"Over the last two decades Indian gaming has grown from a handful of modest-sized bingo facilities in a few states into a $26 billion industry with over 425 tribal gaming establishments operated by 230 tribes in 28 states, many such operations being large-scale casino destination resorts offering Class III gaming. Tribes and others (bondholders, bank syndicates, development/management companies) have leveraged significant investments to fuel this growth, betting heavily on the long-term success of the gaming projects.

In doing so, the question lurking in the minds of many investors (and seldom considered likely to need a definitive answer) has been: What happens if the bet goes bad? The recent credit freeze and recession has thrust this question to the forefront of the industry, particularly for creditors holding substantial Indian gaming debt. Like many issues involving the Indian gaming industry, the answer - and related issues - is yet to be discovered and is evolving with the law.

Commercial gaming debt restructurings are generally made against the backdrop of a well-defined and understood set of legal parameters (i.e. the U.S. Bankruptcy Code). But even here, there is some uncertainty as to the interplay of the bankruptcy laws and state gaming regulatory requirements.

Attempts to restructure tribal gaming debt will only add a number of other variables to the equation and impact several different interested parties (tribal operators, tribal members and casino employees, management companies, lenders/bondholders). Each of these will have a perspective about how the law should address tribal gaming debt restructurings that may, or may not, be consistent with the others."

Get the Story:
Tom Foley: Specter of Tribal Defaults Raises Unique Questions that Have Yet to Be Answered (Gaming Industry Media 6/2)