New deal with Bank of Oklahoma will save Quapaw Nation $55,000 per day in interest for Downstream Casino loan
In 2008, reporters and photographers were lined up to take pictures of the Quapaw Nation’s new Downstream Casino in far northeastern Oklahoma. According to an article published in The Joplin Globe, the 700,000 square-foot space was a marvel for its opulence, attention to detail, restaurants and 2,000 slot machines. The price tag: $301 million dollars.
But as of December 2021, the Quapaw Nation has paid down little of that debt because they were making interest-only payments amounting to $55,000 a day. That's the price of a home in Ottawa County, where the casino is located.
A new deal between the Downstream Development Authority and the Bank of Oklahoma will allow Quapaw Nation to refinance that debt to pay down the initial loan and cut their interest rate.
The casino was supposed to be paid off within 20 years, and former Chairman John Berrey touted the deal’s benefits for the Quapaw people, including housing and utility assistance.
But documents have emerged showing the Downstream Casino underperformed projections and had limited benefit to the tribal nation, in part because of the poor financing terms.
Quapaw Nation's Secretary-Treasurer Guy Barker said he and current Business Committee Chairman Joseph Byrd started looking at the project when they took office in 2020. An audit found Berrey was giving kickbacks and illegal bonuses. They also discovered the high interest rate and lack of return for tribal citizens.
"After more than a decade, it should have been generating revenue to fund tribal services. Instead, we were barely paying the interest on the loan, and our citizens didn't see the full benefit of their asset," said Barker.
He said it's hard for Native American tribes to secure traditional financing for large scale projects like casinos. Instead, they often have to resort to junk bond financing, which is risky and has a higher interest rate. However, after Downstream opened and leaders were able to show it was making money, they should have taken the opportunity to refinance. That didn't happen.
The new terms with Bank of Oklahoma Finance include a much lower interest rate of 3.25%, compared to the more than 10% interest Quapaw Nation was paying on the loan. The lower rate will allow the tribe to start paying down the principal.
The refinancing was made possible in part because the Quapaw Nation increased their credit rating from Moody's after a record profit in 2021 at Saracen, their luxury resort and casino in Pine Bluff, Arkansas.
Ben Blosch, a Cherokee citizen with more experience running gaming operations in Indian Country, is Downstream Casino's chief financial officer. He said without this refinancing, the Quapaw tribe would be stuck in a financial rut.
"As Downstream eliminates its debt, tribal citizens will be the beneficiaries, as they should have been years ago," said Blosch in a statement.
Barker said having people with experience is invaluable.
"My predecessors, for better or worse, had a number of faults, but they have no industry experience and corporate financing," said Barker.