This segment continually seeks opportunities for strategic
management assistance where we have specialized management
Our Management Services segment is engaged in the business
of providing management services to Indian tribes in connection
with the Indian Gaming Regulatory Act of 1988. We have
three management agreements in place; however the performance
of these agreements is contingent upon and subject to approval
by the Secretary of Interior, Bureau of Indian Affairs, National
Indian Gaming Commission and the appropriate State, if required.
In fiscal 1997 we received approval of the management agreement
between the Miami and Modoc Tribes of Oklahoma to contract
and manage a Class II (High Stakes Bingo) and Class III (Off-Track
Betting) establishment. This project, known as the Stables,
was opened in September of 1998.
In the early 1990’s, Butler National began forming
strategic alliances with several midwestern Native American
tribes. As a result of these agreements, Butler National is
currently involved in the consulting, planning, and eventual
management of high-stakes bingo facilities and casinos in
the vicinity of Kansas and Oklahoma. This is made possible
by the Federal Indian Gaming Regulatory Act of 1988 which
provides for Native American tribes to construct and operate
gaming facilities on their respective restrictive allotments,
trust and reservation lands. IGRA provides for Class II (high-stakes
bingo) and Class III (full casino gaming), dependent on a
variety of conditions that must be met.
The most successful casino in the world is the Pequot Tribe's
Foxwoods casino in Connecticut with gross revenues last year
approaching $l Billion. Although Butler National does not
expect that its properties offer this level of potential,
the company believes that the facilities, if and when completed,
offer substantial opportunities in this exciting and growing
revenue. Full details of the various properties are contained
in the 10-K included in the annual report.
The Indian Tribes and Butler National have spent countless
hours working toward approval of these facilities.
The risks associated with advances of funds for assets and
services on behalf of the tribes under the consulting agreements
is that a Management Agreement will not be approved and the
liquidation of the assets and related services does not recover
enough funds to cover the advances. The Company has
been involved in this business segment since 1991 and has
not experienced any project stopping determinations by the
federal courts or the regulatory agencies. All Management
agreements submitted for approval have been approved by the
NIGC. There can be no assurance that the current management
agreements will continue in force, future management agreements
will be approved and that Congress will not outlaw Indian
gaming. Should any of these events occur, the Company
would choose alternative uses of the Indian land in cooperation
with the Tribes to recover the advances to the Tribes.
There is no assurance that all advances could be recovered.