Published: December 29, 2021

Federal court ruling again backs state in casino revenue dispute with Senecas

A third federal court ruling supports New York State in its yearslong dispute with the Seneca Nation of Indians over hundreds of million of dollars in casino revenue payments.

The latest ruling issued earlier this month by U.S. District Judge William M. Skretny said the Senecas must abide by an arbitration panel’s 2019 decision awarding the state a quarter of their slot-machine revenues from three Western New York casinos.

Skretny rejected the Seneca Nation’s contention that the award should be overturned because the secretary of the Department of the Interior didn’t review revenue-sharing payments for a renewal period of a 2002 agreement with the state that allowed the Senecas to operate casinos in Niagara Falls, Buffalo and Salamanca.

In his decision, Skretny wrote that the Interior Department’s “concerns regarding the legality of the renewal-period payments are not on solid ground.” He found “insufficient basis” to conclude that the Seneca Nation will face “extreme and undue hardship” if the court doesn’t cancel its earlier decision.

“It has further failed to establish that vacating the judgment will not impose a hardship on the State, which has been waiting to receive the disputed payments for more than four years,” added Skretny.

Seneca Nation President Matthew Pagels declined through a spokesman to be interviewed about the latest court ruling, but he issued a statement to The News saying the Nation was still reviewing it and will “carefully consider all of our options.”

“Protecting our agreements and the long-term viability and strength of our gaming enterprises, along with the thousands of jobs we provide in the local economy, is of paramount importance,” he said.

Buffalo Mayor Byron W. Brown and Niagara Falls Mayor Robert M. Restaino, whose communities have been denied millions of dollars in casino revenue, said the judge's ruling confirms their position that the Seneca Nation has an obligation to make good on the payments.

"This position has now been upheld multiple times in federal court and the arbitration process outlined in the compact," Brown said. "I think it is time to move past this issue and for the payments to be made to the state and the local governments so that we can focus on the future of a relationship which has benefitted both Buffalo's residents and the Seneca Nation."

Restaino said his administration maintains positive relations with the Seneca Nation and even considers them "partners," but that it is now time for the Senecas to pay the withheld gaming funds and focus on negotiations for a new compact since the current one expires in 2023.

"Think about it, if you’re going to have that conversation six months before the compact expires, it is not going to be done well. This is very complicated," Restaino said. "I know there are conversations going on and I think that is really where the energy needs to be. This chapter needs to be closed and we need to move on." 

Gov. Kathy Hochul’s press office referred The News' inquiry to the New York State Gaming Commission.

Gaming Commission spokesman Brad Maione called on the Senecas to pay up.

“It is past time for the Nation to honor its obligations under the Compact and the Judgment. The Nation has exhausted all of its appeals, the Judgment is final, and the Nation’s most recent effort to manufacture an extrajudicial avenue for delay has been denied. The Nation should not continue to circumvent the Judgment or avoid its clear obligations to the State and the communities that will benefit from the Nation making their revenue sharing payment,” Maione said in an email.

As part of a 2002 compact with the state, the Senecas received exclusive rights to operate casinos in Buffalo, Niagara Falls and Salamanca, with the understanding that 25% of slot proceeds would be shared with the state, which passed along a portion of that money to the casino host cities. The annual casino revenue sharing payments amounted to more than $100 million, and local municipalities counted on the funds to help balance their budgets.

The compact, which runs through 2023, included an automatic renewal at the end of 2016 that took effect for the remainder of the compact term when neither side objected to it.

When the Senecas stopped paying in 2017, they maintained that the renewal of the original agreement didn’t specifically call for further payments to the state.

The dispute ended up with an arbitration panel that decided against the Seneca Nation in 2019. A federal court confirmed the arbitration award – a ruling that later was affirmed by the U.S Court of Appeals for the 2nd Circuit.

The payments since the dispute began add up to about $450 million, which is sitting in an escrow account.

The Senecas again asked a federal court last April to intervene, while also requesting a U.S. Department of the Interior review of the terms of the revenue sharing as spelled out in the 2002 compact.

The Interior Department earlier this year questioned whether the revenue payments complied with federal Indian gaming laws, and it referred the issue to the National Indian Gaming Commission for “possible enforcement action,” according to court papers.

The Senecas said they were concerned the Gaming Commission could force them to shut down the casinos for violations related to the revenue sharing.

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