Choctaws cut 570 jobs, partial shutdown of casino

Published 12:23 am Wednesday, January 7, 2009

The Mississippi Band of Choctaw Indians says it will operate its Golden Moon Hotel and Casino only three days a week and is eliminating 570 non-tribal staff positions as part of a broad restructuring plan intended to save money.

Paul Harvey, president and chief executive of Pearl River Resort, the Choctaw enterprise that manages Silver Star Hotel and Casino and Golden Moon, announced the plan Monday.

Operational changes and layoffs come in response to the U.S. recession, a decline in gaming industry revenues and the over-expansion of Pearl River Resort relative to the size of its market, Harvey said.

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Beginning this week, Golden Moon will operate only on Fridays, Saturdays, and Sundays, he said. Letters are being sent to 570 non-tribal employees effected by the cuts, which will be applied over the entire resort operation, Harvey added.

The state does not regulate the Choctaws casino operations.

While revenues at Silver Star remain strong, Golden Moon has strained earnings since the day it opened in 2002, Harvey said, and the Golden Moon’s money woes have hampered the resort’s ability to fund services provided to tribal members.

“Silver Star was and continues to be a strong business. However, the decision to build the Golden Moon, championed by the prior tribal administration and resort management, has overextended the tribe financially,” Harvey said. “We just don’t have any way to determine when we will come off of this three-day operation. To say otherwise would be misleading.”

Harvey also said Ken Davie, general manager of Silver Star, the tribe’s original casino, has resigned. Davie will return to Connecticut, where he had served as the vice president of table games for the Foxwoods Resort Casino before his arrival at Silver Star.

“We have a tribal member who has some very good casino experience and we are going to have her…be the general manager of Silver Star,” Harvey said. “Susan O’Connell will remain the general manager at the Golden Moon.”

The tribe has been restructuring operations since Beasley Denson, who prefers to be called “Miko,” the Choctaw word for chief, defeated long-standing incumbent Phillip Martin in 2007.

Denson has sought to expand the Choctaws’ role in resort operations and has restructured management. No tribal members will be included in the staff reduction.

“It is not in our plan to lay off any tribal member today or in the future,” said Harvey, who was hired after Denson’s election.

Last year, the tribe hired a new chief financial officer and executive vice president and chief operating officer for Pearl River Resort. The Choctaws also hired O’Connell and Davie.

Martin, who was 80 when he sought re-election, had been chief of the 9,660-member tribe in east central Mississippi since 1979.

During Martin’s tenure, the tribe emerged from extreme poverty thanks in large part to the development of the sprawling resort with its casinos, Dancing Rabbit Golf Club and Geyser Falls water park. But Choctaw officials said the Golden Moon project under Martin was “poorly planned and based on a questionable feasibility study conducted by the now-defunct Arthur Andersen, an accounting firm with little experience in gaming operations.”

Arthur Andersen was convicted in June 2002 of obstructing justice for destroying Enron-related documents before the Houston energy company’s December 2001 collapse. A flawed jury instruction prompted the U.S. Supreme Court to overturn Andersen’s conviction.

Harvey said Andersen’s study was wrong in concluding the market could handle a second casino located directly across from Silver Star in rural Neshoba County.

“We have found historically, from 2002 when the Moon opened up, the bottom line … net profit has declined year after year after year, except for the one time the casinos closed on the coast (during Hurricane Katrina in 2005),” Harvey said. “To have two casinos with 5,000 gaming machines is probably not realistic and we are studying that right now.”

The casinos have more than 100 table games, 1,074 hotel rooms, 16 restaurants, and European spa facilities. Last year, the resort employed from 3,500 people to 4,500 in spring and summer when the two golf courses and its water park are busiest.

Harvey said Pearl River Resort is focused on replacing non-tribal administrative officials with tribal members. “A great day for me is when I can trade seats and we’ll have a tribal president and CEO,” Harvey said.