Federal Appeals Court Latest Group To Tell Seneca To Pay Up $435M

Written By Derek Helling on February 24, 2021 - Last Updated on February 25, 2021

According to the US Court of Appeals, the Seneca Nation has an IOU to the state of New York for $435 million.

That’s the amount that the Senecas have resisted paying since 2017 when they sued the state to force their interpretation of the gaming compact between the state and themselves. An arbitration panel disagreed with the casino operator’s reading then, and earlier this week, so did a federal court.

Court ruled Seneca owes back casino payment

On Feb. 22, the US Second Circuit Court of Appeals rendered its decision in Seneca Nations v. State of New York. The ruling strongly sided with the defendant, which is the state. After the decision, NY Gov. Andrew Cuomo gave the state’s response:

“We have a decision in the ongoing trial with the Seneca Nation. The Seneca Nation, for those who don’t remember, 2013 New York reached a landmark agreement with the Seneca Nation recognizing exclusivity of the Seneca Casinos in Western New York. The agreement was based on trust and respect, and it was one that I was proud to make. This morning the U.S. Second Circuit Court of Appeals again affirmed the need for the Seneca Nation to fulfill their obligations and pay what they owe in exchange for those gaming rights. The court’s decision was clear, and after years of delay, multiple appeals, and multiple court losses it is high time the Seneca Nation follows the law and pays what they owe, and it is significant funding, especially for the communities involved, as well as the State.”

The Seneca Nation’s statement was far shorter.

“The Seneca Nation is reviewing today’s decision and discussing all of our options at this time.”

As far as a further appeal goes, however, that’s a limited menu. The Supreme Court of the United States is the only stop left. There is no guarantee that SCOTUS would even hear the appeal, much less reverse the lower court’s ruling. Thus, the real path forward from here for both parties may be in the boardroom instead of a courtroom.

Seneca claimed compact language favored them

At the center of this lawsuit is the interpretation of the Seneca Nation’s gaming compact with the state. The reading of the compact’s language amounts to a difference of hundreds of millions of dollars that the court says the Seneca Nation must pay.

In 2002, the compact gave the Senecas an exclusivity zone for gambling machines in western NY. In exchange, the Senecas agreed to pay the state a percentage of aggregate revenue. The term for that payment was what the Senecas and state disagreed about.

In their original lawsuit, the Senecas argued that the 2017 arbitration hearing’s result was in error. The payment term ended after the first 14 years of the compact passed, in their reading. However, the arbitration body and multiple courts have maintained that the Senecas had to keep paying through a seven-year renewal period that triggered when neither party objected to the extension of the compact.

That’s where the outstanding amount comes from, as the Senecas haven’t made a payment since 2017 when they distributed funds for the final quarter of 2016. State Budget Director Robert Mujica broke down the past due amounts.

“It’s about $435 million dollars that is owed to-date and is almost over $100 million of that is for local governments. The biggest counties in Buffalo, Niagara Falls, Salamanca, Monroe, and Erie County, but there are over a dozen local governments, county governments, and cities that get direct payments so it’s $435 overall and $150 million directly to local governments, and the rest of the money goes to, mostly, education.”

So, what happens now? That partially depends on how willing the state is to work with the Seneca Nation. At this juncture, the state holds all the cards.

A settlement is probably the Senecas’ best hope now

The Seneca Nation is probably currently trying to size up its prospects before SCOTUS. Unless it gathers a lot of reason for optimism there, the likely next step is to work with the state government to settle the outstanding payments.

That may take some time, as several county governments have an interest in this matter. There is also the matter of “bleeding a turnip,” or demanding more from the tribal casino operator than it can afford to pay.

The likely end to this dispute is that the Seneca Nation will make payments to local and state governments in NY for its revenue over the past few years. How much that will come to and when is still up in the air.

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Derek Helling

Derek Helling is a freelance journalist who resides in Chicago. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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