Seneca Nation Requests Federal Review Before Making Revenue-Sharing Payments To New York

Written By Martin Harris on April 29, 2021

It appears a four-year battle between the Seneca Nation of Indians and the state of New York will continue for at least another few weeks.

The dispute concerns hundreds of millions of dollars in revenue-sharing payments the state wants from the tribe. Now the Senecas are asking a federal district judge to step in to settle the matter.

Last week, the Seneca Nation announced it had requested a 45-day stay of all proceedings concerning the payments. The tribe wishes for the US Department of the Interior to use the period to review the legality of payment provisions in their current gaming compact with New York.

The tribe does not believe they have to make the payments. To support its argument, the Seneca Nation points to a recent letter from the DOI expressing uncertainty about the payments’ legality. Meanwhile, the state disagrees, citing an earlier arbitration decision that favored the state’s position as well as a recent federal court ruling.

Gov. Andrew Cuomo says the tribe owes New York approximately $435 million. But the tribe argues that the state has been illegally trying to obtain as much as $1 billion in payments. In other words, a lot is riding on the decision.

Dispute centers on terms of latest tribal-state compact renewal

As The Buffalo News reported, the argument involves the 2002 gaming compact between the tribe and state. Specifically, the disagreement concerns the second seven-year renewal of that compact in 2016.

The Seneca Nation of Indians is one of eight federally recognized tribes based in New York. The tribe operates multiple gaming properties in the state, including Seneca Buffalo Creek Casino (Buffalo), Seneca Allegany Resort & Casino (Salamanca) and Seneca Niagara Resort & Casino (Niagara Falls).

Over the first 14 years of the compact, the tribe paid the state $1.4 billion of its revenue. But the last time the compact automatically renewed, the terms did not specify whether the tribe would have to continue the revenue-sharing payments. The current compact will expire in 2023.

New York asserted the tribe illegally stopped making the payments. The compact requires such disputes to go to an arbitration panel. In 2019, such a panel ruled in favor of the state. The Seneca Nation responded by taking the case to federal court.

Favorable ruling for NY, but payments do not follow

In late February 2021, the court ruled in favor of the state. At the time, Cuomo announced the Seneca Nation owed the state $435 million, about $115 million of which would go to local governments.

In fact, earlier this year, Cuomo even factored the anticipated payment from the tribe into his budget. A line included New York receiving payment of at least $450 million from the tribe by March 31. The tribe did not make such a payment.

By late March, Seneca Nation President Matthew Pagels wrote Deb Haaland, secretary of the DOI. Paula Hart, director of the DOI Office of Indian Gaming, responded to the tribe on April 15. Hart’s response gave the tribe reason to reaffirm their doubts about the payments’ legality.

She indicated that the DOI could not say whether or not the payments were required. Hart noted how the compact stipulates the state make “concessions” to the tribe in order to receive revenue-sharing payments. However, Hart stated the department was not in a position to conclude whether such concessions were in fact made.

“We caution the parties about their reliance on the terms because we have not determined that they are lawful.”

Seneca interprets letter as support for case against the state

As The Buffalo News characterized the situation, Hart’s letter gave the tribe “fresh ammunition in its efforts in federal court to overturn the arbitrators’ award.”

Indeed, in the statement asking for the 45-day stay, Pagels wrote the state “has done nothing to justify any additional payments.” Rather than make concessions, Pagels noted the state had done the opposite.

As Pagels argued, the state has “made a mockery of our ‘exclusivity zone’ with its three racetrack casinos and a new state-licensed facility five miles from our zone in Seneca County.”

From the perspective of Cuomo and the state, the 45-day stay only functions to delay the tribe being forced to make the payments. The Seneca Nation believes a different outcome will absolve them from having to pay the state.

Both now await a federal district judge’s decision.

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