Seneca Nation Told to Pay Millions as Arbitrators Side With New York in Compact Dispute

Posted on: January 9, 2019, 05:07h. 

Last updated on: January 9, 2019, 05:07h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

An arbitration panel charged with resolving the 20-month dispute between the Seneca Nation and the State of New York over revenue-share payments came down on the side of the state on Tuesday.

Seneca Nation
The Seneca Niagara casino’s gaming floor is packed with slots, the proceeds of which the tribe has refused to share with the state over the past 20 months, while it treated the casino to a $40 million facelift. (Image: Seneca Niagara Casino)

The tribe announced it would stop making payments — worth around $100 million per year to the state — in March 2017, which has resulted in hardship for the host communities of its three Upstate casinos, the cities of Niagara Falls, Buffalo, and Salamanca.

In September that year, New York declared the tribe to be in breach of its compact and demanded arbitration.

But the Seneca argued their obligation to make payments expired when their 2002 compact ended in 2016. The original agreement stipulated the compact would roll over after 14 years, provided there was no objection from either party — which there wasn’t — but there was no stipulation that that payments would be required to continue into this second phase, according to the tribe.

The state countered this argument has “no basis in the compact, law or logic.”

One Dissenting Voice

Two out of three arbitrators agreed, ruling that the requirement to share 25 percent of slot-machine revenues was renewed for an additional seven years when the compact rolled over. The tribe was ordered to pay all missed contributions and to continue to make payments for duration of the second phase of the compact.

But the dissenting arbitrator said the panel’s decision “rewrites the compact in a way that harms the Nation and provides an unjustified windfall to the state.”

The tribe had previously said it would abide by the arbitration panel’s decision, which is legally binding. But on Tuesday, Seneca President Rickey Armstrong Sr. stopped short of confirming the tribe would comply, merely saying that it would “review the decision.”

Seneca Response

“We continue to believe, as anyone who has read the compact, that the nation’s compact payment obligation was fulfilled, and we believe we had an obligation to the Seneca people to defend the compact as it was written and agreed upon,” said Armstrong.

While we know we are right on the law, we also knew that making that argument to an arbitration panel gave no assurance of an opinion in our favor. As is often the case, the Courts, and apparently arbitration panels, do not always decide cases on the law, even their law,” he added.

The City of Niagara Falls was especially hard hit by the cessation of payments. Last September, New York Governor Andrew Cuomo sent $12.3 million in financial relief to the city, roughly the amount it would have expected to receive from the tribe.

“It was clear to us that the nation had an obligation to continue payments — period,” said Rich Azzopardi, a spokesman for the governor’s office, in an official statement.

“According to the compact, this arbitration process was prescribed to resolve conflicts and now that it’s concluded, we ask that the nation cease any further delays, make the state and local communities whole, and resume payments,” he added.