowed on land in South Carolina, even on the Catawba reservation.
Still, Two Kings is just a five-minute drive from the state line, drawing many South Carolinians through its doors.
Reach out to Maggie Brown on Twitter at @MaggieAbrown_ or her personal cell phone 910-622-2477.
