Jamul Casino

Well, it looks like the Jamul Indian Tribe has secured financing to build their casino:

Lakes Entertainment, Inc. Announces Signing Development Financing and Services Agreement with Jamul Indian Village

MINNEAPOLIS — (BUSINESS WIRE) — March 31, 2006 — Lakes Entertainment, Inc. (Nasdaq:LACO) today announced that it has signed a development financing and services agreement with the Jamul Indian Village, a federally recognized tribe located near San Diego, California. This agreement will help assist the Jamul Tribe in developing a first class casino with related amenities/services on its existing six acre reservation which the Jamul Tribe will manage ("Casino Project").

Under the terms of the agreement, in addition to providing development design and construction oversight, Lakes will also advance to the Jamul Tribe sufficient sums to finance the design and construction of the Casino Project. Lakes will receive a flat fee of $15,000,000 for its development design services, and a flat fee of $15,000,000 for its construction oversight services. Each of these fees will be payable to Lakes evenly over the first five years after the opening date of the Casino Project. In connection with Lakes financing of the Casino Project, the Jamul Tribe will pay interest over a ten year period on sums advanced by Lakes equal to the rate charged to Lakes for obtaining the funds necessary plus 5%. Sums previously advanced by Lakes to the Jamul Tribe in connection with the Tribe’s proposed casino resort on land adjacent to the reservation are to be included in the financing for the Casino Project. Tim Cope, President and Chief Financial Officer of the Company stated, “We are extremely excited for the Jamul Indian Village as they take another step forward to achieving economic self-sufficiency. Designing, building and financing a large first class casino on their existing Indian land presents a tremendous opportunity for the Jamul Indian Village and our Company. We look forward to immediately starting the architectural plans and anticipate beginning construction within the next twelve months."

I’m not an expert on corporate finance, and especially not in the gambling industry — but I do know something about it (I was once the CEO of a public company, and I’m generally an entrepreneurial sort). This is a strange sort of deal. The two $15M flat fees seem outrageously exhorbitant, and they’re covering activities that would normally be billed hourly. The big, round numbers and huge amounts add up, basically, to a way to spin a large fee — I’d guess the PR folks think that’s more palatable to someone (I’m not sure who they care about pleasing). The rest of it (the construction cost) is structured as a straight loan, at cost plus 5% — which today would mean a 9% or 10% rate. Again, that’s outrageously high, and suggests one of several things: a large risk being covered by the large rate of return, an awesomely naive customer, or a downright desperate customer who can’t get financed anywhere else.

If you’re a regular reader, you know my stance on the casino: I hate the very idea of the thing, and I hope like hell that it won’t be built. But after reading this press release I can’t help but feel sorry for the Jamul Indian Tribe — because this deal stinks to high heaven. It looks to me like they’re being taken to the cleaners on this one…

Which is just one more reason to hope that the Jamul Casino is stopped…

Breaking the Law

Certainly I won’t argue that crossing the U.S. border without permission isn’t illegal. An interesting fraction — the more rabid — of the anti-immigration crowd stops thinking right there: it’s illegal!, they holler. Punish them! Don’t reward them with the right to stay here! End of story.

Personally, I don’t think the story ends there, and I don’t think it’s quite so simple. For starters, our immigration laws are a complete mess — a ludicrous mish-mash of stupidity, racism, failed initiatives with good intentions, failed initiatives with bad intentions, and a general lack of anything constructive, useful, or even moral. I have next to zero respect for our immigration laws, and even less for our lame “enforcement” of them.

Daniel Henninger of the Wall Street Journal touched on something close to this in a column today:

From Bastiat Knows What Frist Doesn’t About Immigration by Daniel Henninger:

Another 19th-century Frenchman close to the hearts of American conservatives is Frederic Bastiat, who had a further thought: “The surest way to have the laws respected is to make them respectable.” Is our immigration law “respectable"? Need you ask?

America is a nation of laws by now so numerous that it provides jobs for more lawyers per capita than any nation on earth. They serve as legal lifeguards, saving mostly honest citizens from the legal system’s capricious undertow. Medical malpractice and asbestos are two areas of law for which “respect” is about zero. A law’s existence requires compliance, but not respect.

Some of the anti-Mexican sentiment likely reflects an embarrassed awareness of our degraded laws, and so it has chosen to draw a line in the legal sand over immigration. That won’t change the fact that U.S. immigration law is a disrespectable morass.

Swaths of American business openly ridicule the immigration law regulating so-called H-1B temporary visas for highly skilled non-citizen engineers and computer scientists. This controversial boom-and-bust employment morass exists because there is no rational system to give permanent, green-card status to these non-citizen workers and their families. Insisting on “respect” for a law that is doing damage to the nation’s economy is cutting off one’s nose to spite one’s face. That is a bad habit.

The immigration law asking for respect is simply a system of legislated quotas, not much more than a numbers game. The people who play this game — anyone seeking entry to the U.S. for a spouse, sibling, child or worker — make monthly visits to the State Department’s Web-based Visa Bulletin. Have a look; it actually resembles a bingo card.

What he said.

Those of you who live far from a border may not realize just how dumb our “border control” is. I’ve lived within a few miles of the Mexican border for over 30 years, so I’ll claim some personal knowledge of how we deal with our border enforcement. Over that period we’ve changed our laws and our policies considerably — and nearly always in a way that makes them less sensible and less…respectable.

Just to pick on one example: several cities in San Diego County have enacted so-called “sanctuary laws", basically forbidding the police (or any emergency workers) from even asking about a person’s immigration status — much less actually enforcing U.S. law. And the U.S. Border Patrol is forbidden (by policy) from enforcing immigration laws outside the immediate border area. The illegal immigrants know exactly what cities have sanctuary laws, and of course they know that in those cities they are completely safe. Would you — do you — respect such a law and enforcement policy? I don’t.

It reminds me a bit of our laws and enforcement policies on speeding. It’s very clear to any motorist that enforcement of speeding laws is haphazard, and equally clear that in certain circumstances they are completely ignored. Just to pick on one local example: the traffic in the I-5 corridor through Camp Pendleton (which I used to commute on weekly) routinely runs at 80 to 85 MPH, in a 65 MPH zone. I’m not talking about the occasional speeder — I’m talking about virtually every vehicle, traveling 15 to 20 MPH over the speed limit. And yet enforcement is virtually zero; it has been years since I’ve seen someone being ticketed there, despite the CHP cars and motorcycles traveling along with the traffic frequently. That law is not respected, and clearly none of the motorists have any respect for the law. Should we levy heavy fines on those motorists? Imprison the repeat offenders? I don’t see a lot of support for that, for the reasons just given.

Is the immigration situation different in any significant way?

When it is true — and known to be true — that an illegal immigrant can live safely and openly in Chula Vista (a San Diego County city just 5 miles from the border), with the city openly declaring sanctuary and welcome for illegal immigrants, with economic opportunity beckoning (relative to Mexico), can we really say that breaking the immigration laws is entirely the illegal immigrant’s fault?

Myself, I think not. I think we American citizens are also culpable. We need, as Daniel Henninger put it, “respectable laws” — I’ll add sensible and moral laws — and we need to enforce them. Then, and I believe only then, can we hold the illegal immigrants fully responsible for their infractions.

Note that this is not an argument for any particular kind of immigration law — that’s a whole 'nother topic, for a whole 'nother day. All I’m arguing for here is laws that make sense — that are internally consistent, that are possible to enforce, that don’t violate any of the principles that we Americans hold (or should hold) dear. Respectable laws.

Politicians, want my vote? Are you listening?

Faster, please.