The 7th Circuit Court of Appeals is due to accept briefs in the gaming bond case involving the Lac du Flambeau Band of Lake Superior Chippewa Indians of Wisconsin.

On behalf of bondholders, Wells Fargo Bank loaned $50 million to the tribe. The money was used to finance a casino and finance an out-of-state gaming project.

The tribe still owes $46.6 million on the bond but is unable to pay. Revenues at the Lake of the Torches Resort Casino have dropped and the out-of-state project failed.

The bank sued to recover the money on behalf of the bondholders. Judge Rudolph T. Randa rejected the arrangement, saying it rose to the level of a gaming management agreement, as that term is defined by the Indian Gaming Regulatory Act.

But since the deal wasn't approved by the National Indian Gaming Commission, it can't be enforced, Randa ruled in January. The decision is believed to be the first of its kind in Indian Country.

“There is money out there to invest, but I think the investment community is going to take a much harder look at all aspects of a project and the financing,” Dennis Whittlesey, an attorney who has been involved in tribal gaming deals, told Bond Buyer.

Opening briefs to the 7th Circuit are due next month.

Get the Story:
Trustee Appeals Tribal Bond Ruling (Bond Buyer 5/26)

Related Stories:
Lac du Flambeau deal was unique in tribal gaming industry (5/12)
Bank appeals decision over Lac du Flambeau gaming debt (5/3)