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Pauma-Caesars Casino Project Wasn’t in the Cards; Tribe Awarded $30M

An ill-fated business relationship, which in 2003 spurred talk of a Caesars-brand casino-resort going up on the Pauma Indian reservation in North County, has degraded to the point of a jury’s Dec. 1 decision to award $30 million in damages to the Pauma tribe.

And the fight is not over.

The proposed venue, dubbed Caesars Pauma in 2003, was to be an expansion of an existing casino run by the Pauma Band of Luise & #324;o Mission Indians. At roughly 1,000 slot machines, Casino Pauma is small compared with other San Diego County casinos, many of which have 2,000 slot machines or more.

However, the vision of Caesars Pauma got muddier in July 2004 when another large gaming company, Harrah’s Entertainment, announced plans to buy Caesars Entertainment.

Complicating the situation was the fact that Harrah’s operates a casino on the Rincon Indian reservation, also in North County and a short drive from the Pauma casino.

“There was a conflict in Harrah’s operating both the Rincon resort and the Pauma project,” according to a statement released by Pauma’s attorneys on the day the jury reached its verdict. “Pauma alleged that Harrah’s and Caesars took steps to kill the Pauma deal to avoid suit by Rincon.”

When it was apparent the deal was over, Pauma sought new business partners. It also sued Caesars’ new parent company in May 2005 in San Diego Superior Court.

On Dec. 1, a jury returned a verdict against the new parent company, Harrah’s, awarding Pauma $8 million for lost profits and $22 million for increased construction costs.

“Harrah’s Entertainment is disappointed in the verdict announced today in the Pauma Band of Luiseno Indians v. Caesars Entertainment lawsuit,” said a written statement issued through Harrah’s corporate office.

“We believe the decision is not supported by the facts or the law. Harrah’s will aggressively appeal this decision.”

Las Vegas-based Harrah’s Entertainment , a Fortune 500 company that reported $7.1 billion in revenue during 2005 , completed its purchase of Caesars in June 2005 for $9.3 billion, including the assumption of debt.

Since the start of 2005, Pauma has announced deals with two other partners.

In February 2005, Pauma announced it would put up a new casino and a 300-room hotel in partnership with the Hard Rock Hotel & Casino organization.

Then in June 2006, Pauma announced a different deal.

The new deal involved teaming up with the Mashantucket Pequot Tribal Nation. The American Indian tribe operates Connecticut’s Foxwoods casino , one of the biggest and most successful casinos in the country. That deal calls for a new casino and a 500-room resort hotel. At the time, the partners said their project would be up by spring 2009.

Pauma’s tribal chairman, Chris Devers, did not return a call for comment on this story.

Pauma has been represented by Hulett Harper Steward LLP of San Diego. Harrah’s has been represented by Dorsey & Whitney LLP of Minneapolis and Irvine.

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