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Sun sets on Magic Palace 

Marcus Bankuti The Eastern Door

More than six months after allegations emerged that Magic Palace had been infiltrated by organized crime, the establishment has been forced to shut its doors by local authorities. 

“We had to come to this difficult decision,” said Mohawk Council of Kahnawake (MCK) grand chief Kahsennenhawe Sky-Deer. “I don’t think anybody took this lightly. Nobody takes pleasure in having to close a community business.” 

However, Magic Palace has vowed to do what it takes to challenge the decision. “They will hear from us, and if they make a decision that’s not suitable for my clients, we’ll go to the Superior Court, and I’m extremely confident that our permit will be reinstated,” said the business’s legal counsel, Pierre L’Ecuyer, in an interview with The Eastern Door, saying owners Stanley Myiow and Barry Alfred have done nothing wrong. 

The MCK announced Tuesday that it was terminating its electronic gaming devices (EGD) royalty agreement with the facility, a prerequisite for hosting the machines. It was the final nail in the coffin for Magic Palace’s operations after the Kahnawake Gaming Commission (KGC) announced the immediate suspension of the facility’s gaming operations the previous day and then affirmed that MCK’s decision meant the license is now invalid. 

The MCK cited findings that there was an undisclosed, non-local owner of the business who had significant control and garnered most of the benefits. This conclusion was shared with Council around two weeks ago by the KGC, which had commissioned an independent report by Spectrum, a US firm with expertise in gaming investigations, to look into the situation. The report summary is not expected to be made public, but it has been viewed by Council chiefs. 

By the time the report had been commissioned, the KGC had already reviewed the court records that formed the basis of an alarming article in La Presse in October. That piece cited court documents and law enforcement reports that alleged the gaming facility and restaurant had been implicated in laundering large sums of money after bringing in Luftar Hysa, a man said to have ties to a Mexican cartel – a claim that sent a chill through Kahnawake. 

Hysa possessed a key person license for Magic Palace, which was quickly revoked by the KGC. 

According to L’Ecuyer, Hysa had no authority at Magic Palace and was not an owner but merely an investor, a status he said was known and accepted by local authorities prior to October. 

“He had no power of decision,” said L’Ecuyer. 

He also suggested Hysa has been falsely slandered by the media. 

“I’ve been practicing criminal law for 36 years, and I’ve learned one thing: you’re not charged because a newspaper writes an article,” said L’Ecuyer. “What I can tell you about Mr. Hysa is he’s got no pending charges, he’s got no record anywhere in the world, and he’s never been charged.” 

He suggested there has been a chain of misinformation beginning with media coverage in Mexico he said was refuted by the original author. “All this bullshit starts from this false article in 2022, coming from Mexico,” said L’Ecuyer, adding that the claims were motivated by business rivals who sought to squeeze Hysa out of the gaming industry. 

Sky-Deer said this week’s decision demonstrates that the MCK is not all about money as some claim. “No, we’re all about safety and security in the community, taking into account that our gaming jurisdiction is something we pride ourselves on,” she said. 

While the gaming commission has been tight-lipped about its investigations, preferring to refer the press to Council liaisons, the MCK originally took a defensive posture, criticizing outside media and praising Magic Palace for its “swift actions” following a meeting with its representatives about the revelations. 

However, Council insisted all along that it took the situation seriously and that the KGC was looking deeper into it. 

“It’s important we take the time to do a proper investigation,” said MCK chief Cody Diabo on Tuesday. “Some people have said ‘Why didn’t you close them right away?’ It’s like, well, you know, let’s gather some information first. What was reported was just outside media.” 

The MCK will take a financial hit from the closure, which is expected to result in a loss of $5 million in community revenues in the upcoming fiscal year. However, the overall royalties from EGDs are set to increase thanks to the growth of Playground Poker, which is expected to kick in $20 million, nearly a fifth of the MCK’s overall budget. 

The loss of revenue is not the only financial impact of Magic Palace’s closure. In recent weeks, the MCK decided to return $250,000 to Magic Palace that had been transferred as part of a $1-million pledge to the Kahnawake Cultural Arts Center, The Eastern Door has learned. 

“I think it would just be best overall, that’s what we felt, to return the money,” said Diabo. 

There are also a handful of local employees who are now presumably without jobs. The operation had about 130 employees, according to Diabo, 10-15 percent of whom were Kahnawa’kehró:non. 

The saga has incensed some community members who were opposed to EGDs in the first place. Upon the expiry of a pilot project introducing the machines to two licensees, the machines were allowed to become a permanent fixture despite security concerns expressed by some, even as the community has voted multiple times against a casino in the community. 

The MCK has suggested the gaming facilities in Kahnawake do not qualify as casinos because they lack certain criteria, such as table games. 

“The facility is a casino,” said community member Fran Beauvais, who has protested and signed petitions against bringing a casino to Kahnawake. “It has slot machines and poker tables, therefore it’s a casino. It’s not a recreation facility for grownups.” 

She said the outreach done by the MCK on the matter has been inadequate and blames Council chiefs for failing to identify investors in the business, even saying they should step down over the matter. 

“The community members have not been included in decisions on gaming,” Beauvais said. “The people of Kahnawake do not feel safe or comfortable talking about the gaming industry, because it has organized crime attached. People are afraid to speak up in fear of reprisal.” 

According to Diabo, the gaming commission is currently examining measures to ensure a situation like this does not happen again in the future. 

“KGC is going to be looking at beefing up the regulations going forward,” he said. He cited anti-money laundering rules as among those being considered. These were recommended in the report commissioned by the KGC, according to Diabo. 

Regulations already on the books stipulate measures to combat money laundering, including the appointment of a qualified compliance officer. 

The KGC had ordered Magic Palace’s restaurant, Mirela’s, to close until the gaming commission is “satisfied that it is physically separated from Magic Palace’s gaming facility.” However, Diabo confirmed that an entrance through the gaming facility has been closed, leaving the KGC with no oversight of the restaurant. 

Mirela’s announced on its Instagram story this week that it will reopen tonight, Friday. 

marcus@easterndoor.com 

Marcus Bankuti, Local Journalism Initiative reporter 

This article was originally published in print on March 29 in issue 33.13 of The Eastern Door.

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Marcus is a journalist and managing editor of The Eastern Door, where he has been reporting since 2021 on issues that matter to Kahnawake and Kanesatake. He was previously editor-in-chief of The Link and a contributing editor at Our Canada magazine.

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Marcus is a journalist and managing editor of The Eastern Door, where he has been reporting since 2021 on issues that matter to Kahnawake and Kanesatake. He was previously editor-in-chief of The Link and a contributing editor at Our Canada magazine.