Seneca Nation dropping lawsuit, resuming state payments as work begins on new gaming compact

James Neiss/Staff PhotographerThe Seneca Niagara Resort & Casino showed off their $40 million renovation project in 2019. Seneca Nation leaders announced Wednesday they have signed an agreement with New York state to begin discussions on a gaming compact, aimed at fortifying the long-term operations of the nation’s three Western New York casino properties.

The Seneca Nation of Indians has announced it is dropping its lawsuit against New York, will begin making Casino Cash payments again and has entered into an agreement to begin discussions on a new gaming compact with the state.

Nation leaders announced Wednesday night that they will “remit to New York state Compact Revenue Share payments, which have been held in escrow throughout the dispute.” The nation will then resume quarterly revenue share payments, as stated in the compact.

“Our gaming enterprises were developed through the vision, commitment and historic investment of the Seneca Nation. They are a major economic driver and one of Western New York’s largest private sector employers. They are also a primary source of funding for the important services we deliver to our community,” said Seneca Nation President Matthew Pagels in a release. “Our highest priority, as always, is creating the strongest possible future for the Seneca Nation today and for generations to come. A compact agreement, bolstered by greater federal scrutiny as a result of our efforts over the past four years, can ensure greater equity for the Nation, long-term stability for our gaming operations, and continued progress for the Seneca people.”

As part of the agreement, Seneca leaders say they will “realize more than $40 million in disputed fees and cost savings over the remaining life of the current compact,” which expires in December 2023.

“Rather than pursue continued legal action, we believe we can now best address our concerns in a compact with greater clarity on our obligations, and, as important, the obligations New York state has to the Nation in return,” Pagels said. “Furthermore, we want to see the momentum generated by our investments and operations continue to grow, and we look forward to building on our strong relationships with our neighbors in Niagara Falls, Salamanca and Buffalo. Now is the time to move forward.”

Since the current compact was signed in 2002, the Seneca Nation says it has invested more than $1 billion to develop Seneca Niagara Resort & Casino in Niagara Falls, Seneca Allegany Resort & Casino in Salamanca and Seneca Buffalo Creek Casino in downtown Buffalo, and delivered more than $1.4 billion in revenue share payments to Albany. Today, the casinos employ approximately 3,000 workers and attract millions of visitors annually.

In April, the Seneca Nation launched an attempt to overturn a ruling by an arbitration panel that the tribe must make required revenue sharing payments to New York state, and host communities like the Falls, during the renewal period of the compact between the nation and the state that authorized casino gaming.

The nation filed a motion in U.S. District Court for the Western District of New York in Buffalo seeking “relief” from a November 2019 decision by Senior U.S. District Court Judge William Skretny that found the arbitration panel’s decision was valid and directed the Senecas to make the required payments to the state.

The nation had appealed that case to the U.S. Court of Appeals for the Second Circuit, in New York City, which in February unanimously upheld Skretny’s ruling. The unanimous decision of the appeals court made an appeal by the Seneca’s to the U.S. Supreme Court unlikely to succeed.

The latest move by the Senecas’ claimed that an April 15 letter from the U.S. Department of the Interior raises issues about the legality of the revenue sharing payments during the compact’s automatic renewal phase.

The compact’s renewal period began in December 2016, without objection from either the state or the Senecas.

When it went into effect, on Dec. 9, 2002, The compact called for the Senecas to have exclusive rights to operate certain types of slot machines in Western New York. In return, the state was to receive a percentage share (from 18% to 25%) of the revenue generated by those slot machines.

The state then shared a percentage of those casino revenues with the local host municipalities where the gaming operations took place. Specifically, in the Falls, Buffalo and Salamanca.

In March 2017, then Seneca Nation President Todd Gates told Cuomo that the the revenue sharing payments would stop because they were not required under the compact after the first 14 years. In that initial 14 years, the state had received $1.4 billion in payments.

Under the terms of the compact, the state took the Senecas to binding arbitration to determine whether the revenue sharing was required to continue. A panel of three arbitrators, voting 2 to 1, determined that the Senecas were liable for continued revenue sharing payments and ordered that the payments be resumed.

In it’s ruling the arbitration panel found that it would be “unreasonable” and “against common sense” to conclude the Senecas were not liable for the revenue sharing during the extended term of the compact.

Both the nation and the state then went to federal court in Buffalo, where the nation asked for the arbitrator’s decision to be thrown out and that asked for the decision to be enforced.

Following Skretny’s ruling upholding the arbitration panel’s decision, the appeals court ruled that “the arbitral panel did not manifestly disregard governing law” and that the courts did not need to send to the matter to the U.S. Secretary of the Interior for review, because the interpretation of terms of contracts is a matter left to the courts.

State officials have said they believe that the Seneca Nation owes about $435 million, more than $100 million of that allocated for local governments.

Since the revenue sharing payments were suspended, the state government has been providing advances of that cash to the Falls city government. If the Senecas resume the payments, those cash advances will be withheld by the state.

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