SOUTH KINGSTOWN -- The shareholders of a former casino company, once partnered with the Narragansett Indian Tribe, have gone to court seeking $10 million from the tribe that they say is owed because the Narragansetts are now involved in other gambling ventures here.

The shareholders of the former Capital Gaming International Inc. say that the tribe's promised cut of new video slot machines at Lincoln Park triggers an agreement made with the gambling company in 2001.

That agreement says if the tribe moves forward with another gambling project here it must pay back Capital Gaming for development expenses the company incurred.

From 1993 to 1999, Capital Gaming worked with the tribe to bring a casino to Rhode Island. In fall 1999, the tribe dropped the financially ailing Phoenix, Ariz., company in favor a new partner, Boyd Gaming Corp., of Las Vegas, Nev. The tribe later dropped Boyd for its current partner, Las Vegas-based Harrah's Entertainment.

(On Nov. 7 voters will be asked to amend the state's Constitution to allow the tribe and Harrah's to build a casino in West Warwick.)

Capital Gaming threatened legal action if the tribe did not repay $9.9 million in "development loans" and buy out its management contract. The two sides reached a settlement on April 2, 2001.

That agreement stated that 60 days after the opening of any Rhode Island gambling facility to which the tribe was "directly or indirectly" involved, the tribe would have to start paying back $10 million, plus interest.

Last year, state lawmakers gave Lincoln Park permission to add 1,750 slot machines to the 3,002 that already existed. About 600 of those extra machines have gone online and the track is undergoing a massive expansion to make room for the rest. As part of that deal, the Narragansetts were promised 5 percent of the revenues from those new machines.

On July 19, Governor Carcieri's administration told the tribe it was ready to make the first payment: $392,547.

But the tribe's lawyer, Jack Killoy, at the time denounced the "opportunistic check" as the latest in Carcieri's "longtime effort to undermine the tribe's casino effort, which benefits all Rhode Islanders with jobs and economic opportunities."

The tribe has not officially responded to the governor's office and no money has been transferred, Carcieri's spokesman Jeff Neal said yesterday.

Capital Gaming's shareholders, through an Illinois limited-liability corporation -- CGI-NIT -- filed suit Tuesday in Washington County Superior Court seeking the money.

Killoy yesterday said: "The tribe's position is that they have dealt with Capital Gaming in good faith and will continue to deal with them in good faith. The tribe will honor all of its obligations but this lawsuit is, at best, premature."

Further, Killoy said, the General Assembly made it very clear when giving the tribe a cut of Lincoln Park's slot revenue that none of that money could be used to pay off past casino debts.

"The tribe is being asked in this lawsuit to make an unlawful payment," he said.

Harry L. Manion III, a partner at Boston-based Cooley Manion Jones LLP, represents the shareholders.

"Our client is very much in support of the tribe's efforts to open a casino in Rhode Island and this suit should in no way be considered an attack on those efforts," he said in a news release. "But our client expects to be paid in accordance with the agreed upon terms. . . . "

With reports from staff writer Maria Armental.

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