Company behind Vancouver Urban Resort Defends Alberta Casino Venture

A Las Vegas-based casino developer is facing receivership proceedings in Alberta, after promising to add a hotel to its casino operations and failing to follow through with the plan.

After proposing a half-billion-dollar “urban resort” in downtown Vancouver, Paragon Gaming is now facing receivership proceedings for one of its projects in Alberta, after a business partner accused the company of not fulfilling its commitments.

An affidavit filed as part of the receivership proceedings for the Eagle River Casino and Travel Plaza tells how Las Vegas-based Paragon and the Alexis Nakota Sioux Nation embarked on a casino venture together in 2008, only to hit a wall in recent years, when the group started to experience its first financial difficulties.

Change of plans

The Eagle River Casino project originally included two phases, with:

• a 26,000-square-foot casino
• 250 slot machines
• 12 table games
• 6 poker tables
• an 83-room hotel

The casino is located in Whitecourt, about 180 kilometers northwest of Edmonton. In an affidavit dated January 14, Alexis director Don Kootenay described a “history of difficulties with the project”, claiming that its partner had failed to address the First Nation group’s concerns regarding financial debt, operating costs and a hotel included in the plan.

As Kootenay made it clear in his affidavit, Paragon was expected to build a hotel as part of the project’s second phase of development, despite the fact that the two partners did not agree on any of these details on paper.

Referring to Scott Menke, president of Paragon Gaming, Kootenay’s affidavit states: “In 2010, Mr. Menke promised then-chief Cameron Alexis of the Nation, who then informed members of the Nation that the hotel would be constructed in 2011.”

“That did not happen and the Nation has lost faith and confidence in Mr. Menke’s word, and therefore Paragon’s promises, ever since.”

Menke replied to these allegations in a separate affidavit, adding that his company “engaged in good faith efforts to try and finance and construct a hotel.” According to recent gambling news however, the project did not go as planned, and the company ended up having debts which made it impossible finance the promised hotel.

New urban resort in Vancouver

The people over at Paragon Gaming seem to have different things on their mind at the moment. The company is focused on Vancouver, where it will open a new $535-million “urban resort” downtown, in addition to its already existing Edgewater Casino.

A few years ago, the company wanted to open a 1,500-slot-machine and 150-table gambling venue on the same spot. Despite Canadian gambling laws allowing casinos, the project was shot down after a strong campaign opposing the proposal. Now Paragon is promising to open two luxury hotels, a conference center, restaurants and retail space, while also moving the Edgewater Casino to the same location without extending it.

“The previous project was a destination casino,” vice-president John Cahill told reporters. “We’ve heard clearly from city council that that is not to be here.”

In order to successfully complete the urban resort, Paragon has partnered up with Dundee Corp, a publicly traded holding company with interests in energy, real estate and corporate finance. The revamped project has a sleek new look with a glass-fronted structure designed by IBI Group, who explained that the concept was meant to “evoke the natural mountain environment in its architectural design.”

Moving on to better things

With all efforts invested in the Vancouver resort, the Eagle River project doesn’t seem to be among Paragon’s priorities at the moment.

Spokeswoman Tamara Hicks said it was “an extremely complex and unique project,” adding that “it was subject to a highly complex regulatory framework that involved multiple levels of government and was reliant on the provincial government funding arrangements for First Nations casinos that were approved at the outset of the project.

“The project faced many challenges, not the least of which was the provincial government changing its policy regarding the funding arrangements that were critical to the success of the project,” she explained.

The Eagle River project is a thing of the past now, after an Alberta judge approved the venue’s sale in March. Paragon also gave up on its second operation in Alberta, the River Cree Resort and Casino, by selling its minority interest earlier this year.

Hopefully, the company’s plans for Vancouver will be successfully completed. Hicks added that Paragon’s “strong and experienced Canadian partners” will bring not only their experience, but also “an entirely different private funding model” to the table.