New York Takes Battle with Seneca Tribe over Payments, Exclusivity Rights to Arbitration

Posted on: September 11, 2017, 01:13h. 

Last updated on: September 11, 2017, 01:14h.

Casino.org Staff Writer Read More
Expertise: Commercial Gaming.

The Seneca Nation’s stand-off with the state of New York over exclusivity terms in the compact between the two is destined to go to arbitration. On Thursday, the state issued an 11-page demand for legally binding arbitration, as mandated by the 2002 agreement that governs their relationship.

New York Gov. Andrew Cuomo
New York Gov. Andrew Cuomo is not impressed by the Seneca Nation’s withholding of funds from the state under claims that casino expansion violates their exclusivity rights. (Image: AP)

The Seneca had accused Gov. Andrew Cuomo’s office of inaction over an ongoing dispute over gaming exclusivity, which has led the tribe to withhold slot machine revenue-share payments to the state.

Disputes between the tribe and the state have been ongoing for years, pretty much since the state began allowing other operators to be involved in New York gaming.

“The state has a demonstrated history of compact violations,” Seneca spokesman Phil Pantano said in an official statement. “Now, after threatening to once again violate the compact, it is abundantly clear that the governor has no interest in engaging in a meaningful dialogue with the Seneca Nation’s leadership.”

The tribe contends that they have repeatedly invited Cuomo to meet with Seneca president Todd Gates to discuss the dispute, but claim to have been ignored.

“This follows the same course as the state’s rhetoric,” Pantano said. “After all, rather than take President Gates’ offer and willingness to meet in person, the governor repeatedly chose insults, attacks and threats through the media.”

Eavesdropping Allegations against Tribe

Counsel for the New York governor argued that it would not be appropriate for Cuomo to meet with Seneca representatives due to an ongoing criminal investigation against the Seneca Gaming Authority.

The Erie County District Attorney’s office is currently investigating allegations that the tribal authority attempted to eavesdrop on the New York State Gaming Authority after a listening device was found in a space the tribe had rented to state officials.

The Seneca operate the Seneca Niagara Resort and Casino in Niagara Falls, the Seneca Allegany Casino in Salamanca, and the Seneca Buffalo Creek Casino in downtown Buffalo.

In exchange for exclusive rights to operate full casinos in western New York, the Seneca Nation agreed in 2002 to pay the state 25 percent of annual slot machine revenues. Over the years, that has resulted in more than $1.4 billion sent to the state, or about $110 million a year, which is supposed to be shared with local governments, area hospitals, and school districts in 16 counties. 

Irked by Expansion

The tribe has been vigorously objecting to recent gaming expansions in New York and elsewhere in the region. In 2009, the Seneca withheld payment in response to the state’s authorization of casino games at racetracks west of Route 15, which the tribe claimed violated an exclusivity provision of the state’s compact.

To resolve that case, the state admitted culpability and allowed the tribe to keep $200 million that it previously claimed they owed.

This time, the tribe says it is under no obligation to continue payments under the terms of the 2002 compact, which expired in 2016. That agreement stated it would roll over for another seven years on expiration, provided there was no objection from either party.

But the tribe argues that there was no specific stipulation that revenue share payments would continue beyond 2016.

The state said Friday that there was “no legitimacy” to these claims. Attorneys for the state wrote in their Thursday demand for arbitration,

“The nation’s contention that it can unilaterally end paying the state contribution while continuing to enjoy the benefits of the compact has no basis in the compact, law or logic,” they said.