SALAMANCA — The Seneca Nation has asked a federal judge to delay enforcement of an arbitration panel’s order to pay New York State $500 million in casino payments being withheld over language in the Seneca’s 2002 Gaming Compact pending a federal review.
In addition, the U.S. Department of the Interior has asked the National Indian Gaming Commission — a regulatory agency under the department’s purview — to review the arbitration panel’s 2020 ruling as a possible violation of federal laws designed to protect “the sole propriety interest” of the tribe as the “primary beneficiary” of the gaming enterprise.
“The questions and concerns surrounding the Compact arbitration remain part of an ongoing legal action,” Seneca President Matthew Pagels said. “Specifically, there are questions over whether the payments imposed by the Arbitration Panel violate the Indian Gaming Regulatory Act. These questions have not only been raised by the Nation, but by the Department of Interior and the National Indian Gaming Commission as well. These significant questions must be answered definitively so that the Nation and the state can move forward.”
The nation operates casinos in Salamanca, Buffalo and Niagara Falls. The gaming exclusivity pact promised in return for a share of the slot machine revenue always fell short of Seneca expectations with three racetracks granted licenses that included video gaming. Two private casinos located just outside the exclusivity zone were also licensed by the state.
It has been four years since the Seneca Nation began withholding the 25% share of slot machine revenues after claiming the gaming pact renewed for seven years by both parties did not contain provisions for continuing payments to the state. It is the second time the Nation has withheld payment to the state over a disagreement.
The nation paid the state about $1 billion over the first 14 years of the pact. The city of Salamanca, the Salamanca City School District and Cattaraugus County received a portion of that money paid to the state until the nation cut off the payments to the state.
The city and school district received millions each year under the pact. Cattaraugus County often received in excess of $1 million a year, which went toward covering the loss of property taxes on Seneca-owned property in the city, which is almost entirely on the Allegany Territory.
The nation asked U.S. District Judge William Skretny last week to delay the arbitration award due to the concerns expressed by the Interior Department and National Indian Gaming Commission that the automatic seven-year renewal of the compact was not reviewed by federal officials.
Under the U.S. Indian Gaming Regulatory Act, the tribe is guaranteed to be the “primary” beneficiary of its casino operations.
In a letter to Pagels last week, the chief compliance officer at the Indian Gaming Commission, Thomas Cunningham, said the casino revenue payments to the state “may violate” the federal law that directs the tribe “maintain sole proprietary interest” in its gaming operations.
The National Indian Gaming Commission is investigating the circumstances of the dispute, Cunningham said. The commission could direct further investigation or possible “corrective action.”
A spokesman for Gov. Kathy Hochul’s office weighed in on the issue as well last week, saying the delay caused by the federal agencies “should not be used 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. It is past time for the Nation to honor its obligations under the compact and the judgment.”
The nation lost the binding arbitration case by a 2-1 margin and two federal judges in Buffalo ruled afterward that the nation must abide by the arbitration ruling.
Pagels wrote to President Joe Biden and Interior Secretary Debra Haaland in March, asking for help in stopping New York state from seizing $500 million the tribe has held in escrow since ending payments to the state in 2017. The Seneca president invoked the 1794 Treaty of Canandaigua in his request to the federal government for help in the “attack” by the state.
The key question the National Indian Gaming Commission appears to be considering is whether the Indian Gaming Regulatory Act would be violated by any Seneca payments to New York since 2017.
The federal government could rule the state should not receive any additional payments from the nation after the initial 14-year agreement. Neither the state or nation objected to the seven-year extension. The nation said there was no mention of maintaining the 25% share of slot machine revenues to the state. The arbitration panel disagreed on a 2-01 vote.
The Interior Department appears to be basing its concerns on federal laws designed to both protect the tribe’s “sole proprietary interest” and that the nation are the “primary beneficiary of its gaming enterprise.”
In the first 14 years of the gaming pact, the nation grossed more than $5 billion, with about $2 billion in profits going to the tribe and $1 billion to New York State.
The Interior official wrote that the arbitration panel’s ruling in favor of the state may be in violation of federal laws intended to protect the “sole proprietary interest” of the tribe to ensure that it is the “primary beneficiary of its gaming enterprise.”
The question local governments are asking is what happens to the millions of dollars of casino revenue sharing they had planned to receive from the state under the gaming pact with the nation.
